FCC Economist: Congestion Pricing Could Mean Efficient Network Operation

Cable operators have been talking about charging more for bandwidth-heavy users

By John Eggerton -- Broadcasting & Cable, 10/30/2009 11:59:54 AM

The FCC's chief economist has offered up the suggestion, though only a suggestion, that congestion pricing and network management may both be incentives to "efficient network operation."

Cable operators have been talking about needing to charge more for bandwidth-heavy users as part of the business model for broadband delivery.

In a posting this week on broadband.gov , Chief Economist Jonathan Baker said he saw four key economic issues informing the commission's role in being one of the custodians of a transformative technology in the mold of the printing press and the steam engine.

Number four, he said, was "providing incentives for efficient network operation, perhaps through congestion pricing or network management." The other three were market failures that might be caused by, among other things, the market power of ISPs or applications providers; social welfare effects of price discrimination and the impact of wireless broadband as a potential substitute; adequate incentives for investment [a key issue for incumbent networks as well as those managing pension funds with large stakes in those networks].

As per the FCC's current mode of input collection on steroids, Baker said he was offering those up for inspection and input by economists, an openness to criticism signaled by the title of the post: "Educate Us On Economics."