NCTA: Data Cap Bill Is Ill-Conceived

Says legislation ignores benefits of usage-based pricing

By John Eggerton -- Broadcasting & Cable, 12/21/2012 10:29:11 AM

The National Cable and Telecommunications Association on Friday slammed the just-introduced Data Cap Integrity Act, which would mandate standards for measuring capacity and put economic restrictions on usage-based pricing.

"Regrettably, this ill-conceived legislation ignores the substantial pro-consumer benefits of usage-based pricing," NCTA said in a statement. "While congestion management may be one effect of tiered pricing, the primary benefits are consumer choice and fairness. Usage tiers give consumers more choices to better fit their bandwidth needs, and they rightly distinguish between low-volume users and high-volume users as is true for many products and services."

NCTA last week looked to get ahead of the issue, releasing a paper that concluded that differential pricing increased economic welfare in most cases.

"Tiered pricing is common throughout our economy, consumers both understand and appreciate it and the FTC and FCC have said it is sensible and fair," said the trade group.

On Thursday, Sen. Ron Wyden (R-Ore.) introduced the data cap bill, which he said would give consumers more control over their data usage in the wake of data caps imposed by some ISPs. The bill would also mandate industry-wide data measurement accuracy standards and impose "disciplines" to ensure that data caps are only used to manage network congestion, not to "extract monopoly rents," citing a New York Times editorial opining on that subject.

FCC chairman Julius Genachowski has said usage-based pricing can be a useful tool -- the FCC's network neutrality rule order cited that upside -- and was consistent with "driving efficiency, investment, and faster and more robust network infrastructure," but he has also suggested those tools could be misused.

In a speech in September, the chairman made a point of saying that consumers need sufficient "monthly" broadband capacity so that families don't have to fight over who gets to do homework or have a remote health checkup or stream video, and "monthly" capacity to make sure that the e-commerce goods flow freely.

He said he understood the challenge to ISPs of managing the growing demands on their networks while earning enough to invest in upgrades and expansion, both FCC goals. But he also said he expects monthly usage limits to rise and the cost-per-bit of those usage-based plans to decrease as technology improves.