FCC Head Backs Internet Cable Usage-Based Billing

If this is any indication of things to come, accessing the Internet could be a whole lot more expensive in the future. Julius Genachowski, Chairman for the FCC has come out in support of usage-based billing in the US for cable companies.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

It’s been a multi-year fight to maintaining network neutrality and keeping the ISPs in check to allow innovation to flourish online. Unfortunately, years of prosperity, American innovation and job creation on the Internet may be coming to an end thanks to a changing attitude at the FCC. MSNBC reports:

“Usage-based pricing would help drive efficiency in the networks,” FCC Chairman Julius Genachowski said on Tuesday, speaking at the cable industry’s annual NCTA Show.

Genachowski said usage-based pricing would also be fairer to users and would encourage competition.

Of course, Slashdot pointed out the following:

He makes the claim that it would drive network efficiency. Currently most internet service providers charge a flat fee and price their packages based on the speed of the service, while wireless providers are reaping record profits by charging based on usage, similar to the way utilities charge for electricity. By switching to this model, the cable companies can increase their profitibility while at the same time blocking consumers from cutting the cord and getting their TV services online.

I think that this is a big reason why a lot of people were always against the idea of ISPs being owned by broadcasting corporations. If conglomerates were to exist, one of the fears it would lead to would be the prevention of the existence of third party businesses who create new business models more fit for the era of the Internet. For instance, if usage based billing were to exist right when YouTube first came on the scene as a big player in the Internet, consumers would consider YouTube to be far too expensive because watching those videos would rack up huge ISP bills. If ISPs exclude their own services from being counted towards a users metered Internet, then consumers would hardly have a choice which streaming service they would use in the first place. It’s basically a choice between being charged a huge amount of money to access YouTube or pay a few dollars for the service provided by the ISP. What it is is straight up anti-competitiveness.

There are numerous other ways usage-based billing would kill innovation online. For instance, new artists trying to get their music out for free. Some, such as myself, post their music on file-sharing networks. Others post their music on a variety of free music hosting websites such as SoundClick. If downloading that song costs $1.50 in bandwidth whereas buying the same song on an ISP service costs 99 cents, then the new artist doesn’t stand a chance because it’s more expensive for consumers to get that song for free and the artist winds up getting ripped off by the ISP in the process.

It would also contribute to the killing of projects such as [email protected], an project that searches for the cure for diseases such as Alzheimer’s and Cancer. If running this software ends up costing $20.00 per day thanks to the bandwidth it uses, then far fewer people would be willing to donate those extra cycles to curing disease.

There’s also the Open Source movement that this sort of thing would hurt. A number of Linux operating systems distribute ISOs which can be anywhere between hundreds of Megabytes to a couple of Gigabytes. If the bandwidth used to obtain these ISO files now becomes expensive, it could be a discouraging factor for those thinking of switching from, say, Windows to Linux.

Small businesses who develop video games could also be harmed by usage-based billing. What users see now is just how much that small company is charging for that video game. If usage-based billing comes in to play, then that consumer has to think, “OK, the developer is charging this much money and the ISP surcharge for this is this amount of money… do I still want to buy this game?”

I could go on and on with examples of what kind of damage usage-based billing could do. Bottom line is that it harms innovation, it harms small business, it harms competition, it harms the economy and it harms society. I, for one, hope that this is as far as the FCC ever gets in allowing usage-based billing.

Drew Wilson on Twitter: @icecube85 and Google+.



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