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Bill Limiting Internet Usage Data Caps Could Signal Next Big Tech-Policy Battle

Wednesday, December 26, 2012

Senate Bill: Data Measurement Integrity Act  

What the Bill Would Do: All ISPs would have to obtain a certification from the Federal Communications Commission that they accurately measure customers' data usage before applying any caps.

Next Steps: Sen. Wyden introduced the legislation in the waning days of 112th Congress, with little chance of the bill passing. He will likely have to reintroduce the bill next year to see it move forward.

By Paul Barbagallo  

A newly introduced bill in the Senate that would limit the ability of internet service providers to impose data caps on subscribers has been met with a backlash from the cable industry, in what could be a preview of a protracted policy battle in 2013.

The Data Measurement Integrity Act (not yet numbered), introduced Dec. 20 by Sen. Ron Wyden (D-Ore.), would require all ISPs to first obtain a certification from the Federal Communications Commission that they accurately measure customers' data usage before applying caps.

In addition, such caps could only be used “to reasonably limit network congestion in a manner that does not unnecessarily discourage use of the internet.”

Cable Industry Criticizes Measure.

The National Cable and Telecommunications Association, the cable industry's main trade association in Washington, immediately responded with a statement saying the measure was “ill-conceived” and that it “ignores the substantial pro-consumer benefits of usage-based pricing.”

“While congestion management may be one effect of tiered pricing, the primary benefits are consumer choice and fairness,” the group said in a statement Dec. 21. “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. Tiered pricing is common throughout our economy, consumers both understand and appreciate it and the [Federal Trade Commission] and FCC have said it is sensible and fair. Some consumers are light users that check e-mail and Facebook while others prefer to stream music and movies for hours each day.”

The issue has been one of the more disputed aspects of communications policy in recent years.

Shift to Usage-Based Billing Models.

Consumer advocates, internet users, and companies like Netflix have voiced growing concern in recent months that broadband providers are shifting to usage-based billing models.

Earlier this year, Comcast Corp. announced plans to raise its residential internet service data cap by 20 percent as it tests different pricing models in two metropolitan markets.

So far, the FCC has not taken any action. Chairman Julius Genachowski, a Democrat, has on several occasions given his personal endorsement to usage-based internet pricing models, but only in principle.

In a speech at Vox Media's offices in Washington in September, Genachowski described usage-based pricing as a “useful tool,” but noted that as consumer usage grows and technology improvements enable providers to deliver more bits at lower cost, monthly usage limits--caps--should increase while consumer cost-per-bit should decrease.

His remarks mirrored those he gave at the National Cable and Telecommunications Association's Cable Show 2012 in May, when he said that such tiered pricing would “help drive efficiency in the networks” and could be “healthy and beneficial” for the cable, telecommunications, and tech industries.

Wyden: Caps Must Be 'Carefully Constructed.'

Wyden, in announcing his legislation, appeared to agree. He said data caps are “appropriate” only if they are “carefully constructed to manage network congestion.”

Otherwise, they risk “undermining innovation in the digital economy if they are imposed bluntly and not designed to truly manage network congestion,” he said.

He also made a point to criticize “sweetheart deals” between ISPs and content providers to not count certain content against the cap.

To address this, his bill would prohibit ISPs from giving “preferential treatment to data that is based on the source or content of the data.”

For practical purposes, the legislation defines “data cap” as “a limit on the amount of bits a consumer of an Internet service provider may download or upload during a period of time specified by the internet service provider” or “a fee-based structure with the purpose of limiting the bits a consumer of an Internet service provider may download or upload during a period of time specified by the internet service provider.”

Consumer Groups Praise Bill.

Consumer advocacy groups were quick to praise the introduction of Wyden's bill.

“Caps create an artificial scarcity in the broadband market that limits consumer choice and hinders the creation of new competitive content online,” said Christopher Lewis, vice president of government affairs at Public Knowledge, in a statement late Dec. 20.

Benjamin Lennett, policy director of the New America Foundation's Open Technology Institute, added that caps allow the nation's largest providers to “generate enormous profits and protect legacy business models from new services and innovators.”

An FCC spokesman could not be reached for comment on the bill.

Though Wyden introduced the legislation in the waning days of 112th Congress, with little chance of the bill passing, he is expected to reintroduce it next year.

For the text of the bill, visit http://op.bna.com/der.nsf/r?Open=sbay-937qr2.

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