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New Bill Gives FTC Veto Power Over Broadband Caps

Agency would oversee any attempt to shift to usage-based plans

By Martin H. Bosworth
ConsumerAffairs.com

June 17, 2009

The mid-sized upstate city has only two prominent Internet service providers (ISPs) — TWC and Frontier Internet, both of which are regularly criticized by customers for slow speeds, bad service, and high prices.

The resultant backlash against the bandwith cap plan was so great that Congressman Eric Massa (D-NY), who represents the Rochester area, got involved, promising to introduce legislation that would prevent ISPs from metering Internet service or capping bandwith without good cause.

Yesterday Massa introduced the "Broadband Internet Fairness Act," (H.R. 2902) which if passed would give the Federal Trade Commission (FTC) jurisdictional authority over ISPs that introduce plans to cap bandwith usage.

"The Federal Trade Commission Act authorizes the Federal Trade Commission to investigate and remedy consumer pricing practices that it determines to be unfair or anti-competitive, including pricing practices by Internet service providers," the legislation said. "Substantially above-cost pricing has anti-competitive and anti-consumer effects on Internet use, including in particular Internet use for online video delivery."

The bill was crafted with help from media watchdog group Free Press, and Rochester resident Philip Dampier of StopTheCap.Com. Among its provisions:

• Requires ISPs planning to introduce bandwith caps to submit their plans to the FTC beforehand, as well as hold public hearings and comment opportunities.

• Prohibits metering plans if the plan is found to be discriminatory or has usage terms that are unreasonable.

• Targets ISPs with 2 million subscribers or more.

• Gives the FTC enforcement and penalty power.

"Cable providers want to stifle the internet so they can rake in advertiser dollars by keeping consumers from watching video on the Internet," Massa said. "But so long as Americans can't choose which cable channels they want to pay for, I don't think cable operators should be able to determine consumers' monthly internet usage."

Although the Obama administration and the current Congress have expressed support for both net neutrality and expanding broadband access in order to improve competition, passage of Massa's bill is by no means certain.

As Broadband Reports.com editor Karl Bode noted, both the cable and telecom industries have anticipated such a move, and are already marshaling armies of lobbyists to block any such legislation from becoming law.

"It's hard to think this (or any legislation mandating how ISPs price services) will make it through a heavily lobbied Congress," Bode wrote. "Expect Massa to lose this particular fight, barring some kind of K-Street miracle."

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