FCC chief backs usage-based Internet pricing

Tue May 22, 2012 2:55pm EDT

* Says usage-based pricing would increase efficiency

* Welcomes cable industry initiative on Wi-Fi hotspots

By Yinka Adegoke

BOSTON, May 22 (Reuters) - The head of the Federal Communications Commission said he supports cable companies' charging for Internet based on how much a subscriber uses the service, and also welcomed a cable industry initiative to share Wi-Fi hotspots around the country.

Most Internet service providers charge a flat fee and price their packages based on the speed of the service. Cable providers have been considering charging based on usage, similar to the way utilities charge for electricity.

"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.

Cable providers have explored usage-priced pricing, but the idea has not been well received. There have been concerns that the companies were trying to raise their fees.

Comcast Corp, the No. 1 U.S. cable operator, said last week that it would conduct a trial of usage-based pricing in two markets.

Time Warner Cable, the No. 2 U.S. cable company, launched a trial of usage-based pricing in 2009 but was forced to end it after negative feedback from consumer groups. It launched a new trial in February.

Genachowski praised the cable industry for its leadership in the development of Wi-Fi services and welcomed an initiative by several cable companies to allow their customers to access each other's free Wi-Fi hotspots.

Comcast, Time Warner Cable, Cablevision Systems Corp , Cox Communications and Bright House Networks said this week that they would share access to more than 50,000 hot spots.

For example, Comcast customers visiting New York would be able to access Time Warner Cable or Cablevision Wi-Fi hotspots by logging into the generic CableWiFi hotspot with their Comcast details.

The initiative could put extra pressure on telecoms companies such as Verizon Wireless and AT&T Inc, which would prefer that customers pay for 3G or 4G wireless packages for iPad tablets, laptops and other devices.

The cable companies are determined to keep pace with consumers' demands by adding more flexible and mobile features to their service plans.

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