ISP Bandwidth Policies Under Attack

Published May 1, 2009

Frontier Communications Corp., a Rochester, New York-based Internet service provider specializing in the rural market, has joined a growing number of firms that advocate charging “bandwidth hogs” more than moderate users.

Advocating Tiered Pricing

“It is important that customers that use less don’t subsidize those that use the most,” Frontier CEO Maggie Wilderotter told a group of state utility regulators meeting in Washington earlier this year.

Charter Communications, Time Warner Cable, and Cox Communications—three of the largest ISP companies in the United States—are moving forward with such programs.

Net Neutrality Proponents Persist

Advocates of so-called net neutrality, a policy in which government forces ISPs to treat all traffic identically, generally oppose such practices. Organizations such as the influential Electronic Frontier Foundation have urged Congress to implement rules reducing the ability of ISPs to manage their traffic.

But the freedom to manage traffic is essential, says Bret Swanson, president of Entropy Economics, a technology strategy firm based in Indianapolis, Indiana. The market, he says, will provide the best service at the best prices—and work to correct any problems by itself.

“As with any market, price signals are crucial in broadband,” Swanson said. “Bandwidth tiering or per-bit pricing are just [two] of the models that might be tried in this dynamic realm.

“Other bundled packages and advertising models will also be tried,” Swanson added. “But it’s perfectly reasonable to charge more for better, faster service. The government should not force low-end users to subsidize high-end users.”

Debate Remains Hot

“This debate is heating up because of the confluence of two major factors,” said Azita Arvani, president of the Santa Monica, California-based technology consulting firm Arvani Group, Inc. “Broadband penetration has enabled higher bandwidth applications, and consumers are using more of these bandwidth-hungry applications.

“These factors make ‘flat data pricing’ less profitable,” Arvani said, adding that any regulations on broadband-traffic management need to be “fair to service providers.”

James G. Lakely ([email protected]) is a research fellow at The Heartland Institute and managing editor of Infotech & Telecom News.