RealTime IT News

Consumer Groups Balk at 'New Cartel'

WASHINGTON -- Consumer groups urged Congress today to pass legislation barring broadband providers from engaging in what the groups call potentially discriminatory pricing for high speed Internet service.

As Congress prepares for a serious run at telecom reform this year, telephone and cable companies are lobbying lawmakers for the right to charge Internet content and service providers a fee to access their networks in addition to regular charges to consumers.

The consumer groups fear the plan, often called a tiered Internet, would ultimately undermine the Internet's founding open platform principles where all users have access to all services and content on the Internet.

"These pricing schemes are simply poorly disguised discrimination," Ben Scott, policy director of the media reform group Free Press, said at a press conference. "Requiring Internet companies to pay for high-speed access to the Internet when they're already charging consumers for the same service means consumers will ultimately pay twice."

Scott added it is "foolish to think those costs won't eventually be passed on to consumers."

In addition, Scott said, "The scheme will stifle innovation and competition by effectively denying access to start-ups that can't afford to pay for access to high speeds."

Mark Cooper, director of research for the Consumer Federation of America, called the proposed pricing plan for high bandwidth content and service providers, such as Yahoo, Google and Amazon, a "tax on innovation."

Calling the "unregulated duopoly of telephone and cable companies" created by the Federal Communications Commission (FCC) the "new cartel," Cooper noted neither the Bells nor the cable companies have produced any data justifying the need to charge fees to content and service providers.

"Certainly, they [Bells and cable companies] should be allowed to recoup their costs [for building a network]," Cooper said. "They should charge consumers for the functionality of the network and let the applications fill up the pipe. They don't need to tax the applications."

Cooper said if Congress approves the plan favored by the broadband providers, they would use their "market power to extract rents from innovators."

Under the plan before lawmakers, broadband carriers would also be allowed to transmit their own services faster and more efficiently than competing services.

Potentially, the consumer advocates contend, the broadband providers could block access to other sites and services.

"Congress should enact tough new laws prohibiting cable and telephone companies from blocking consumer access to content and services on the Internet, bilking both consumers and Internet-based companies," said Jeannine Kennedy, a senior policy analyst at Consumers Union.

If Congress does not act, Kennedy said, "These big companies will use their market power to line their pockets against competitors in favor of their own content and service offerings."

Kennedy urged Congress to begin with the principle of "no discrimination, not one of how much discrimination."