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

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

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.”

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