With the FCC preparing to vote on Net Neutrality rules later this month, the cable companies and internet service providers have begun talking about how their pricing models might change if the rules are passed.
Unsurprisingly, many of these corporations are interpreting Net Neutrality as something that will allow them to institute new pricing models that they refer to as “per use pricing” instead of the “flat rate” models that many use today.
Most of us would interpret this as a fair model that would charge each customer only for the bandwidth they actually use, but that isn’t exactly the case. The models these corporations have been wanting to institute for years begin at a low monthly rate for a very limited amount of bandwidth per month, but then would subject the customer to high, “multi-thousand percent markup over cost”, per-gigabyte overage fees.
When you put it that way, the plans wouldn’t sound appealing to anyone, so the companies are putting their own spin on them to sell the public on the idea. A bit of rhetoric to encourage a positive marketing spin is to be expected, however, one of the cable industry analysts has actually gone so far as to claim that these pricing schemes would not be implemented primarily for the corporations to see increased profits, but rather to make the services more affordable to the poor.
Sanford Bernstein analyst Craig Moffett quoted top Washington cable lobbyist Kyle McSlarrow as saying that,”[U]sage-based pricing for broadband would have profound implications. At the low end, it would allow cable operators to introduce lower priced tiers that could boost penetration and help in efforts to serve lower income consumers.”
The problem with this, as DSLReports.com writer Karl Bode explains, is that the ISPs have been profitable under their current flat-rate pricing plans, and have had no interest in lowing pricing tiers before. That, coupled with the fact that there is nothing affordable about the proposed overage charges, makes Moffett’s claim a complete farce.
If cable companies are going to gouge their customers with high per-gigabyte overage fees, it is insulting to spin the story so that it looks like it’s helping those it will end up hurting the most.