AT&T tiered data plan and regulatory oversight questions

By Cecilia Kang
Washington Post Staff Writer
Friday, June 4, 2010; 9:44 AM

Thanks to reader bitter_bill for asking how a previous post on AT&T data pricing relates to tech policy.

Good question. There's lots of interest in Washington about consumer billing practices. There are also questions about the Federal Communications Commission's push for better authority to regulate broadband services that could affect the wireless mobile broadband industry.

Rebecca Arbogast, a tech policy analyst at Stifel Nicolaus, said she believes the FCC will continue to allow wireless providers to experiment with different business models, including tiered pricing like that announced by AT&T. The FCC has said it is debating whether to include wireless services in its push to redefine broadband as a telecommunications service. The biggest concern by investors is that the move would -- particularly down the road -- lead to price regulation of broadband and a requirement for network operators to share their Internet lines with competitors.

Regulators will like how AT&T's plan allows for a lower entry point for Internet users and is designed to clearly inform users when they go over their allotted amount of data for the month, Arbogast said.

But she noted that such pricing models would get greater scrutiny for broadband providers who also produce content. Time Warner Cable scrapped tiered pricing plans after pressure by public interest groups and lawmakers who feared those that models would allow the broadband and cable company to favor its own content.

"The analysis of caps and tiers may ultimately be different for companies that are both broadband providers and content owners, if the caps or tiered pricing apply onto broadband service in a way that makes Internet video a less effective competitor to subscription video," she said. (Read: Comcast-NBC Universal merger.)

But you can bet there will be pressure on the FCC by consumer groups to scrutinize tiered pricing.

Free Press, a public interest group, said the move is an "overcharge scheme" and will deter consumers from using mobile broadband services. The iPad and other mobile devices and tables geared for Internet use will only lead people to watch more video and use more bandwidth-intensive applications in the future.

"The fact is that today's heavy user is tomorrow's average user," said M. Chris Riley, Free Press policy counsel.

That said, AT&T's new wireless data pricing plan ¿ the end of all-you-can-eat flat rates for new customers ¿ has drawn mixed and many positive reviews.

Check out David Pogue's review of the plan in the New York Times, which he said is consumer-friendly and fair. The Post's Rob Pegoraro said most people don't blow past the limits set by AT&T ¿ in other words, they probably wouldn't be dinged with overcharges.

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