Excerpt from voices.washingtonpost.com/posttech

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Cecilia Kang
Tuesday, September 28, 2010

FCC likely to back tiered pricing, analysts say

Federal regulators aren't expected to stand in the way as wireless service providers move away from flat-rate Internet plans toward tiered pricing, according to analysts.

Verizon Communications chief executive Ivan Seidenberg said last week that the nation's largest wireless service provider would introduce pay-as-you-go Internet data plans in coming months, joining AT&T and Cricket, which have also adopted tiered-pricing.

The Federal Communications Commission, which was once skeptical of tiered pricing, has signaled recently it would approve such price packages. In seeking comments on his proposal for rules overseeing the treatment of Internet traffic, FCC Chairman Julius Genachowski said that tiered pricing could help alleviate data congestion on networks.

Such a shift would be a boon for wireless operators, analysts said. "Wireless cable operators for years have wanted to generate more revenue from broadband service through tiered pricing but delayed doing so due to potential FCC concerns," said Paul Gallant, a communications and media analyst at Concept Capital.

The idea of tiered pricing had sparked debate among telecom policy observers. Some public advocacy groups have warned that users would access the Web less and that the tech industry would be worse for it. But some consumers say they like the idea of paying for what they use, arguing that they don't want to pay flat-rate fees that subsidize heavier users.

Gallant predicted that the FCC would apply the same reasoning for tiered pricing on wireless networks to cable and broadband fixed-wired service providers such as Verizon's Fios.

But public interest groups warn that charging too much for data would deter users from viewing video over the Internet. That could be a scheme, they say, to keep consumers tied to their cable and satellite television subscriptions.

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