Usage-Based Pricing Can Spur Competition, FCC Chairman Says At Cable Show

Some had told the FCC that all-you-can-consume broadband should remain the only acceptable model, Genachowski recalled. “I didn’t agree with that, and the commission didn’t agree with that,” he said. It can “increase choice and competition, and it can increase fairness. It can, we said, result in lower prices for people who consume less broadband, so experimentation in this area with those goals in mind is particularly appropriate.” Charges based on tier of data plan is “something our companies are wrestling with getting right,” Powell said. He criticized “naysayers” on Monday who “wail” at cable ISP pricing changes (CED May 22 p3).

Comcast’s new broadband bandwidth policies and Verizon Wireless’s existing limits are consumer-friendly, their executives said earlier Tuesday. “There’s always demand for more capacity, and more bandwidth,” said Comcast Cable CEO Neil Smit. Increasing data demand by wireless subscribers is “why we're so focused as an industry on spectrum,” said Verizon Wireless President Dan Mead. “We see the hunger in consumers using their devices in so many ways.” He pointed to the carrier’s LTE capabilities and its new Viewdini video portal.

Comcast “had a more rigid structure in place” for data caps, “and we wanted to make it more flexible” for the cable operator’s broadband subscribers, Smit said. If they want to consume a terabyte of data, they “could buy tiers,” he said. “It was about flexibility and choice,” he said of the ISP’s changes last week to its caps which led it to abandon a 250 GB limit. “It seemed to be very well accepted,” Smit said of the change.

Verizon Wireless considers alerts to subscribers who approach data caps “friendly consumer reminders,” Mead said. “We give notices for data consumption to consumers” when they approach certain thresholds, and customers can upgrade, he said. The point “is to never have the consumer surprised,” he said. “One of the things consumers are going through is what a gigabyte is,” and Verizon Wireless and “the wireless industry is doing a good job in responding to those needs,” Mead said. “I think that you'll see that the tiers for consumption will continue to evolve."

Genachowski’s “important statement” isn’t “the first time” he’s “recognized the need for flexibility in broadband pricing,” AT&T Senior Executive Vice President Jim Cicconi wrote in a blog post (http://xrl.us/bm8yho). “But his words today come at a time when one company has been pushing the FCC to impose a particular pricing model on Internet service providers. Under that company’s proposal, the costs of providing their service would be borne by all consumers, not just those who choose to use their service. This would be fundamentally unfair, and that’s why Chairman Genachowski’s pushback is significant.” Netflix has told the FCC that the exclusion of some content from broadband data caps when video is sent by managed networks of AT&T, Comcast and Time Warner Cable violates net neutrality rules. Netflix had no comment Tuesday. Genachowski “recognizes the need for regulatory humility” for the Internet, Cicconi wrote.

To Public Knowledge, Genachowski backing data “caps presents a false picture” that it’s “simply another ‘business model innovation,'” Legal Director Harold Feld said. “The question is not, as the chairman said, whether there is only one model. The question is, will all the benefits of broadband Chairman Genachowski has articulated in the past ever happen in a world where broadband providers get a free pass on any pricing scheme or restriction if they use the magic words ‘bandwidth cap'?” ISPs shouldn’t be able to “exempt their content from the cap while counting the same type of content supplied by others,” Feld said. (http://xrl.us/bm8yh6).

"The FCC should be investigating” caps, “not endorsing them,” said Free Press Policy Director Matt Wood. “All the evidence shows that caps on wired broadband platforms like cable make no sense,” Wood said. “They don’t affect network congestion, even in the rare instances where congestion actually exists on these systems.” Comcast shows the “harms” and “lack of any legitimate reason” for caps, because the ISP began by exempting its own content from the limits and applying them to rivals including Netflix, Wood said. Last week “Comcast changed course and suspended caps temporarily in all but a few markets -- but promised to start overcharging any users there who exceeded these arbitrary limits,” he said. “The FCC has turned a blind eye to this competition problem.” But Genachowski “emphasized the importance of consumer choice,” an FCC spokesman said of the remarks on usage-based pricing. Genachowski also emphasized “competition, which includes over-the-top video competition, and lower prices for consumers,” the spokesman said.

Genachowski keeps hoping more government-occupied spectrum will be used for commercial purposes, he said of the approximately 60 percent of frequencies in certain desirable bands used by federal agencies, he said. “No one anticipated this increase, so we haven’t managed spectrum policy to anticipate this increase” in consumer demand for data and other functions that need spectrum, he said. “We have to think about much more of that for commercial [use] more quickly, and think about innovative ideas like sharing of government use and commercial use, building on some of the ideas in Wi-Fi.”

Using cable operators’ Wi-Fi hotspots to “offload” wireless data traffic is “a big part of the solution,” Genachowski said. “In the category of the kind of problems you want to have is mobile congestion,” since without it “we wouldn’t have any demand,” he continued. “Cable has been leading the way in innovating around Wi-Fi,” and Genachowski “was very pleased to see the announcement” Monday that five operators are letting each others’ broadband customers use their Wi-Fi hotspots, he said. “We're just at the beginning of the innovation that we'll see from Wi-Fi.”

Addressing a TV station practice opposed by cable operators seeking changes to retransmission consent rules, Genachowski said his agency is giving “closer attention” to shared services agreements. “That raises real issues, and it’s something we're taking a close look at the FCC,” he said of when two or more separately owned stations within a market share some functions. Genachowski joked that the addition of Ajit Pai and Jessica Rosenworcel this month as commissioners means it'll be harder to find a conference room to fit all the FCC members. Powell said both visited NCTA’s show. “We've had a very well functioning commission that has gotten a lot done, a lot done unanimously,” Genachowski said. “When we've disagreed, we've been able to disagree without being disagreeable.” -- Jonathan Make

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The term “second screen” means many different things to different people in the TV industry, Matt Murphy, senior vice president-digital video distribution for Disney and ESPN Networks, said at the NCTA convention Tuesday. That fact could not have been more apparent during the series of presentations webcast live from the trade show in Boston, as executive after executive gave his or her own take on the technology. For some it’s delivering traditional TV programming to new devices, such as iPads and smartphones. For others, it’s using those devices to let viewers interact with TV programming and ads without interfering with the programming on a main TV. For others still, it seemed to mean allowing media companies to tap into the vast stream of data being created by users talking about TV on social media.

ESPN is focusing on delivering its live networks to more devices, Murphy said. “With sports, 99 percent of the viewership is live, and that’s why we wanted to focus on the network itself,” he said. For Disney’s WatchESPN apps, the network was initially delivered ad-free, Murphy said. That gave the company the ability experiment with new ad formats and take advantage of the two-way nature of devices like tablets and smartphones, he said: “They have qualities that allow you to do much more engaging things."

Sports programming also drives social media use on second-screens, said Sean Casey, CEO of SocialGuide, a Brooklyn, N.Y.,-based startup that is aggregating information about how people discuss TV on social media platforms and selling those insights to media companies. “Sports events, in any given month, constitute about 2 percent of all TV programming but make up about 50 percent of the social activity” tied to TV, he said. Viewers are already discussing TV programs on social media, he said. “The next step is how can they [the media companies] bring their sponsors and advertisers and add them to the conversation,” he said.

Time Warner Cable executives said they're also focused on bringing their living-room TV experience to more devices. “We want to be on all the devices consumers are using,” said Kevin Leddy, executive vice president-technology policy and product management. On those devices, “our navigation can be a lot better than it is on a set-top box,” he said. He said TWC is streaming about 250 channels live to IP devices and plans to add more broadcast channels this year. TWC is already carrying broadcasters on its IP platform in New York: “We'll be adding the broadcasters from other markets through the end of this year.”