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Usage-Based Pricing of Internet Service

Document of the Day

U.S. Government Accountability Office. 2014. FCC Should Track the Application of Fixed Internet Usage-Based Pricing and Help Improve Consumer Education. Mark Goldstein, GAO–15–108: Published: Nov 24, 2014. Publicly Released: Dec 2, 2014.

GAO found that mobile providers employ usage-based pricing (UBP) more commonly than fixed. Under UBP, providers can charge varying prices, change connection speeds, or take other actions based on Internet data consumed.

According to the literature, providers facing limited competition could use UBP to increase profits, potentially resulting in negative effects, including increased prices, reductions in content accessed, and increased threats to network security. Several researchers and stakeholders GAO interviewed said that UBP could reduce innovation for applications and content if consumers ration their data.

Because prices can vary based on usage, it may be important that consumers be informed about data. GAO found that some tools offered by fixed providers to educate consumers regarding data can be confusing. For example, some provider estimates vary on data consumed for the same type of content

While FCC is collecting data regarding fixed UBP, it is not using this data to track UBP use…. As a result, … it may not know if UBP is being used in a way that is contrary to the public interest and, if so, take appropriate actions.

GAO recommends FCC: (1) work with fixed providers to develop a voluntary code of conduct to improve consumer communication and (2) make use of existing data to track fixed Internet UBP and its effects on consumers nationwide. FCC said it will monitor complaints and provider plans to determine if a more proactive approach is needed. GAO continues to believe that better communication is warranted. FCC agreed to use existing data to analyze UBP issues.

CC BY-NC-SA 4.0 This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

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