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Genachowski's proposal allows tiered pricing
Proposed rules fall more on the ISP side than consuemr side

The FCC has been mulling over new rules and regulations for internet providers. These rules would govern how traffic that the providers carry can be regulated, and how end users and content providers could be charged. Early on it sounded as if the FCC was going to take the consumer's side, eliminate traffic throttling, and possibly even chime in on tiered offerings for end users.

The wireless and broadband industry fought the FCC on imposing rules to throttle traffic and tiered data charges. From the looks of the latest FCC proposal that has surfaced, it appears that the ball has fallen on the side of the broadband carries and wireless industry rather than on the consumer's side. FCC chairman Julius Genachowski proposed a set of rules for providers that are much more flexible for the providers than many expected.

The rules will be very flexible for the wireless industry with Genachowski noting that wireless is at an earlier stage of development. 
Reuters reports that the carriers seem pleased with how they will be able to operate under the new plan, but providers for high bandwidth offerings like Netflix and other movie streaming firms will take a hit.

The proposal is on the agenda for the December 21 meeting of the FCC. The proposal outlined will allow the ISPs around the country like Comcast and others to charge more for users who download things like movies. You can bet that the ISPs will jump on that and tiered pricing for all users will go into effect in short order if the proposal is approved at the meeting later this month.

A note to investors from Bernstein Research read, "The tacit endorsement of (usage-based pricing) is, in our view, the biggest news of the day, and must be viewed as very positive for terrestrial broadband operators."

Reuters cites a senior FCC official as stating that usage-based pricing will bring added choice and flexibility to consumers. Consumers will certainly see larger bills for things they are doing right now on the plan they already pay for with usage-based pricing. The move will certainly have an effect on consumers that are considering moving from cable to IP video for their content watching and may force some users of IPTV back to cable or satellite service.

Analyst Paul Gallant from MF Global wrote, "Depending on where the tiers were set, usage-based pricing on wireline broadband could end up deterring some people from dropping cable for over-the-top video."

The proposal by Genachowski will not seek to regulate the internet along the lines of telephone regulation. Genachowski said, "The proposed framework would prohibit the blocking of lawful content, apps, services, and the connection of non-harmful devices to the network." 

Democratic Senator Maria Cantwell said, "I am concerned that it [Genachowski's proposal] is not as bold as it should be. We need a bold plan."





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