FCC could attempt to regulate usage-based broadband pricing, commissioner Pai warns

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Republican FCC commissioner Ajit Pai warned Thursday that the FCC could attempt to regulate the pricing of usage-based broadband packages next year if its net neutrality rules are upheld by an appellate court.

Verizon  (NYSE: VZ) and MetroPCS have been waging a court battle aimed at forcing the commission to drop the network neutrality rules it approved in 2010. During a speech at the Phoenix Center in Washington, Pai said a ruling expected next year by the U.S. Court of Appeals for the D.C. Circuit could be "the most important action" of the year.  

"Should the D.C. Circuit uphold the FCC's order, I would expect to see revitalized efforts to expand the Commission's regulation of the Internet. In particular, I would not be surprised if the FCC looked into whether we should stiffen our oversight of the network management practices of wireless broadband providers and whether we should begin to regulate usage-based pricing," Pai said. "With a court victory under the Commission's belt, I believe that the net neutrality order would be the first step, not the last, on our regulatory path," he added.

Both wireless and wireline broadband providers are beginning to offer subscribers usage-based broadband pricing. Time Warner Cable (NYSE: TWC) CEO Glenn Britt said earlier this week that the MSO will expand the option of usage-based billing to subscribers nationwide by the end of December. Comcast (Nasdaq: CMCSA) has been testing various usage-based pricing models. In July, its Nashville, Tenn., system began charging subscribers that exceed a monthly data cap of 300 MB incremental fees of $10 for every 50 GB that exceeds that cap.

Netflix (Nasdaq: NFLX) and other online video providers have complained about usage-based billing and data caps. Pai said if the network neutrality rules are upheld, the commission would likely receive more complaints alleging violations. "Uncertainty over how the FCC would resolve these complaints could persist for some time," he added.

For more:
- see Pai's speech
- The Hill has this story

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