Heaviest users of Web face limits on 'unlimited'

For as long as consumers have had high-speed Internet at home, they have surfed the Web as much as they wanted, downloading any content while paying their service provider a flat monthly fee.

Those days may be ending.

Internet service providers, especially cable companies, are eyeing new pricing models to address the rapidly growing popularity of such applications as streaming online video and the sharing of large files. These programs can eat up bandwidth and cause bottlenecks, slowing service across networks. Companies such as Comcast and Time Warner also fear becoming a "dumb pipe"—providing the conduit for data-intensive Internet activity but not managing the flow or making any money from it.

The service providers emphasize that a small number of Internet users are responsible for the heaviest consumption and that average customers don't have to fear monthly usage caps or sudden spikes in rates. Time Warner spokesman Alex Dudley said 5 percent of the company's 8 million Internet subscribers use 50 percent of the bandwidth.

But as AT&T noted in a statement, "broadband use is surging." The company said average bandwidth usage rose about 35 percent per year between 2001 and 2007.

Much of the heightened activity comes from watching videos, downloading media and sharing music and movies. These activities require investment in more robust networks, especially as consumers seek more Web-based entertainment options, such as watching TV shows online.

The question of who will pay for that investment and how the costs will be shared has sparked a fierce debate.

"What people have to understand is that the concept that there's unlimited capacity on the Internet or on anyone's network is not true," Dudley said. "And as the bandwidth-intensive uses of the Internet increase, investment has to be made."

On Friday, Federal Communications Commission Chairman Kevin Martin publicly criticized Comcast for interfering with subscribers' Internet access. Martin said the company's restriction of certain applications, such as peer-to-peer file-sharing programs, violated the FCC's principles for "Net neutrality," or ensuring open access to any lawful content on broadband networks.

"This is an important precedent to make sure that operators do understand that they can't artificially or arbitrarily limit consumers' access to the Internet," Martin told the Tribune in an interview. But he also indicated that service providers will have the freedom to set pricing the way they want.

Comcast says it temporarily delays "a relatively small number" of peer-to-peer uploads but denies allegations it blocks any Internet content outright and says it is evaluating alternative models.

Internet service providers have long offered different service plans based on network speed. But the new models under consideration focus on how much content is being consumed.

Time Warner is testing a model for Internet pricing that takes its cues from tiered cable TV pricing. The lowest tier is $29.95 a month for 5 gigabytes and the highest is $54.90 for 40 gigabytes. Users pay overage charges when they exceed those caps. Five gigabytes equals about 15 hours of standard-definition digital video.

In another possible scenario, a user downloading a particularly large file could pay a one-time charge for a temporary increase in bandwidth, said Michael Manzo of Virginia-based Openet, a technology provider.

"I can guarantee that behind the scenes, [companies] are buying the technology to allow these things to occur," Manzo said. "True flat-rate pricing may exist for basic access, but you'll have a bunch of up-sell capabilities."

Some proponents of Net neutrality say they worry new pricing models could set a dangerous precedent.

"Where is the primary control over choice of content on the Internet?" said Ben Scott, policy director at Free Press, which has filed a complaint against Comcast with the FCC. Scott worries that a cable company could set Internet pricing higher to make cable TV more appealing.

Cable firms say the issue is bandwidth investment. If Internet usage requires bigger pipes, it makes sense to charge more for customers who use more.

"Pick your poison," said Time-Warner's Dudley. "It just isn't free. It's servers, it's air conditioning, it's fiber-optic cables, it's rolling trucks. It's expensive and labor intensive."

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