Yesterday, FCC Chairman Julius Genachowski  delivered remarks about proposed FCC rules to preserve an open Internet; the rules will be voted on at the FCC’s next meeting on December 21.

As I indicated in a statement regarding Chairman Genachowski’s proposal, we are pleased with much of what the Commission will be considering.  One particular aspect of his remarks, however, is worth highlighting.

Chairman Genachowski  noted:

Our work has also demonstrated the importance of business innovation to promote network investment and efficient use of networks, including measures to match price to cost such as usage-based pricing.

This approach reflects a responsible and considered view of a fast-moving and highly dynamic marketplace but it doesn’t assume that there is any one “correct” answer.  I made a similar point last year in an interview conducted by Ars Technica’s Nate Anderson:

…Internet pricing models are now on everyone’s collective mind. Is metered and/or capped Internet the future?

McSlarrow doesn’t defend any model; he’s not even partial to metering, having happily lived under flat-rate plans himself for many years. He also won’t defend particular business plans, like those advanced by Time Warner Cable. But what he will defend is cable’s right to experiment.

“I’ve lived under a flat rate plan,” he said, “but I don’t assume… that’s it’s necessarily impossible to believe that you could have a different model in the future.”

That means experimentation, and lots of it, done in the most transparent way, with full input from consumers. Without even doing the tests, McSlarrow says there’s simply no way to know whether certain business models will work better than others.

I also wrote on this very blog:

None of us knows with certainty what works best for consumers. As broadband providers, we face daunting and ever-changing challenges in ensuring that we do our level best to provide consumers with what they want, when they want it. But our goal has been, is, and will be to communicate with our customers in an open and transparent manner; to try new models that can be used to attract new broadband users and more equitably spread costs among high and low volume users, and – at the end of the day – to let the consumer make the ultimate choice of whether new models survive and thrive or are thrown into the dustbin of history.

Even though the cable industry first rolled out high-speed Internet access in the mid 1990s, this is still a relatively young business.  While 70 million Americans now subscribe, broadband adoption continues to be a key challenge.

Some consumers don’t see the need to go online.  Others are constrained by cost.  Still others want to use the service they have in cutting-edge ways.  And the ability to pigeonhole companies and their business plans as being one thing or another is breaking down, particularly in an environment where Internet applications, content, and services change the way we behave as consumers, provide new opportunities for providers and consumers and alter how we all interact with both traditional and new devices and features.

The key point is that that we need to focus on what best serves consumers.  With all this change, it is necessary to have the flexibility to test new business models – and perhaps new pricing plans – in order to see if they make sense.

A usage-based pricing model, for instance, might help spur adoption by price-sensitive consumers at the lower end of the socioeconomic ladder.  As Sanford Bernstein analyst Craig Moffett noted in a report issued yesterday, “{u}sage-based pricing for broadband would have profound implications.  At the low end, it would allow cable operators to introduce lower priced tiers that could boost penetration and help in efforts to serve lower income consumers.”

As I’ve said before, I’m not arguing for or against any particular model.  All I’m really confident about is that the marketplace is changing and that companies will have to adapt to that change.  Chairman Genachowski should be commended for recognizing the close connection between driving network investment and efficiency, providing consumers more choices, and permitting broadband providers to experiment with different business and pricing models.

Kyle McSlarrow, President & CEO of NCTA, recently sat down for a chat with Nate Anderson of Ars Technica. Anderson has written about that conversation today in a post entitled
Cable: let us experiment with metered Internet.

First up, they discuss the issue of caps & metering, which was in the news last month.

McSlarrow doesn’t defend any model; he’s not even partial to metering, having happily lived under flat-rate plans himself for many years. He also won’t defend particular business plans, like those advanced by Time Warner Cable. But what he will defend is cable’s right to experiment.

“I’ve lived under a flat rate plan,” he said, “but I don’t assume… that’s it’s necessarily impossible to believe that you could have a different model in the future.”

That means experimentation, and lots of it, done in the most transparent well with full input from consumers. Without even doing the tests, McSlarrow says there’s simply no way to know whether certain business models will work better than others.

As usage increases over time, McSlarrow says that eventually something will have to be done to handle capacity issues.

“As demand goes in a certain direction,” he says, “someone’s going to have to build a network” to deal with “not just instantaneous peak but, more importantly, average peak usage. The whole point is to do it in a way, and to serve your customers in a way, that they have a great experience. If you fail on the network side to do that, particularly with our shared network, that’s a real problem.”

You can read the whole thing here.

One of my favorite movies is The Princess Bride. Remember when the character Vizzini, played by Wallace Shawn, notes the two classic blunders — one of which is never get involved in a land war in Asia and the other, never go in against a Sicilian when death is on the line? There’s probably a third, which is to never go “blog” vs. “blog” with organizations like Free Press that cut its teeth on this medium.

So, it is certainly not a surprise that the Free Press response to my last post smoothly skips over some fundamental points. On the Free Press homepage, the first thing you see is a technicolor box blaring “Tell Congress: Investigate the Unfair Internet Penalty.” In the Free Press response, this has now turned into a mere “inquiry.” Who could be against that? Especially when these plans are rolling out “under the radar.”

Huh? Time Warner Cable couldn’t have possibly been more transparent about their thinking over the last year, including repeatedly briefing members of Congress and reaching out to interested groups like . . . oh, Free Press. And they have repeatedly made clear that they were listening to constructive comments and views.

Thus, Time Warner Cable’s announcement today that they will spend more time on engaging interested parties, members of Congress . . . and most importantly, their customers by deploying metering tools that help all us become more educated consumers . . . is completely consistent with how they have approached this from the beginning. Bottom line: they have been and are engaged in exactly the kind of outreach and transparency interest groups profess to want.

And I have a lot of personal respect for Ben Scott, but I had to chuckle at the very lawyerly but ultimately inadequate attempt to explain why they were really against usage metering before they were for it. But I suppose I will end on a note of agreement: Ben now says, “As for whether metering is fair — it can be.” Right.

None of us knows with certainty what works best for consumers. As broadband providers, we face daunting and ever-changing challenges in ensuring that we do our level best to provide consumers with what they want, when they want it. But our goal has been, is, and will be to communicate with our customers in an open and transparent manner; to try new models that can be used to attract new broadband users and more equitably spread costs among high and low volume users, and – at the end of the day – to let the consumer make the ultimate choice of whether new models survive and thrive or are thrown into the dustbin of history.

So, my friends at Free Press recently announced a petition to gather signatures to call on Congress to “investigate” plans by Time Warner Cable to conduct trials in four U.S. cities to test customer response to “consumption-based” billing for its high-speed Internet access service.

Great. Hundreds of billions of dollars have been and continue to be invested by our industry in the deployment of broadband and now the deployment of next generation broadband; speeds have doubled or tripled in just the last few years; new and spectacular applications keep getting launched; no anti-competitive conduct has remotely occurred; and, in fact, compared to many other industries, the Internet ecosystem seems to be one of the few really healthy, growing, and creative parts of our economy with continued investment and innovation taking place every day. At a time of economic and financial challenges for our country, I for one would rather Congress spend its time on real problems, not fictional ones.

Despite Free Press’s hyperbole, the facts are these: Time Warner Cable has merely suggested that they are interested in conducting a limited set of trials of a new pricing model – in a careful and transparent manner – that may serve the vast majority of their customers better by reflecting the growing reality that some consumers utilize far more high speed bandwidth than others. They have engaged in an open conversation with their customers and other interested parties about how they are thinking through their plans, and I would expect that only after gathering input would they announce more specific plans for what, where and how such tests would be conducted.

While it is certainly appropriate for all of us and anyone interested in the deployment and use of broadband technology to monitor the results of these and similar experiments, we should recognize the Free Press petition drive as the publicity stunt it so obviously is.

Let’s not forget that Free Press previously suggested that consumption-based billing could be an appropriate pricing model for network providers in a filing on network management at the FCC:

[T]hey could also charge by usage (emphasis mine), provide more bandwidth to all users, or actually offer high symmetric broadband speeds.

As well as to the media:

“I don’t quite see [metering] as an outrage, and in fact is probably the fairest system going — though of course the psychology of knowing that you’re paying for bandwidth may change behavior,” said Tim Wu, a law professor at Columbia University and chairman of the board of public advocacy group Free Press.

And, while they have every right to change their minds, what hasn’t changed is that it is entirely appropriate for any actor in the Internet eco-system to test and examine new ideas and approaches that promote consumer choice and enhance the Internet experience for broadband users before making any permanent decisions. The right approach, as Time Warner Cable has done, is to conduct such tests in a transparent way, with full notice and explanation to their customers.

I don’t hold a brief for or against any particular pricing model. I simply do not have all the data to make an informed judgment about consumption-based billing; nor, with all due respect, does anyone else. The whole point of tests, it seems to me, is to learn what works and what doesn’t, and the details matter a lot.

But the “shoot, ready, aim” mentality seems all too prevalent these days. For example, it is somewhat tiresome to have Free Press repeatedly assert that every effort by network providers to examine any new approach or idea in our or related industries is somehow designed to protect against the supposed “threat” of “Internet video.” This is so stale, and so at odds with the facts, that it really should not be necessary to point out the obvious:

• Over the last few years, the use of broadband connections to view Internet video has grown at a faster rate than any other application. According to one estimate, traffic generated by YouTube video in 2008 alone was more than the sum of traffic crossing the Internet backbone in 2000.
• Far from fearing online video, our industry is courting and exploring partnerships to bring Internet video to the television screen;
• Our industry has worked — and continues to work — cooperatively with consumer electronics manufacturers to ensure TVs can receive Internet video by building in the necessary ports;
• Our industry is the largest provider of broadband in America, and we view the health and growth of the Internet ecosystem as fundamental to our success, which means the applications and services on the Internet must thrive too;
• Our industry is aggressively deploying next generation broadband across America in order to enable, not restrict, new applications.

Any one of these basic facts would have been evident simply by touring The Cable Show in Washington, D.C., earlier this month.

I would respectfully suggest that this is precisely the time in which we can and should test new ideas, especially when the evidence demonstrates that such tests are being planned with care and transparency.