Followup on Net Neutrality -- AT&T Adopts Tiered Pricing Structure for Cell Phones

Last week, I discussed in a lengthy post the current disputes about the pricing of joint products, including internet service.  I noted that the entire net neutrality fight was a dispute between heavy and more moderate users of internet bandwidth.  The latest news is that AT&T has attempted to do something to apply appropriate pricing so that bandwidth hogs are not subsidized by the rest of us.  David Pogue, the NY Times technology guy explains the new pricing structure.

FCC to Hold Hearing on Regulating Cell Phone Termination Fees

The FCC will hold a hearing tomorrow, June 11, on whether to take over jurisdiction of cell phone termination fees, which are not subject to state regulation. The major cell phone companies are, of course, in favor of this proposal, which as been promoted particularly by Verizon, because it would eliminate regulation by 50 pesky state governments, in exchange for a single regulator at the federal level. It would also preempt class actions, several of which have apparently been filed. See Wall Street Journal article, May 24, 2008.

Of course, regulation of termination fees would simply result in increased costs to consumers. Cell phone companies have justified termination fees as enabling them to offer low-cost or free cell phones to consumers. If termination fees are restricted, the costs of telephones and telephone service would undoubtedly increase. See also Open Market.org.