Comcast Wants A Cookie For Suspending Its Bullshit Broadband Caps For a Few Months

from the do-not-pass-go,-do-not-collect-$200 dept

For years, Comcast has slowly but surely expanded its pointless and arbitrary broadband usage caps and overage fees into all of its markets (picture the boiling frog metaphor, with you as the frog). And for most of that time, the company avoided doing so in the Northeast where it faces more competition from competitors like (uncapped) Verizon FiOS. But recently, likely fearing an incoming Biden FCC willing to do its job, Comcast rushed to finally push these useless, confusing, and expensive restrictions into the Northeast. In the middle of a pandemic. When people were already struggling to pay for basic utilities and rent.

Needless to say, lawmakers weren't happy about it. Massachusetts lawmakers were quick to complain about the practice, noting that price gouging captive customers during a financial and health crisis isn't a good look. This morning, Pennsylvania AG nabbed headlines after Comcast announced it would be pausing the expansion of usage caps for a few months (until July):

"The Philadelphia-based cable giant said it would postpone the new charges after Pennsylvania Attorney General Josh Shapiro (D) raised concerns that Comcast’s policy threatened to disproportionately harm cash-strapped Americans who are learning, working and communicating primarily online."

There are a couple problems here. One, The Washington Post (like a lot of outlets) never even informs readers that the caps are technically unnecessary. They're literally the monopolistic price gouging of captive customers using technically unnecessary nonsense. That's kind of important context, without which the reader walks away possibly thinking Comcast is somehow being altruistic here. This is pretty standard practice for a mainstream US tech press which has a violent allergic reaction to calling a duck a duck (in this case, monopolistic price gouging).

Two, I know from my conversations with Massachusetts lawmakers last week that briefly suspending the caps for a few months was Comcast's idea. It was their base offer in negotiations, and they're unwilling to go further. As such, what's portrayed here as a savvy win for PA AG Josh Shapiro is really just him agreeing to let Comcast get away with doing what is effectively nothing. These restrictions shouldn't exist in the first place. Suspending them for just a few months in one portion of the country is an empty gesture. Comcast will simply bring them back once the PR heat dies down a bit.

If there's an area the modern FCC and state regulators have failed miserably, under both parties, it's broadband caps. It shouldn't take a pandemic to realize that monopolies imposing costly, confusing, and unnecessary restrictions to drive up the already high cost of broadband access isn't a great idea (such restrictions are also also abused competitively in the streaming space). And, with only the occasional exception, and despite endless, breathless yammering on about the "digital divide," most federal and state regulators clearly couldn't give any less of a shit.

Filed Under: broadband caps, covid, fees, josh shapiro, pennsylvania, usage caps
Companies: comcast

AT&T Is Restoring Its Bullshit Broadband Caps Because Apparently The COVID Crisis Is Over

from the do-not-pass-go,-do-not-collect-$200 dept

Last March, the Trump FCC put on a big show about a new "Keep America Connected Pledge" to help broadband users during COVID. In it, the FCC proudly proclaimed that it had gotten hundreds of ISPs to suspend usage caps and late fees, and agree to not disconnect users who couldn't pay for essential broadband service during a pandemic. The problem: the 60 day pledge was entirely voluntary, temporary, and because the FCC just got done obliterating its consumer protection authority as part of its net neutrality repeal, was impossible to actually enforce. It was regulatory theater.

The rather meaningless pledge has since expired despite the pandemic only getting worse. And because this FCC doesn't actually care about consumer protection (it literally doesn't even collect data on who is getting kicked offline for nonpayment during a plague), many ISPs simply ignored the pledge, and kicked users offline anyway; even disabled Americans who were told repeatedly by their ISPs that they wouldn't be booted offline for nonpayment during the crisis.

If you hadn't noticed, the COVID health and economic crisis has only gotten worse. Yet most of the ISPs that crowed about the benefits of this performative prattle have also restored their bullshit, arbitrary usage caps, making them a pretty additional penny during a crisis. AT&T, for example, has restored arbitrary usage caps as of January 1:

"The New Year brings unwelcome news for some customers of AT&T’s internet services as the telecom giant ends data cap waivers that were a part of its response to the coronavirus pandemic...on Jan. 1 the 1-terabyte-per-month data limits are back for customers of AT&T Internet, previously known as U-verse Internet."

Americans already pay some of the highest prices in the developed world for broadband. In AT&T's case, you'll pay a high flat-rate price, and then have to pay $10 for each 50 GB consumed over the cap. Many AT&T customers, like their DSL customers (who face ridiculous monthly caps as low as 150 GB), never had the caps waived in the first place:

"Customers who still have AT&T’s oldest and slowest internet service, DSL, did not have their caps waived, which are set at 150 GB per month. Fixed-wireless internet services are capped at 250 GB per month."

We'll say this one more time with feeling: broadband caps have no technical or financial purpose outside of price gouging and anti-competitive leverage in the streaming wars. They don't help manage network congestion. They're not an issue of "fairness," because you're imposing costly and unnecessary new surcharges on all of your users. It's not even really useful as a price differentiator for heavy users, who can already be shoveled to a business-class tier should they feel the need to run multiple servers out of their closet (something modern network management tackles anyway without the need for caps).

If America had functional regulators, you'd be hearing criticism about how monopolies probably shouldn't be engaged in price gouging during an historic health and economic crisis. But not only has the Trump/Pai FCC not followed up on its original pledge, it's not even trying to track how many users are being kicked offline during the crisis due to economic hardship. They've also done absolutely nothing to even lightly criticize ISPs that ignored the original pledge. Again, that's because the Trump GOP couldn't give any less of a shit about consumer protection, despite oodles of breathless pretense to the contrary.

Filed Under: competition, covid, digital divide, fcc, usage caps
Companies: at&t

Comcast Increases Prices And Bogus Fees In The Middle Of A Pandemic

from the do-not-pass-go,-do-not-collect-$200 dept

Last week, we noted how Comcast had expanded its bullshit broadband usage caps during a pandemic, insisting that the confusing, technically-unnecessary restrictions were being deployed in an alleged act of fairness. Of course as we noted, there's nothing "fair" about costly, punitive surcharges that serve absolutely no technical purpose, and exist exclusively so a monopoly can extract additional revenue from monopolized markets and captive subscribers with no alternative ISPs to choose from.

But Comcast's not just using usage caps to extract its pound of flesh. The company is raising prices across most of its services just before the new year, including significant price hikes for its TV services, broadband services, and hardware rental costs. Comcast will also be increasing a bevy of misleading fees, including another $4.50 per month for the company's "Broadcast TV Fee," which is simply some of the cost of programming broken out and hidden below the line, so that the company can falsely advertise a lower rate than you'll see on your final bill:

"Other changes for 2021 include a Broadcast TV Fee increase of up to $4.50 depending on the market; $3 increase for Internet-only service; and up to a $2.50 increase for TV boxes on the primary outlet, with a decrease of up to $2.45 for TV boxes on additional outlets," the Comcast spokesperson added. The fee for a customer's primary TV box is rising from $5 to $7.50, while the fee for additional boxes is being lowered from $9.95 to $7.50."

Comcast isn't engaged in any meaningful network upgrade projects to necessitate such notable price hikes, so this is simply a monopoly raising prices on its services, including an essential utility, during an historic health and economic crisis.

And of course Comcast can get away with this for two reasons. One, roughly 83 million Americans live under a broadband monopoly (usually Comcast), so there's no place for these customers to flee to. And despite a lot of chippy, feel good talk about the "digital divide" being his top priority, Trump FCC boss Ajit Pai is a feckless bureaucrat who has never had the backbone to stand up to this industry on any issue of real substance. Pai hasn't made so much as a peep as a major US broadband provider imposes major new additional costs in the middle of a pandemic crisis in which broadband in an essential lifeline.

You'd think the obvious one-two punch of limited competition and regulatory capture would drive US policy makers to action. Instead, most US policymakers spend their days either pretending there is no telecom monopolization problem, or engaging in performative histrionics over "censorship" by "big tech monopolies." Having just effectively convinced the Trump FCC to neuter itself at lobbyist behest, the US government is in a weaker position than ever when it comes to standing up to telecom monopolies or protecting already struggling Americans from a telecom monopolization problem we often refuse to even acknowledge, much less fix.

Filed Under: broadband, competition, covid-19, fees, pandemic, prices, usage caps
Companies: comcast

Comcast Expands Its Bullshit Usage Caps...In The Middle Of A Pandemic

from the read-the-room dept

Contrary to what some try to claim, broadband usage caps have always been bullshit. They serve absolutely no technical function, do not help manage congestion, and exist exclusively to nickel-and-dime captive customers in monopolized U.S. markets. Worse, they can be used by incumbent ISPs anticompetitively to hamstring competitors in the streaming video and other markets.

Comcast, for years, has been slowly expanding these unnecessary and costly restrictions in line with the frog in the boiling pot fable (you're the frog, unless that wasn't clear). The only area the company hadn't yet deployed the restrictions was in the northeast, largely due to the added competition Comcast sees in the area from uncapped Verizon FiOS. Apparently Comcast has gotten tired of waiting, so they've announced that they've implemented a new 1.2 terabyte cap across the Northeast, which will be fully implemented by March:

"...effective March 1st, residential customers will begin facing overlimit fees for exceeding their data allowance at a rate of $10 for each 50 GB of excess usage, up to a maximum of $100 a month. Customers will not be credited for unused data, cannot rollover unused data, or be charged less than $10 in overlimit fees, regardless if one used 1 MB or 49 GB over the 1.2 TB allowance.

Customers approaching their usage limit will receive email, text messages, and Xfinity X1 on-screen notifications upon reaching 75% (email only), 90%, and 100% of 1.2 TB of data usage. Overlimit fees that subsequently start accumulating will be noted in email and X1 on-screen notifications for each additional 50 GB of usage over 1.2 TB, up to the maximum overage charge of $100."

Folks will quickly (as usual) get caught up in a discussion about how 1 terabyte a month is "fair," ignoring, again, that these restrictions serve no purpose outside of jacking up U.S. broadband bills, which, even under flat-rate pricing, are some of the most expensive in the developed world thanks to monopolization and corrupt state and federal regulators. The industry doesn't even try to pretend that such restrictions "help manage congestion" (they do not). Nor do they help manage "heavy users," which can already be shoved toward more expensive business-class tiers when needed.

It's not a great look for Comcast during a pandemic when broadband is essential and countless Americans are already struggling to pay their bills. Comcast must have done the calculus and figured the outrage will likely be muted enough to prevent any meaningful backlash. After all, unless you live in a Verizon FiOS market in the Northeast, most of these users don't have any competing ISPs to flock to. And historically, neither party has much cared that entrenched monopolies routinely rip off American consumers with costly and confusing restrictions that serve no purpose outside of jacking up already high monthly bills.

With neither competition nor adult regulatory oversight to keep Comcast in check, who is going to do anything about it?

Filed Under: broadband, competition, covid-19, data caps, pandemic, streaming, usage caps, video conferencing
Companies: comcast

Bullshit Broadband Usage Caps Are Hugely Profitable During A Pandemic

from the fancy-that dept

We've noted for years how broadband providers have increasingly imposed arbitrary, confusing, and punitive usage caps and overage fees to cash in on the lack of competition in US broadband. Not only have industry executives admitted these limits aren't technically necessary, they've increasingly been abused to hamstring competitors. AT&T, for example, doesn't impose the limits on its broadband customers who use its streaming video service (AT&T Now), but will impose the added charges if you use a competitor like Netflix.

For more than a decade ISPs have slowly but surely imposed such limits hoping that consumers wouldn't notice (think of the frog in the pot of boiling water metaphor with you as the frog). But with most folks stuck at home during an historic health and economic crisis, bandwidth usage (and thereby profits gleaned by usage caps) has grown significantly. In fact, data from OpenVault indicates that the number of broadband "power users," or users who consume more than a terabyte per month, has doubled over the past year:

"In Q3 2020, 8.8 percent of broadband subscribers used at least 1TB per month, up from 4.2 percent in Q3 2019, according to a study released yesterday by OpenVault. OpenVault is a vendor that sells a data-usage tracking platform to cable, fiber, and wireless ISPs and has 150 operators as customers worldwide. The 8.8- and 4.2-percent figures refer to US customers only, an OpenVault spokesperson told Ars."

Cross this phony threshold and you wind up owing your ISP even more money, despite Americans already paying some of the highest prices for broadband in the developed world -- a notorious metric that doesn't even include the additional costs incurred by usage caps, overage fees, and other nonsensical surcharges the industry uses to falsely advertise a lower rate. If you're a telecom monopoly, this is all great. If you're an American struggling to pay your broadband bill, suddenly higher due to household video streaming, gaming, school work, regular work, and video conferencing, it's decidedly less so.

OpenVault of course advises ISPs to embrace caps because it means more users will be paying more money over time than ISPs that don't:

"In potentially bad news for customers, OpenVault seems to be urging ISPs that haven't imposed data caps to adopt them. "The goal for network operators is to ensure that subscribers who consume the most bandwidth are in faster, higher ARPU [average revenue per user] speed tiers," OpenVault said. "Usage-based billing operators are achieving this goal more, on average, than network operators who utilize flat-rate unlimited billing."

But again, the problem is that such restrictions are bullshit. They do not manage congestion. They aren't required for network management because they don't really help network strain. They're glorified price hikes by natural monopolies on captive customers who can't vote with their wallets. They're not even necessary as a product differentiator, as the heaviest users can already be shoved toward business-class tiers. They exist solely to extract an additional pound of flesh from uncompetitive U.S. broadband markets. And now they're being exploited during a national crisis.

The Trump FCC made some performative, empty gestures toward this problem earlier this year when it announced an entirely voluntary pledge with ISPs, who agreed they'd temporarily stop charging late fees or imposing usage caps. Many ISPs not only ignored their promise, but it was only a few months before most ISPs returned to business as usual, hitting struggling Americans with all manner of spurious additional charges.

Of course you'd never realize such limits are bullshit reading outlets like the Wall Street Journal, which recently parroted industry claims like caps are necessary to "keep the prices of internet packages stable by shifting the extra cost to heavy users," (nonsense, everybody pays more under such a model as the average usage rate creeps skyward), or "protect the majority of subscribers from having rates raised every year" (also nonsense, given U.S. broadband flat rate prices and other fees routinely increase your costs either way).

It's just monopolies being monopolies, and there's a sizeable industry of think tankers, consultants, academics, and lobbying firms funded by the U.S. telecom sector whose entire job is to pretend that's not actually a problem.

Filed Under: broadband, data caps, overage fees, profits, usage caps

ISPs To Bring Back Usage Caps After Brief Pandemic Hiatus

from the useless-is-as-useless-does dept

While it required some nudging, major US ISPs announced last March they would be suspending their usage caps and overage fees for 90 days as millions of Americans hunkered down to slow the spread of COVID-19. They also struck an entirely voluntary deal with the FCC to not kick users offline during this period for nonpayment due to financial hardship, though given the fecklessness of the captured Trump FCC, many ISPs ignored these promises and saw no penalty for it.

Despite the fact that the pandemic is seeing explosive growth across most of the U.S. and financial hardship for many won't be ending anytime soon, most ISPs will begin imposing usage caps and surcharges again starting in July:

"Major Internet service providers are scheduled to end their quarantine benefits soon, once again subjecting Americans to data caps and removing protections if they are unable to pay their bills."

The FCC, so far, has made no comment on whether the hiatus on disconnections, late fees, and usage caps will be extended.

The problem with usage caps in particular is that they're not technically or financially necessary in the first place. They're little more than price hikes on captive customers in uncompetitive markets, and claims they were necessary due to congestion were debunked long ago. They're not even helpful as a price differentiator, given that speed tiers and business class-tiers already perform that function.

ISPs crowed repeatedly about their networks performing incredibly well despite caps being suspended. Such limits routinely confuse customers, and the limits can be abused to give incumbent ISPs an unfair advantage in the streaming wars. In short, broadband usage caps are bullshit, and should be eliminated permanently.

Extending a hiatus on all late fees and disconnections is a thornier issue, given many smaller ISPs can't afford to carry the debt for customer nonpayment indefinitely. That said, giant ISPs like Comcast and AT&T not only enjoy natural monopolies that result in sky high prices, they have received billions in subsidies, tax breaks, and regulatory favors during the Trump administration. As such the idea that not kicking struggling users offline during an historic crisis for another 3-6 months is some kind of extreme burden for them is laughable. AT&T received a $42 billion windfall from the Trump tax cuts alone.

It's entirely possible that ISPs have to once again buckle to public outrage and announce an extension. Especially given the COVID-19 flare ups occurring in Florida, Texas, and California, and the chain of looming financial headaches (missed rent payments, the end of federal unemployment and stimulus assistance). But it's also possible so much is going on that ISPs will be able to quickly revert to imposing arbitrary, unnecessary, and punitive surcharges thanks to feckless regulators and geographical monopolies, neither of which US "leaders" want to do much about.

Filed Under: competition, covid, fcc, pandemic, usage caps

US ISPs Drop Usage Caps, Pledge To Avoid Kicking Users Offline During Coronavirus

from the every-bit-helps dept

While it required some nudging, several of the nation's biggest ISPs this week announced they would be suspending their usage caps and overage fees as millions of Americans prepare to hunker down to slow the spread of COVID-19. Comcast, AT&T, and Centurylink all stopped imposing such limits for at least the next 90 days. Critics (and even leaked Comcast memos) have long made it clear such restrictions (particularly on fixed line networks) aren't technically useful in managing congestion as the industry once claimed, and are little more than glorified price hikes on captive customers.

The speed at which such restrictions were dispatched (during a time when overall bandwidth consumption is up, no less) supports industry executive claims that such limits are arbitrary, confusing, and unnecessary.

That said, numerous ISPs say they're taking additional steps to ensure users can stay online during the outbreak. For example, a coalition of several dozen ISPs struck a voluntary "Keep Americans Connected Pledge" that they wouldn't kick users offline during the outbreak for lack of payment due to Coronavirus, and wouldn't impose late fees either. From the FCC announcement:

"Given the coronavirus pandemic and its impact on American society, [[Company Name]] pledges for the next 60 days to:

(1) not terminate service to any residential or small business customers because of their inability to pay their bills due to the disruptions caused by the coronavirus pandemic;

(2) waive any late fees that any residential or small business customers incur because of their economic circumstances related to the coronavirus pandemic; and

(3) open its Wi-Fi hotspots to any American who needs them.

To be clear, this is a good thing. Those struggling during the obvious economic difficulties to come should not be kicked offline during a pandemic. That said, this is all voluntary and there's no genuine legal mandate for ISPs to do follow up. Given this FCC's tendency toward giving industry a pass for pretty much anything, it's unlikely it would penalize any ISP for non-compliance barring the most obvious instances of attention-grabbing misbehavior. At lobbyist behest, the FCC has stripped away much of its industry oversight as it applies to everything from sneaky fees to transparent billing, making this sort of thing notably more difficult to actually police.

Again, that's not to say that much of these efforts won't be a good thing in the weeks or months to come. Comcast and Spectrum in particular lay claim to tens of thousands of hot spots across the United States, and opening them up to the general public should prove greatly beneficial. Especially if the nation's libraries -- often the first place lower income Americans go to connect to the internet -- are forced to close their doors. Other ISPs, like T-Mobile, have announced they're effectively getting rid of caps and will be giving all of the company's customers unlimited data:

Starting now - ALL current T-Mobile and Metro by T-Mobile customers who have plans with data will have unlimited smartphone data for the next 60 days (excluding roaming).

Providing T-Mobile and Metro by T-Mobile customers an additional 20GB of mobile hotspot / tethering service for the next 60 days – coming soon.

In the weeks and months to come, Americans will face notable financial hardships as the country struggles with business closures as the country attempts to "flatten the curve." At the very least, they won't have to worry about usage restrictions and consumption fees that shouldn't have existed in the first place.

Filed Under: broadband, broadband caps, coronavirus, covid-19, usage caps
Companies: at&t, centurylink, comcast, t-mobile, verizon

US Bandwidth Consumption Surges As Usage Caps Pose A Looming Threat

from the full-on-squeeze dept

We've noted for years how broadband providers have increasingly imposed arbitrary, confusing, and punitive usage caps and overage fees to cash in on the lack of competition in US broadband. Not only have industry executives admitted these limits aren't technically necessary, they've increasingly been abused to hamstring competitors. AT&T, for example, doesn't impose the limits on its broadband customers who use its streaming video service (DirecTV Now), but will impose the added charges if you use a competitor like Netflix.

For many years ISPs have slowly but surely imposed such limits hoping that consumers wouldn't notice (think of the frog in the pot of boiling water metaphor). But as streaming services have increasingly embraced high-bandwidth 4K streaming, consumer usage has started to push back hard against some limits. For example, Charter Spectrum last week noted that the average Charter subscriber (one that doesn't subscribe to traditional TV) consumes just over 400 gigabytes of data per month:

"Monthly data usage by our residential Internet customers is rising rapidly and monthly median data usage is over 200GB per customer. When you look at average monthly usage for customers that don't subscribe to our traditional video product, usage climbs to over 400GB per month."

It should be noted that Charter is one of the only major broadband providers that doesn't impose usage caps and overage fees. Why? It was banned from doing so for six years as a condition of its 2016 merger with Time Warner (read: in four years it probably will). Many DSL providers (AT&T, Centurylink) impose caps as low as 150 GB per month, with overage fees as high as $10 per each additional 50 gigabytes consumed. Elsewhere, I've seen caps as low as 50 GB per month.

Initially, ISPs tried to claim these limits were necessary to manage congestion. After that claim was repeatedly debunked, you'll find most don't even try to justify the move. But again, the fact that these caps are completely technically unnecessary just kind of falls by the wayside as the practice has expanded.

A home full of heavy gamers and streamers can already eat through these limits in pretty short order. A recent study by OpenVault found that Internet customers are using an average of 268.7GB per month. Those numbers are about to change dramatically with the launch of game streaming services like Google Stadia, which eliminate your local game console and shift all computing power to the cloud. Such services will need at least 25 Mbps to stream games at 60 FPS, and are certain to drive users toward costly restrictions and overages.

Of course this was all by design. Usage caps aren't just glorified price hikes, they're increasingly used by incumbent ISPs to harm competitors. In a functioning market, these behaviors would be restricted by either healthy competition (users would just switch to an uncapped ISP) or regulators (who'd clearly note such limits are misleading, unnecessary, and often anti-competitive). But since most broadband consumers have few if any real broadband options and regulatory capture is so totally hot right now, its a problem that remains stuck in neutral for the foreseeable future.

Filed Under: bandwidth, broadband, data caps, usage caps

Verizon Begins 'Testing' DSL Usage Caps It Refuses To Call Usage Caps

from the tightening-the-noose dept

For years now broadband providers have used a lack of competition to impose all manner of obnoxious additional fees on the backs of broadband consumers. That includes arbitrary and obnoxious usage caps and overage charges, which not only raise rates on captive customers, but quite intentionally make using streaming video competitors more expensive and cumbersome. Once caps are in place, large ISPs often exempt their own content from usage caps while still penalizing streaming competitors (aka zero rating).

ISPs used to claim that such limits were necessary to manage network congestion, but as that argument was increasingly debunked (caps don't actually help manage congestion) they've shifted their justifications to more flimsy alternatives. These days, ISPs usually offer no justification at all, or issue vague declarations that they're simply trying to help users "better understand their consumption habits."

Case in point: Verizon DSL customers in Virginia recently began noticing language on Verizon's website indicating that the company's already expensive (and slow) DSL service will now face ambiguous "usage" limitations depending on the speed of your tier. While caps are now pretty common among cable ISPs, it's the first time Verizon has begun flirting with such limits:

For some context: Verizon has long been trying to get rid of DSL customers it doesn't want to upgrade so it can spend more of its time focused on slinging ads at Millennials via its new Oath (Yahoo and AOL) brand. It has been doing this by either refusing to repair and upgrade these users, or by constantly imposing rate hikes on lines that can't even get close to the FCC's 25 Mbps definition of actual "broadband." Because regulations require they keep servicing these lines (since most were taxpayer subsidized), they've had to engage in more creative methods to drive users off of them.

When I pressed Verizon as to why the company felt the need to impose any "usage" restrictions upon slow, over-priced DSL lines at all, it first informed me that these aren't caps because they aren't being enforced (yet). It then tried to claim that the company was simply trying to help consumers "see their usage":

"We're not applying data caps, overage fees or any sort of restrictions on DSL customers," Verizon claims. "There is a small trial in Virginia of displaying data usage in customer billing. It affects less than 2,000 homes over three remote terminals. But while the customers are shown data allowances of 150-250 GB, none of them are charged if they exceed those amounts."..."We've never had a way for these customers to see their usage," a company spokesman added, stating this is "just a very small trial with that." "Lots of cable companies display broadband data usage to customers even though they don't impose data caps. I'm afraid this isn't as exciting as you think," the spokesperson argued.

But there's simply no legitimate reason for Verizon to even be hinting at usage caps. The company's DSL lines are so slow, the cost of providing the service is largely negligible, and the volume of bandwidth these lines consume are largely irrelevant. And if the company really wanted users to understand their consumption, it could have simply provided an actual usage meter that mirrors the meters you often see on routers or the OS. So why is Verizon doing this?

As ISPs flirt with usage caps, usually they'll first employ "soft caps" (read; intially unenforced) and a usage meter (usually inaccurate) aimed at "educating" users on their monthly bandwidth consumption. This usually warms consumers up to later efforts at hard caps and overage fees (usually around $10 per each additional 50 GB). It's like the boiling frog anecdote: once users are ok with the idea of such restrictions, ISPs can then tighten the noose slowly to further monetize these users -- with less of a backlash if than if you'd simply imposed hard caps from the start.

But in this case Verizon didn't even bother to offer users an actual usage meter showing their usage. I pressed Verizon as to why, if it's simply concerned about consumers understanding their usage, it didn't just provide users with an actual bandwidth meter? Why even use language hinting at usage limits at all? It's at that point the company stopped responding to my inquiries.

Again, Verizon has made it abundantly, repeatedly clear that it doesn't want to keep these DSL users as the company shifts focus. For Verizon, the goal is either to drive them to Verizon Wireless, or to a cable competitor (that in many instances will upsell them to a Verizon Wireless service bundle anyway). The very worst case scenario for Verizon is these users stick around and wind up paying even more money for last-generation DSL. "Educating consumers" is traditionally the very last thing on an ISP exec's mind when a company begins flirting with this kind of language.

It's pretty clear Verizon was experimenting with the idea of caps and simply hoped the limited footprint meant nobody would notice. And with net neutrality now formally slated to expire June 11, there's going to be a lot more "experimentation" where this came from.

Filed Under: broadband, broadband caps, competition, dsl, usage caps
Companies: verizon

Comcast Still Makes A Killing, Even When You Cut The Cord

from the damned-if-you-do dept

While the rate of cord cutting is expected to double for Comcast this year, the phenomenon isn't having as dire an impact on the company's bottom line as you might expect. That's thanks to Comcast's growing monopoly over broadband in countless markets where the nation's phone companies are simply refusing to upgrade their networks at any real scale. That lack of competition lets the company not only jack up the standalone price of broadband (starting at $75 in many markets), but it allows the company to implement punitive and unnecessary usage caps and overage fees to drive up your bill should you embrace streaming alternatives.

Speaking at a telecom conference in New York this week, Comcast cable CEO Dave Watson very quietly acknowledged the fact that when a customer cuts the cord, the fact that Comcast doesn't have to pay content licensing costs for that user -- combined with the fact that they simply drive up the cost of broadband for that user -- means that the company comes out ahead anyway:

"Watson added that while Comcast tries to keep customers through a variety of programming and broadband packages, but added that when a customer leaves as a result of price, the impact is actually favorable to the company. "We segment the marketplace,” Watson said, adding that when a low-end customer drops video service over price, but keeps their broadband service – at a higher monthly charge – the company makes out better.

"It’s actually accretive when that happens,” Watson said. “It’s a manageable transition."

Of course that wouldn't be the case if Comcast actually had to compete on the broadband front, a problem we don't seem particularly intent on solving anytime soon. Wall Street of course knows this and is very excited about the prospect, with many analysts cheering Comcast toward boosting the cost of standalone broadband from $75 (after a recent hike) upwards of $90 per month or higher:

"We have argued that broadband is underpriced, given that pricing has barely increased over the past decade while broadband utility has exploded,” New Street said. “Our analysis suggested a ‘utility-adjusted’ ARPU target of ~$90. Comcast recently increased standalone broadband to $90 (including modem), paving the way for faster ARPU growth as the mix shifts in favor of broadband-only households. Charter will likely follow, once they are through the integration of Time Warner Cable."

New Street added that “broadband pricing could double from current levels."

How exciting. Of course while this firm tries to argue that broadband pricing has "barely increased" over the last decade, it's important to understand he's talking about the advertised price. Comcast has provided a master class in the tactic of using hidden, sneaky, and/or entirely bogus fees to covertly jack up the cost of service post sale, something both Comcast and Charter are facing numerous lawsuits for. Then there's Comcast usage caps and overage fees, which Comcast can also slowly but surely squeeze with zero organic market or (for now) regulatory repercussions.

Of course Comcast still values the cash cow that is traditional television, and in an added wrinkle has started only doling out the latest speed upgrades to users that bundle television. But thanks to our refusal to actually address limited competition in the broadband space, Comcast will manage to grab its pound of flesh -- one way or another. That's why a growing number of towns and cities see building their own broadband networks as the only path forward out of this cycle of monopoly dysfunction.

Filed Under: competition, cord cutting, fees, price hikes, usage caps
Companies: comcast