Comcast data caps rile consumer groups

Comcast data caps rile consumer groups
© Getty

Consumer advocates are raising concerns about Comcast's plans to impose Internet data caps on even more customers.

Comcast customers in nine Southern markets — including Little Rock, Ark. and Chattanooga, Tenn. — will see their monthly broadband data use capped at 300 gigabytes starting in December. If they need more, they can buy it at a cost of $10 per 50 gigabytes or purchase an unlimited plan for an extra $35.

It expands a trial program Comcast is already running elsewhere in the country. And it has advocacy groups concerned about the effect the caps could have on competition and consumers, especially if they become widespread.

“The question really is, why are they setting the caps and why are they setting them where they’re setting them?,” said John Bergmayer, a senior staff attorney at Public Knowledge, a consumer group.

Though the cap is being applied in a limited number of markets, advocates say they are concerned that it could limit competition and raise prices for consumers.

The competition concerns stem from Comcast’s own stake in the turbulent video market, in the form of its cable television service. Comcast's video offerings are a rival to services including Hulu and Netflix that stream television shows and movies over a broadband connection.

The advocates say that if customers have to worry about their data use being capped, they might be less inclined to try out competing video services.

“We don’t want to overstate it, but we’re seeing a steady build where more and more people are substituting online over-the-top video for traditional video,” said Matt Wood, policy director for Free Press. “We see [the cap] as a way to discourage that kind of substitution or even experimentation.”

Some also fear that customers may end up paying more, even though their base rates remain the same.

“Instead of raising people’s rates, you’re kind of disguising it,” Bergmayer said in reference to that risk.

“Let’s say you want to raise more money from your customers, you can start charging them more, or you can change the entire logical basis under which they are billed so they effectively end up paying more but it’s less obvious.”

Comcast has been testing the feasibility of caps for years.

Starting in 2012, customers in Nashville were capped at 300 gigabytes a month but could buy an additional 50 gigabyte allotments for $10. A plan for light users who consumed up to five gigabytes a month was added in Fresno in 2013. Smaller markets followed, then Atlanta was the first major city to get caps.

Customers will be offered the unlimited plan option in Atlanta and South Florida starting this fall.

Comcast is experimenting with the new pricing model as more of its customers drop their cable television service but keep the broadband Internet they use to stream video. Earlier this year, Comcast announced that, for the first time, the number of customers buying Internet service from the company was higher than the number of video subscribers.

The company is dismissing criticism of the cap as overblown and notes that only eight percent of customers use more than 300 gigabytes per month. It says it has a simple goal in imposing the cap: making sure that customers who consume more data pay at rates that reflect their usage.

“We also found ten percent of our customers are consuming half the data that’s running over our network. Which means that, obviously, 90 percent are using the other half,” said Comcast spokesperson Charlie Douglas.

“So the point that we’re trying to do with these trials is to create a flexible policy that is also fair. That those who use more data pay more, and those who use less pay less.”

Wood argues that it’s unfair to say that heavy users should be on the hook for greater costs when broadband service, once the necessary equipment is installed, does not cost much to provide. Comcast says that the customers are paying for costs associated with, among other things, increasing network capacity and marketing.

Bergmayer said he could understand the imposition of a cap if it was directed at a small segment of users who consumed massive amounts of data.

Asked if Comcast would raise the level of the cap if the average user's data consumption rises in the future, Douglas would only say that the company tries to make sure its policies "evolve" with its customers.

"We adjusted it in the past, and we've always said that as the internet evolves and our consumers' use of the internet evolves that we will evaluate our policies to have those policies evolve as well," he said.

Comcast's moves are being closely watched by both consumer groups and others in the industry.

“I think the fact is, when major broadband providers sort of set the trend, even if they don’t overlap with providers in other parts of the country because they’re not competing for the same households, they can sort of imitate each other,” Bergmayer said.

“So I think an increased trend towards unfair caps could be a problem.”