As a persistent, long-term critic of Internet service provider usage thresholds that are set too low and overage fees that are set too high, I was surprised to find myself thinking, “Eh, that’s okay,” upon reading Comcast’s announcement of a new 1 TB limit for monthly data use in the parts of the country in which the cable company has caps in place.
The new limit isn’t generous, but it’s sufficient for most people right now, and will probably remain so for at least a few years. More importantly, it shows that even a company that’s effectively a monopoly in most areas it serves still has to respond to consumer, regulatory, and political pressure.
This announcement came out of nowhere — no news outlet seemed to have advance word or leaks — and it may be in response to the terms the Federal Communications Commission and Department of Justice set in allowing Charter Communications, another large cable provider, to acquire Time Warner Cable. That merger agreement requires no caps and no usage-based pricing for the first seven years of the deal. It also bars interconnection shenanigans that would throttle competing video providers from providing high-quality streaming services.
Comcast is clearly signaling an intent to roll out data usage caps and overage fees across its entire territory, which should make me irate. But I find myself thinking that this crack in Comcast’s long insistence that it couldn’t allow more usage without suffering from network congestion is a positive sign, and 1 TB is far more reasonable than the data caps the company has implemented in the past.
What a Capper -- Comcast has been imposing and testing data caps for several years. At one point, it was a “soft cap” that, if you crossed more than once or twice, typically led to having your service canceled for a year. There was no appeal, and regulators had no authority. Even in markets in which there’s tight franchise-board control over cable television, ISPs can only be regulated by the FCC, which lacked and still lacks oversight over this sort of customer issue (see “Net Neutrality Controversy Overshadows U.S. Broadband Woes,” 19 February 2015).
In 2008, Comcast rolled out a hard cap of 250 GB per month, even if you paid for its highest-tier 105 Mbps service. I hit this while testing online backup services in 2009. Absurdly, Comcast didn’t provide a tool to show its view of your usage until 2010, provoking questions of accuracy and arbitrariness. In the face of political pressure and intense discussions about net neutrality in 2012, Comcast dropped caps for a time but then started testing overage charges in some parts of the country.
Comcast deployed these tests mostly where it’s the only choice or the only reasonably fast and affordable option. Before 28 April 2016, the limit was 300 GB of combined upstream and downstream usage per month, and a fee of $10 for each 50 GB increment above that. In some areas, you had the option of paying an additional $30 or $35 per month (roughly the cost of basic cable) for unlimited bandwidth.
AT&T has a similar plan in effect, with a variable threshold from 150 GB to 1 TB per month, depending on service levels, the same $10 per 50 GB overage fee, and a recently introduced $30 per month unlimited usage add-on.
TidBITS Managing Editor Josh Centers lives in one of Comcast’s overage-charge regions — they’re mostly in the South (see “Comcast Expanding Data Caps: How You Can Respond,” 10 November 2015). He shifted to Comcast’s business service, which costs more for slower speeds, but has no cap or overage charges — I also used Comcast Business for a few years for the same reason. You have to sign a contract for at least a year, and last time I checked, there was a 75 percent cancellation fee — highly offensive, but again, it doesn’t violate the regulatory rules.
I recently switched to gigabit broadband via CenturyLink, a regional telco that has struggled to stay afloat with landlines and DSL, and is now rolling out fiber as fast it can for a chance at survival. Most fiber-backed service plans — including mine — have no bandwidth limits, though they often have provisos about not running servers or, for consumer tiers, not running a business from those lines. Such terms are typically unenforceable unless you start consuming vast amounts of bandwidth.
I paid about $300 for installation of the service and a “phone line” (provisioned from the same fiber-optic cable coming into my house), with a $100 rebate, which took some prodding to get sent out. Monthly service without any long-term commitment costs $155, including the phone line and unlimited calling. Without the phone line, CenturyLink would have charged me about $185 per month because part of their motivation in pushing fiber is to reduce the cost of maintaining their aging, outdated, and expensive copper wire base.
About a year ago, Comcast responded to the steady increase of fiber-optic broadband service, most notably Google Fiber, by promising it would offer 2 Gbps service to customers inside a third of a mile of its extensive fiber network within a year, and 1 Gbps service to nearly everybody by the end of 2017 through an update to its underlying data-encoding standards. (The company is moving to DOCSIS 3.1.)
Comcast’s promises seemed overly ambitious, but the rollouts have proceeded, another good sign that there’s something like competition going on. The 2 Gbps service reaches 18 million customers (about a third of the 55 million homes and businesses to which it can offer service). It costs $1000 for the installation, the bill is $300 per month, and the service requires a minimum contract of two years. (It likely costs Comcast a few grand to install the line, so a two-year contract is not outlandish.)
Comcast’s 1 Gbps service just launched in Atlanta in March, and has a $500 installation fee and a promotional $70 per-month rate that lasts for the duration of the required three-year initial contract. Comcast says it will cost $130 per month after that.
But here’s the funny part: The fine print says its usage plan still applies in cities in which it’s charging for overages. Comcast may still not understand that when you offer 1 or 2 Gbps, any threshold has to be proportional to the service offered.
Keeping Competitors At Bay -- Comcast insists that data caps are about improving network quality, but in fact, they’re meant to discourage customers from canceling cable TV in favor of streaming services. It appears to have worked, as The Wall Street Journal (paywall) reported just a few days ago about how cord cutters are now hitting usage caps and switching back to cable or changing their viewing behavior when they hit the point at which they’d pay overage fees.
The Comcast corporate blog noted a couple of interesting facts: 99 percent of its customers consume less than a terabyte per month, and its average user transfers only about 60 GB. The Wall Street Journal article got an additional tidbit from Comcast, however, noting that 2 million subscribers exceed 300 GB a month, and commenting that Time Warner Cable’s average use is 141 GB per month and growing 40 percent a year.
Where does that usage come from? Netflix can use 500 Kbps to 5 Mbps of bandwidth for video streaming. Amazon says it needs 900 Kbps to 3.5 Mbps. Hulu cites a need for 1.5 Mbps for standard-definition video (SD) and 3 Mbps for HD.
If you left Netflix streaming at 5 Mbps on a single device 24 hours a day for 30 days, you’d consume roughly 1.6 TB. In a home in which, say, three people watch 40 hours of programming a week in HD — possibly an excessive amount — that would still only be 1.2 TB.
Other users might hit the limit more easily. My colleague Jason Snell, an avid podcaster and podcast-network operator, crosses 1 TB a month due to the large audio files he creates and edits every week, which are in turn synced to a cloud backup service. When I seeded a Backblaze backup after getting gigabit service, I pushed 1.3 TB in a couple of days. I suspect between photo syncing, cloud services, and cloud backups, I regularly use a few hundred gigabytes a month.
But 1 TB is probably an entirely reasonable limit, even for video-intensive households. Comcast is clearly wagering that when it rolls out overage fees nationwide, it will avoid a popular revolt. Based on Comcast’s own numbers, it will charge overage fees to about 200,000 of its 20 million or so customers who are heavy users (above 1 TB) instead of the 10 percent or 2 million above 300 GB today. Paying from $10 to $50 a month extra is significant, but it doesn’t come off as so petty at the 1 TB limit.
The real test will be how Comcast continues to refine this argument over time and whether it increases that 1 TB limit, especially as gigabit services roll out — and as TVs that can show ultra-high-definition (UHD) media continue a slow but steady progression in the home, as people replace dead equipment or choose to upgrade.
Netflix streams UHD at up to 25 Mbps, and you could watch (exclusive of any other usage) 20 hours a week of UHD streaming media without crossing 1 TB. However, in households with multiple TV sets or viewers, and with more displays and content becoming available at higher definition, it’s going to be ever easier to cross that limit, too.
Will Caps Hold? -- Bandwidth caps, thresholds, and overage fees are not necessarily predatory, even in monopoly or duopoly environments. All networks have capacity limits, and if a good percentage of users in any given region were using massive amounts of bandwidth for long periods, it would have a detrimental effect on everyone else on the network.
But that doesn’t seem to be what ISPs are addressing with usage caps. If it were a matter of capacity, Comcast would have gradually increased the amount year over year. My rough calculation of what’s reasonable, based on known costs and Comcast’s reporting of customer behavior, is that customers should be able to transfer about 250 GB per month plus 150 GB per month for each additional 10 Mbps of service. A 25 Mbps Comcast customer would thus end up with a 700 GB cap, while a 150 Mbps customer would have a limit of 2.5 TB. That may still be too low, but it’s least proportionate to the price paid for throughput.
Even there, the trend seems to be moving away from thresholds of any kind. Cablevision competes with Verizon’s FiOS fiber service in several markets and has long argued against caps, which Verizon also eschews for FiOS. (That extends beyond competitive areas, but they have a significant overlap.) Likewise, as noted above, Charter will accept a no-cap/no-usage-fee limit for seven years to acquire Time Warner Cable.
AT&T and Comcast seem more like outliers now, even with this latest change, which makes Comcast’s continued expansion in owning media more interesting. It has owned NBCUniversal for years, which includes a ton of production companies and many cable channels. And NBCUniversal just bought the animation studio DreamWorks.
We’ve all been waiting for pay TV to both implode and explode simultaneously, where the large packages of channels offered mostly via cable and satellite are sold a la carte and in bundles over the Internet. This started to happen a couple of years ago, accelerated in 2015, and the trend seems more supercharged than ever. AT&T said in March that it would start to compete with Dish Network’s Sling TV later this year.
Maybe caps are disappearing and thresholds are loosening because cable and telephone companies have figured out how to shift their businesses to this new model. They’re staking out territory even as they appear to be more friendly to the competition. Whatever the reason, we’ll benefit in the short run.