Usage-Based Broadband Picks Up More Steam
Broadband data policies that place a soft cap on monthly usage and charge more for additional buckets of data are rapidly becoming the norm among the nation’s Internet-service providers.
Such policies are now commercially deployed by Suddenlink (now part of Altice USA), Mediacom Communications and AT&T, as well as smaller service providers such as GCI. Meanwhile, Comcast continues to expand its usage-based trials, while CenturyLink is slated to start kicking the tires on a new broadband data policy later this week.
Comcast, the nation’s largest cable operator, confirmed that it recently notified customers in the Chicago market area that the MSO’s data plan trial will get underway Aug. 1. When that trial launches, it will become the largest market in Comcast’s footprint so far to test the MSO’s new policy. In addition to greater Chicago, Comcast is also poised to test usage-based policies in Quincy and Rockford, Ill., and in its Northern Indiana systems, also starting Aug. 1.
Comcast introduced a 1-TB plan in April, replacing a 300- GB plan it had been implementing in most of its trial markets.
If customers exceed the 1-TB limit, they have the option to purchase additional buckets of 50 GBs of data for $10 each (up to a maximum of $200), or move to a new unlimited data plan that runs an additional $50 per month.
Comcast has not announced if or when it will expand the policy to all markets. In addition to the new markets coming online Aug. 1, other trial markets include Huntsville, Mobile and Tuscaloosa, Ala.; Tucson, Ariz.; Little Rock, Ark.; Fort Lauderdale, the Keys and Miami, Fla.; Atlanta, Augusta and Savannah, Ga.; Central Kentucky; Houma, LaPlace and Shreveport, La.; Maine; Jackson and Tupelo, Miss.; Chattanooga, Greeneville, Johnson City/Gray, Knoxville, Memphis and Nashville, Tenn.; Charleston, S.C.; and Galax, Va.
Reed Hastings, the CEO of Netflix, the OTT giant and critic of usage-based policies, praised Comcast when it announced the new 1-TB plan, tweeting: “Huge for me as a Comcast customer. Now I’ll never be able to watch enough to hit my cap.”
Perhaps not too coincidentally, Comcast and Netflix announced a deal a few weeks later that calls for the MSO to integrate Netflix on Comcast’s X1 platform sometime this year.
GCI, the Alaska-based operator, also made some waves last week, announcing that it had raised the monthly limit of “Red,” its 1 Gigabit-per-second residential cable modem service, from 750 GBs to 1 TB. Customers on Red, which is paired with an upstream that maxes out at 50 Mbps, have the option to purchase additional 30-GB buckets of data for $10 when they exceed their monthly limit.
But GCI has added a different twist to the usage-based approach. Under a “No Worries” option launched in January 2015, customers can buy additional buckets of data, upgrade to a different plan, or shift temporarily to a “basic” level of service of less than 1 Mbps with no overages.
CenturyLink is the latest provider to jump on the usage-based bandwagon. It confirmed last week that it will launch a usage-based billing trial in Yakima, Wash., on Tuesday (July 26) that will charge $10 for a bucket of 50 GBs of data (up to a maximum of $50) when customers exceed their monthly limit.
Under the trial, subscribers of service plans with speeds up to 7 Mbps can consume up to 300 GBs per month, while those that have speeds of more than 7 Mbps will be capped at 600 GBs before the usage-based policy is applied.
CenturyLink has not announced the length of the Yakima trial or when it might look to expand it to other markets. “CenturyLink will analyze the data from this trial to determine next steps and make decisions regarding further rollout of usage-based billing,” a company official said.
Though usage-based broadband policies and overage charges are increasingly becoming part of ISP strategies, critics of them maintain that they are in place to increase revenue while keeping OTT video competition in check.
For its part, Comcast has argued that its trials “are based on principles of flexibility and fairness” and that more than 99% of its high-speed Internet subscribers don’t come within a whiff of using a terabyte.
One MSO that will be sitting on the sidelines with regard to usage-based broadband pricing for the foreseeable future is Charter Communications. Charter, per a condition of its acquisitions of Time Warner Cable and Bright House Networks, is prohibited from imposing data caps or implementing usage-based polices for a period of seven years.
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