The nation's three largest ISPs have started either testing or implementing caps and overage fees, not coincidentally as their cable TV offerings are being threatened by pesky Internet upstarts. Convincing customers that already very profitable companies need to completely revamp the US broadband pricing model is a tall order, so ISP marketing departments are using some ridiculous measurement criteria to suggest paltry caps are reasonable -- just as we enter the era of HD Internet video.
When Rogers recently began charging overages, they sent out an e-mail informing customers, with pictures
, that their new caps allowed 6,291,456 e-mails and 1,572,864 page views. Time Warner Cable's website
sells customers on their low caps by suggesting that a 1GB limit gets you "70,000 e-mails, 34 hours of gaming or 1,344 hours of Web browsing." This week finds AT&T highlighting their generosity to the San Francisco Chronicle
by noting their cap allows users to receive "75 million e-mails" or "60,000 high-resolution graphics or pictures."
Those would all be relevant measurement criteria, were we all idiots. However in 2008, several of these low caps being proposed allow customers to view only a handful of HD films on tiers that still wind up costing nearly $40 per month. An entire home's worth of heavy gamers and TV watchers will
find themselves bumping into many of these proposed caps. Measuring caps in e-mail is not only idiotic, it's insulting.
AT&T is successfully convincing papers like the Chronicle that these caps are to protect ISPs against heavy users without a shred of real data. That's right, ISPs offer no raw data to prove congestion makes such a move necessary, nor do reporters ask for it. Consumers are supposed to believe, on faith, that instead of targeting just
the heaviest users (who the ISPs admit make up a miniscule minority of their base) and pushing them onto business tiers, everyone must trade in their unlimited service for strict limitations. It makes absolutely no sense.
Additional bandwidth costs a large carrier like AT&T between five and ten cents a gigabyte. Charging 10 times as much is information superhighway robbery.
-Analyst Dave Burstein
Well, at least for consumers. It makes perfect sense if you're an investor or exec whose job it is to think that already immense profits under a flat-rate pricing system just aren't good enough. At least until you realize that unless the entire industry moves to caps and overages en masse, you're driving customers to any uncapped competitors. It creates a new market differentiator for your competition -- a real advantage in a market now driven by long-term retention.
Back to the caps, were they really
aimed at gluttony, AT&T would simply follow Comcast's lead and implement a cap (in Comcast's case 250GB) that really only targets these problem consumers. Instead, AT&T is considering low caps on many of their slowest tiers
. That's not taking aim at gluttons to protect the network, it's taking aim at average American networked households. More specifically, it's both monetizing and deterring use of content that competes with AT&T's own offerings like U-Verse TV
, which won't count against your cap.
Unfortunately for consumers, overage fees will probably become mainstream before writers and consumers figure out they're being conned. Many engineers repeatedly note that the bandwidth apocalypse carriers claim they're facing is a manufactured crisis
, but they're frequently not heard over the din of ISP lobbyists, execs, investors or the uncritical reporters who parrot them. Meanwhile, P2P use on AT&T's network is actually dropping
. As long-time industry analyst Dave Burstein notes
this week, greed is AT&T's one and only motivation here:
AT&T has limited Internet usage to about 90 minutes a day (7%) and is marking up anything over that by 1,000 to 2,000%. There is no economic or technical reason for this. The difference in cost between capped and unlimited service to a DSL carrier is a few dimes at most, possibly only pennies. AT&T's bandwidth cost has been going down for several years, and they have plenty of capacity to handle any likely load. Additional bandwidth costs a large carrier like AT&T between five and ten cents a gigabyte. Charging 10 times as much is information superhighway robbery.
But by suggesting they're facing a non-existent crisis
, and soothing consumers into thinking a 20GB cap will never impact them (after all, that's fourteen billion
Facebook status updates), these ISPs are paving the way for a particularly ugly future. One where consumers are not only paying immensely more money for the same service, but one where carriers are able to ration your consumption of content they otherwise wouldn't profit from.