The writing has pretty clearly been on the wall as Comcast slowly but surely has expanded their usage-cap trials throughout less competitive Southern markets
. Speaking at the MoffettNathanson Media & Communications Summit today in New York City (see transcript
via Fierce Cable
), top Comcast lobbyist David Cohen was asked whether or not he sees a future where users only have a choice of capped plans.
With a merger on the line, Cohen chose his words very carefully, responding to a rather dancing, ambiguous question by industry analyst Craig Moffett (long an avid supporter of usage caps
, and, apparently, "variabilization") with some dancing ambiguity of his own:
Moffett: Bottom line is, 5 years, 10 years from now, do you think that we will be in a model where the Internet is fully variablized, or usage is fully variablized, or at least variablized to the extent that most people are selecting from a reasonably large number of usage plans that match their usage to their price?
Cohen: I actually think the answer to that is, no. I would say, if you made me predict today, and I don't want to get myself in any trouble, if you made me predict today, I would predict that in 5 years Comcast at least would have a usage-based billing model rolled out across its footprint.
But I would also predict that the vast majority of our customers would never be caught in the buying the additional buckets of usage, that we will always want to set the basic level of usage at a sufficiently high level that the vast majority of our customers are not implicated by the usage-based billing plan. And that number may be 350 -- that may be 350 gig a month today, it might be 500 gig a month in five years, but it will never -- I don't think we will want to be in a model where it is fully variablized and 80% of our customers are implicated by usage-based billing and are all buying different packets of usage.
In other words, Comcast plans to eventually to cap everyone (it's amusing to watch Cohen pretend he's not sure of this). But worry not -- a lobbyist paid to see the bright side has faith that his company will set the base cap high enough so that most people will not be impacted. Again, Cohen's trying to get a $45 billion merger approved, so everything that comes out of his mouth needs to be taken with an even a larger grain of salt than usual.
In Comcast trial markets, users pay the same price users in unlimited markets pay, except they get a 300 GB cap, and have to pay $10 for every 50 GB beyond that they travel. Comcast also copied a Time Warner Cable offer that provides a $5 monthly discount off a user's bill -- if they agree to a 5 GB per month usage cap with $1 per GB overages.
Time Warner Cable is on record saying the 5 GB cap offer isn't very popular
. That goes without saying, as the value of a $5 discount evaporates immediately upon any meaningful usage of the line. Cohen admits that "not a lot of customers" are taking the 5 GB option, but he insists that "having the choice is something that is attractive to them." It should be noted that customers in capped Comcast markets don't have the choice of an unlimited tier.
Cohen also made it clear that Comcast is very aware of the negative public sentiment that surrounds usage caps, which is why the company is proceeding so cautiously with their cap and overage ambitions.
"We are trying to go slowly here because we have no desire to blow up our high-speed data business," stated Cohen. "And notwithstanding what some people say, we feel competition in our high-speed data business across our entire footprint."
Granted any competition Comcast currently "feels" (and that's debatable) is going to shrink substantially as AT&T and Verizon back away from DSL markets they don't want to upgrade
, opening the door for broader implementation of usage caps without repercussion. The water temperature in the boiling frog anecdote
was raised slowly too, though that didn't prove to be of much benefit to the frog.
We don't want to chase our customers away, so we are rolling out different models, different approaches.
"We don't want to chase our customers away, so we are rolling out different models, different approaches," stated Cohen. "We are surveying our customers."
Except there really isn't much to survey. As the Time Warner Cable kerfuffle of 2009 made clear
, consumers have stated time and time again that they prefer the simplicity of flat rate, unlimited data. Some users might like actually pay-per-byte plans -- but that's not what carriers are offering here, despite Cohen's claim that "people who use more should pay more and people who use less should pay less."
What companies like Comcast are doing is simply taking current, already-expensive flat-rate plans and pricing -- and affixing usage caps and overage fees on them, making existing product immeasurably more expensive. Under that model, everybody pays more -- no matter what
. The industry claims they're just "experimenting" with "creative pricing," but the end result is usually just a rate hike wearing lipstick and a dress.
I've illustrated time and time again how usage-caps on modern, well-run networks simply aren't necessary. Full stop. Flat rate broadband is perfectly profitable as any earnings report can attest, and even the cable industry itself was ultimately forced to admit congestion isn't an issue
. Cable operators are employing caps for one reason: to cash in on and hinder the single, biggest future threat to their TV revenues: Internet video.