AT&T to impose data caps on broadband users
March 14, 2011 - Openet
The meter is running on Internet service.
AT&T Inc. confirmed Monday that starting May 2, it will impose a monthly data cap of 150 gigabytes on users of its DSL broadband service. Subscribers to its U-Verse service get 250GB a month. Consumers who go over this limit three times will be charged $10 for every 50 additional gigabytes of usage.
The new data caps represent the latest move by an industry grappling with unabated and significant increases in bandwidth usage, fueled by online video consumption. According to the latest data from the Nielsen Co., U.S. viewers spent nearly 45 percent more time watching online videos in January than a year earlier.
AT&T, like other service providers that have experimented with or imposed data caps, emphasized that less than 2 percent of its Internet customer base, or "those who are using a disproportionate amount of bandwidth," would be affected. The vast majority of subscribers won't come close to 150GB per month with typical e-mailing, Web surfing and casual video watching.
But the growth trends are concerning. An October report by Sandvine, a Canadian technology company that helps service providers manage their networks, said that Netflix streaming accounts for more than 20 percent of downstream traffic in the U.S. during peak hours. Fixed broadband providers want to avoid the same network congestion issues that took mobile phone operators by surprise after the introduction of Apple's iPhone.
"What's happening is the operators are learning from that experience and saying, 'We can't afford to be reactive anymore. We have to get in front of this wave of traffic that's going to occur,'" said Mike Manzo, chief marketing officer of Openet, a maker of software for service providers.
The problem is that any change to the unlimited, surf-as-much-as-you-want model causes consumers to balk, even if most of them are considered non-excessive users. Phillip Dampier, editor of Stop the Cap, said he views data limitations and similar measures as ways for companies to squeeze more money from consumers and control how they use their Web access.
Dampier said he doesn't see why operators need to tamper with their traditional model of tiered pricing by speeds.
"Those heavy users that they're complaining about are the same people who want the fastest possible speeds and will upgrade to them as soon as they're available," Dampier said.
Another issue consumers have with data caps is that most of them have no idea what a gigabyte of usage means. AT&T said it "will communicate early and often" with the heaviest users so they're warned before going over their monthly data limit.
Comcast Corp., which put a 250GB monthly cap in place in October 2008, lets customers check their usage levels online. The operator also said its median customer usage ranges from 4 to 6GB per month, with fewer than 1 percent of customers hitting the 250GB level.
Mike Paxton, principal analyst for digital entertainment at In-Stat, said he estimates that reaching AT&T's 150GB monthly cap would require watching four hours of high-definition video or eight hours of standard-definition video per day.
"The people that are going to be impacted by this are such a small segment of the population," Paxton said. "It becomes a public relations challenge for the service providers, and in this case for AT&T, to make it seem palatable to some people who think it's the end of times."