Light Reading

Comcast Turns On Usage-Based Broadband

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

Comcast Corp. (Nasdaq: CMCSA, CMCSK) has picked Nashville, Tenn., as the first city to try out a new broadband usage policy that will charge customers $10 for each bucket of 50 gigabytes that they consume above a monthly 300GB threshold.

The new policy takes effect there on Wednesday, Aug. 1. According to a Q&A about the new policy, Comcast won't bill customers the first three times they exceed the monthly 300GB allowance during a 12-month period. Following that "courtesy period," customers will get charged if they bust through the cap.

They will then be allocated another bucket of 50GB and will be alerted to the fact by email and an in-browser notice. Comcast will do the same when users approach both 90 percent and 100 percent of their monthly data allowance.

The debut of the policy comes more than two months after Comcast announced it would raise its monthly broadband usage cap from 250GB to at least 300GB for all its cable modem tiers and would start to try out a usage-based, metered model that would charge fees when customers exceeded the limit.

At the time, Comcast had also discussed plans to introduce a different kind of test that would start with a 300GB cap for its lower-level service tiers and then raise that data consumption ceiling for its higher-end tiers (its fastest service now maxes out at 305Mbit/s down by 65Mbit/s upstream). As it's gotten ready for these tests, Comcast has chucked its old 250GB "excessive use" policy, which took effect in the fall of 2008 and did not charge extra when users exceeded the cap. (See Comcast Draws the Line at 250GB and Comcast Revs Up Pricey 305-Meg Tier.)

Comcast didn't say when or where it will next test its usage-based broadband policies, but company EVP and GM of Communications and Data Services Cathy Avgiris noted in mid-May that the plan is to "pilot at least two approaches" in different markets over the next few months.

Why this matters
The Nashville launch marks Comcast's first policy to combine a broadband cap with overage fees, and follows similar policies being tested or deployed by other U.S. broadband ISPs, including Time Warner Cable Inc. (NYSE: TWC), Suddenlink Communications and AT&T Inc. (NYSE: T). With Comcast now moving ahead, it's likely that other major U.S. cable operators may begin to introduce similar policies that aim to keep bandwidth hogs in check.

Usage-based broadband policies are allowed by the Federal Communications Commission (FCC) 's network neutrality rules, though they have become the subject of complaints from over-the-top video services that believe broadband meters and caps put them at a disadvantage. Netflix Inc. (Nasdaq: NFLX), meanwhile, has whined that Comcast's Xfinity TV app for the Xbox 360 game console does not count against a user's cap.

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— Jeff Baumgartner, Site Editor, Light Reading Cable

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Jeff Baumgartner
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 5:25:36 PM
re: Comcast Turns On Usage-Based Broadband

Although other US cable operators may join the usage-based broadband party now that Comcast is moving forward, I don't expect Verizon to  change its policies for FiOS, if it's smart, that is.  Comcast and FiOS are matching up on speed with their fastest tiers and it's probably a matter of time when they will do so on price too. But if I'm VZ, I'm keeping FiOS cap-free, since it offers the kind of differentiator that customers, particularly heavy users, can understand. Google was also smart to keep meters and caps off the table as it gets its fiber products rolling in the Kansas Cities. JB

User Rank: Light Beer
12/5/2012 | 5:25:31 PM
re: Comcast Turns On Usage-Based Broadband

Maybe it's time for an OISP in Occupy ISPs. Any idea if other advanced economies (S. Korea, Japan, W. Europe) also have caps or are considering them?

User Rank: Light Beer
12/5/2012 | 5:25:20 PM
re: Comcast Turns On Usage-Based Broadband

By this logic, Sprint should be materially outpacing ATT and VZ on wireless net adds with their unlimited wireless data plans.  Hasn't happened.  And the heaviest users are  the least profitable customers to have if you assume that revenue is the same for a heavy user vs. "typical" user - so ISPs may be glad to let their competition attract the least profitable customers with unlimited data plans. 

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