AT&T to Fit Subs With Broadband Caps

LR Cable News Analysis Jeff Baumgartner, Senior Editor, Light Reading 3/14/2011

AT&T Inc. (NYSE: T) is following in the footsteps of some of its cable competitors by installing monthly broadband consumption caps designed to keep bandwidth hogs in check.

AT&T will impose a new, monthly 150GB cap on all DSL customers and a 250GB cap on all U-verse subscribers starting May 2. AT&T will be alerting customers of the new terms of service between March 18 and March 31, according to DSL Reports.

AT&T is also looking to impose penalty charges on customers who regularly exceed the cap, but is stopping short of implementing a full metering policy on broadband services. The carrier will reportedly charge US$10 for every 50GB above the usage threshold, but has inserted a grace period of sorts as it will only ding customers if they exceed the new caps three times. As it does for wireless plans, the carrier will also tell customers when they reach 65 percent, 90 percent and 100 percent of their monthly allowance.

Instead of going with a tightly integrated usage-based billing model that has taken root in Canada but has historically been the cause of political and consumer firestorms in the US, AT&T is borrowing a page from some MSOs by going with a large consumption cap. Comcast Corp. (Nasdaq: CMCSA, CMCSK), for example, implemented a monthly 250GB cap on "excessive use" in October 2008, but doesn't charge customers for exceeding it. (See Comcast Draws the Line at 250GB.)

AT&T was not immediately available for additional comment.

Why this matters
The concept of metered billing in the U.S. has grown hot again following a new set of Federal Communications Commission (FCC) network neutrality rules that, some fear, could open the door to by-the-byte billing policies. Those rules may not stick, however, after a House panel voted for a bill to block them last week. (See Net Neutrality Rules in Jeopardy, The FCC Strikes Back, FCC Votes to Approve Net Neutrality Rules and Verizon Fights Net Neutrality Order.)

AT&T is clearly taking baby steps into the world of consumption caps and metered billing. It, along with Time Warner Cable Inc. (NYSE: TWC), used Beaumont, Texas, as a proving ground for metered, usage-based billing on broadband services, but pulled them back amid a highly publicized backlash. At the time, AT&T was testing out a 20GB cap on its low-end DSL package and a 150GB cap for its fastest offering, and then billing $1 for every GB consumed beyond the threshold.

For more
For more about the turbulent history of consumption caps and usage-based billing, please check out these stories:

— Jeff Baumgartner, Site Editor, Light Reading Cable