March 15, 2011
Some Thoughts on Data Caps
AT&T announced yesterday that it would impose data caps on its home DSL subscribers. Those who use its U-verse service would have a limit of 250 GB and those subscribers with simple DSL access would have a limit of 150 GB. In a nod to customer care, AT&T stated it would charge $10 per additional 50 GB only after three months of exceeding the cap. The company intends to send out emails or other notifiers to customers informing them of their usage. In contrast, Comcast has a cap of 250 GB, but also can deliver much higher connection speeds than DSL.
It all sounds perfectly reasonable on its face. After all, the company says, it will only affect about 2% of its subscriber base. All right, what kind of usage would regularly fill up the tubes? How about video and audio, and I'm not even thinking of the pirated kind. The trend to moving to a streaming or cloud-based ecosystem will impact subscription costs in the long run. Netflix is so convenient that it's being built into digital televisions and media players. So much so that the business model likely drove Blockbuster into bankruptcy. While it's not a great concern now, the more people rely on Netflix, YouTube, Hulu, and any other video on demand service, the more data they will consume, and the more charges they will rack up. Oh, and did I mention that any competing video service from AT&T is exempt from the cap? So, apparently, there is a consumer alternative when the same content is available from an AT&T source.
I'm not suggesting that anyone be outraged by this. The recently enacted FCC rules on net neutrality do not explicitly forbid this development. Data caps are content neutral, after all, and a network management device used to relieve system congestion, we're told. But I wonder if the antitrust laws may spark an investigation or two. Consider the noises the European Union is making over complaints that Google favors its own content over its competitors in search results. Congress is getting involved as well with Senator Michael Lee (R-UT) calling for hearings on Google. I would think that consumers would find it easier to abandon Google than it would be to ditch AT&T for another Internet service provider. The choices are exactly what? The cable alternative and wireless. The latter is not a viable replacement for desktop service as the data caps imposed there from all providers are pretty severe for easy media consumption.
I don't know how this will all play out. I see one company under fire for favoring its own, and another so far not so much. Rep. Edward Markey is (predictably) critical, but he is part of the minority in the House, so don't expect much beyond talk. Feel free to enjoy media, especially on the AT&T network. It only adds to the bottom line. Consumers, make your adjustments. Marketers, start jumping on the bandwagon. Welcome to the two tiered Internet they warned us about. [MG]