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For more than two years, Comcast has been testing data caps — sorry, “data thresholds” — in various markets around the country. With the possibility of this usage-based pricing model being rolled out on a nationwide basis, a new report claims that the FCC could use its new authority to scrutinize the data limitations.
This is according to Stop The Cap, which cites anonymous D.C. sources as saying that the FCC is ready to put data caps under the regulatory microscope.
Comcast began the program slowly in 2012, eliminating its practice of throttling heavy data users after they surpassed 250GB of data in a month. Rather than slow down access for these customers, Comcast now offers them the chance to pay for additional bundles of gigabytes at the same speed.
The program expanded in 2013, but has yet to be rolled out to all 22 million of Comcast’s broadband customers. Of course, Comcast did spend more than a year trying to acquire Time Warner Cable. A mass expansion of the data cap program would have likely resulted in more negative press for Comcast during that time.
“Two-and-a-half years is exceptionally long for a ‘market trial,’” explains the source in the Stop The Cap report, “and we expected Comcast would avoid creating an issue for regulators by drawing attention to the data cap issue during its attempted merger with Time Warner Cable.”
But with that merger dead at the starting gate, the source says Comcast may finally be ready to flip the switch that would bring the data cap program to most of its customers.
Critics of data caps, including Consumerist, have pointed out the inherent dueling interests of having pay-TV providers also being the primary providers of Internet service for most consumers. As streaming video services grow in popularity, traditional pay-TV declines. And while a consumer might sign up for multiple streaming services, the cable company is still only being paid the same rate for Internet access.
Some providers have realized there is money to be made in joining the cord-cutting party. Cablevision, for example, now allows its broadband subscribers to order HBO Now and Hulu Plus through Cablevision. To the consumer, it consolidates their monthly payments while allowing Cablevision to get a piece of those streaming subscriptions.
The other approach is to make these services less attractive to broadband users by limiting the amount of data customers can access each month. And even if the data thresholds don’t do anything to curb usage, the overage fees guarantee that Comcast is going to get paid by its most voracious users.
Some proponents of data caps have claimed they are put in place to relieve network congestion, but former FCC Chair Michael Powell — who is now the head of the National Cable & Telecommunications Association — undermined his industry’s own arguments when he said in 2013 that data caps aren’t about congestion but about “how to fairly monetize a high fixed cost.”
And recent studies call this “high fixed cost” claim into question, pointing out that it’s getting increasingly cheaper to transmit and store data.
As Stop The Cap notes, customers of Comcast’s new super-fast fiber network will not face data caps. Meanwhile, because this new network would allow them to stream multiple high-quality video feeds simultaneously, these are the users who are most likely to devour hundreds of gigabytes of data.
To date, the Federal Communications Commission has left the issue of data caps and usage-based billing on the back burner, despite a Government Accounting Office report that found little justification for usage limits or compulsory usage allowances on broadband.
The FCC has been hands-off about data caps and tiered pricing. In 2012, then-chairman Julius Genachowski claimed that tiered pricing would result in savings for light broadband users. However, the few plans that have offered discounts to users with limited access have been remarkably anti-consumer.
For instance, there is Comcast’s “Flexible Data” option that gave users a whopping $5 off their bills if they were willing to limit themselves to using only 5% of what they would get at full price. Time Warner Cable offered a similar program called Essentials that targeted people who can’t do basic math.
“We don’t see much innovation coming from Comcast’s usage limit trials because Internet pricing continues to rise and the plans have the side effect of discouraging customers from using competing video providers, which can consume a lot of a customer’s usage allowance,” says Stop The Cap’s source, who claims that, because broadband has been redefined to give the FCC more regulatory authority, the Commission could start asking questions about Comcast’s data caps.
“An operator the size of Comcast absolutely will draw scrutiny,” says the source. “If Comcast decides to impose its currently tested market trial plans on Comcast customers nationwide, the FCC will take a closer look.”
The idea, says Stop The Cap, is that Comcast could possibly be using mandatory data caps to limit customers’ access to competing video services. That may be in violation of net neutrality guidelines about blocking legal access to websites and online services.
Just because the FCC may look into the issue doesn’t mean that a cable company or ISP is in violation of a rule. The Commission will likely find itself reviewing a number of matters in the near future in an effort to clarify the real-world applications of the new neutrality guidelines and the FCC’s increased authority over broadband services.
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