Comcast To Move To Usage-Based Billing Instead Of Caps?
Data usage caps are something that many people are familiar with by now, as cellular carriers are instituting tiered plans to replace “unlimited” plans. Even Verizon wireless is going to do it, regardless of whether you are grandfathered into an unlimited data plan or not (details here). Comcast, one of the largest Internet Service Providers in America, has had customers under data caps in many of their markets for quite a while, but it looks as if things could be changing soon for Comcast customers.
Comcast Corp said on Thursday it will introduce a trial for usage-based billing for its Internet subscribers in a move seen to pre-empt more complaints the cable company favors its own Web video service over rivals. (via Reuters)
The plan is to employ a pricing structure for data consumption based on the amount of data the consumer uses. The more the customer uses the service, the higher the bill could potentially become. The usage-based pricing would allow the company to charge it’s customers similar to energy companies, with a utility meter, rather than paying flat rates for the service. Many Comcast customers experience a flat-rate for their service, with a data cap of 250GB each month.
That’s a lot of data, even for some reasonable busy users. It would never fly with my usage, simply because my home features a level of usage well above that of a typical customer. The speed we pay for is also substantially higher than the average consumer needs (20Mb/s down, 3Mb/s up).
Comcast, the number one residential ISP in the United States, will be raising it’s caps for those who are part of this usage trial, which is a rather large bump. Much like AT&T claimed when they switched to tiered pricing. Their terms on throttling their unlimited data users discloses even more information on their data management policies for consumers. Unlimited data consumption for a set rate is quickly becoming a thing of the past, and the land of the free is about to experience a whole lot of restrictions on their paid services.
What’s Comcast’s motivation for doing this? Well, the company claims this will save many consumers a lot of money overall, since they are never really reaching their data cap as it is. Others claim this is just another way to complicate the billing structure for favorable financial results for Comcast. One such favorable results, as Netflix Chief Executive Officer Reed Hastings pointed out, is how third-party video streaming services instantly become less attractive. This isn’t even due to the data-limitation, but rather, the exclusion of data penalties for Comcast’s new Xfinitiy TV video streaming service on gaming consoles. When Comcast customers use third-party services such as Netflix or Hulu, their data usage from those streaming services count towards their data cap. The same is true for online gaming services such as Xbox Live or the Playstation Network.
However, users who decide to use Comcast’s Xfinity TV applications will not have any data usage from the video streaming service count towards their data cap. Users who find themselves approaching their limits (which can happen often with streaming services) may find Xfinity a much more attractive deal, especially once a usage-based system is in place. Netflix will end up costing a lot more than Xfinity because of the data usage, and many believe this is an anticompetitive measure. Comcast, of course, denies. Executives on a conference call claim the changes are being put in place to adapt to a changing marketplace and technology. Comcast senior vice president David Cohen said the decision had nothing to do with Netflix or Xfinity.
Still many, myself included, feel that such a move would give Comcast a big advantage in competition to other streaming providers, a marketplace that’s only looking to grow rapidly from this point into the foreseeable future.
“The notion Comcast would charge an exorbitant rate for additional bandwidth — while continuing to exempt its own traffic under its Xbox deal — illustrates Comcast is really trying to discourage subscribers from experimenting with online video alternatives” – Joel Kelsey of Free Press, an advocacy group. (via Reuters)
The big question here, regardless of the reasons behind such a change, is how it will affect the consumers in the marketplace, and the actions of their competition. Most likely, many customers are likely to see lower bills in the mail, as their lower usage habits will end up creating a lower bill. Others, such as myself, will find themselves either changing their habits (which is sorta the point), or will be paying much higher bills as a result.
Are we really seeing the end of flat-rate/unlimited usage pricing structures here? Do you believe this is a good thing, or a bad thing for consumers looking to save money on today’s most in-demand services? Let us know in the comments below.