AT&T Moves to Tiered Pricing for Broadband
It begins:
Starting May 2, AT&T will begin implementing monthly usage limits for its U-Verse and DSL users and charge $10 fees every time a customer exceeds the cap.
According to Broadband Reports, DSL customers will have a 150GB monthly usage limit, while U-Verse subscribers will get 250GB. AT&T will impose the $10 fee for every 50GB over the limit a customer uses.
This is a pretty large cap, but it’s clearly designed to profit from high-bandwidth users. There’s nothing inherently wrong with charging bandwidth hogs for their capacity; plenty of businesses charge on such a consumption model. The issue comes when this directly affects the ability of video-streaming sites like Netflix to carry out their business model, because of the cost-prohibitive nature of the service for individual users. Just three hours of HD video on Netflix would wipe out the entire 150GB monthly limit, for example. And at that point, AT&T comes back to those who want to watch movies on the Web with their own proprietary service. Before long, companies who want to deliver high-quality broadband video to audiences who want it will see their business models shattered and will be forced to close their doors. And only AT&T and its telecom friends will be around. You don’t have to precisely discriminate against competing sites to practice discrimination.
AT&T is likely to get away with tiered pricing; it’s allowed for in the fake net neutrality rules put out by the FCC, as far as I can tell, and the last time they tried this, consumer complaints succeeded only on the grounds of false advertising, that they were promised unlimited usage. Comcast already has usage fees.
Critics denounced the move:
S. Derek Turner, research director at media reform group Free Press, called AT&T’s most recent venture “a poor solution to an unproven problem.” The move will have “a chilling effect on economic growth and innovation online,” Turner said. “When ISPs force their customers to watch the meter, experimentation, innovation and business will suffer.” Turner also said that AT&T’s overage plan is punitive considering it “bears no discernible relation to underlying costs, which are estimated to be mere pennies per gigabyte.”
Rep. Edward Markey (D-Massachusetts) also expressed his worry over the potential repercussions of AT&T’s usage caps. “I am concerned that charging more for increased usage would raise prices for some consumers and potentially lead to lower broadband adoption levels,” Markey told The Hill. “This would undermine our broadband goals as outlined in the National Broadband Plan while undercutting our global competitiveness, and I will be closely monitoring this decision.”
Come back to the Internet in about five years and see how it’s “progressed.” My guess would be, not far.
AT&T Moves to Tiered Pricing for Broadband
It begins:
Starting May 2, AT&T will begin implementing monthly usage limits for its U-Verse and DSL users and charge $10 fees every time a customer exceeds the cap.
According to Broadband Reports, DSL customers will have a 150GB monthly usage limit, while U-Verse subscribers will get 250GB. AT&T will impose the $10 fee for every 50GB over the limit a customer uses.
This is a pretty large cap, but it’s clearly designed to profit from high-bandwidth users. There’s nothing inherently wrong with charging bandwidth hogs for their capacity; plenty of businesses charge on such a consumption model. The issue comes when this directly affects the ability of video-streaming sites like Netflix to carry out their business model, because of the cost-prohibitive nature of the service for individual users. Just three hours of HD video on Netflix would wipe out the entire 150GB monthly limit, for example. And at that point, AT&T comes back to those who want to watch movies on the Web with their own proprietary service. Before long, companies who want to deliver high-quality broadband video to audiences who want it will see their business models shattered and will be forced to close their doors. And only AT&T and its telecom friends will be around. You don’t have to precisely discriminate against competing sites to practice discrimination.
AT&T is likely to get away with tiered pricing; it’s allowed for in the fake net neutrality rules put out by the FCC, as far as I can tell, and the last time they tried this, consumer complaints succeeded only on the grounds of false advertising, that they were promised unlimited usage. Comcast already has usage fees.
Critics denounced the move:
S. Derek Turner, research director at media reform group Free Press, called AT&T’s most recent venture “a poor solution to an unproven problem.” The move will have “a chilling effect on economic growth and innovation online,” Turner said. “When ISPs force their customers to watch the meter, experimentation, innovation and business will suffer.” Turner also said that AT&T’s overage plan is punitive considering it “bears no discernible relation to underlying costs, which are estimated to be mere pennies per gigabyte.”
Rep. Edward Markey (D-Massachusetts) also expressed his worry over the potential repercussions of AT&T’s usage caps. “I am concerned that charging more for increased usage would raise prices for some consumers and potentially lead to lower broadband adoption levels,” Markey told The Hill. “This would undermine our broadband goals as outlined in the National Broadband Plan while undercutting our global competitiveness, and I will be closely monitoring this decision.”
Come back to the Internet in about five years and see how it’s “progressed.” My guess would be, not far.
