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David Salway

42 Million Subscribers Now Face Broadband Usage Caps

By May 3, 2011

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nullAT&T is trying to rein in heavy data usageby imposingfees on users who consume high volumes of data. The cap will affectmore than 16 million AT&T broadbandusers. AT&T now limitsDSL users to 150 GB, and U-Verse users to 250 GB. Exceeding those limits will incur a$10 per month fee,which buys an additional 50GB of data.When Comcast imposed similar limits of their broadband service, they claimed only 1% ofusers were affected; AT&T says 2% of their customer base will be affected.

With AT&T now capping broadband usage, more than half of all broadband users will now face some sort of limit- bringing the days of unlimited Internet usage to an end. Even though the data caps are high - intensive bandwidth applications, and the increasing use of video streaming and online gaming is sure to increase usage requirments.

As users are increasingly using the Internet to watch feature length movies and television shows, demand for bandwidth - and lots of it - will continue to increase. Although the rush to impose caps is seemingly to reduce costs, the costs of providing bandwidth is estimated to be verylow, compared tobroadband revenues. Time Warner Cable reported $1.13 billion in revenues, and $36 million inbandwidth expenses. The company received atremendous amount of backlash while imposing bandwidth caps in 2009, and currently does not cap usage.

As the net neutrality debate continues in Washington DC, broadband providers will continue to find ways to increase profits, while controlling the amount of traffic they allow on their networks. Comcast faced the wrath of the FCCwhen they tried toblock certain traffic frompassing over their networks. As of now, the FCChas not objected to usage caps, or excess usage fees, although consumer groups have. Still to be determined is the effect, if any, the usage caps will have on the AT&T acquisition of T-Mobile, or the recent promotions of AT&T's U-verse service.
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