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Behind Comcast’s New Data Cap

CREDIT: JEFF FUSCO/AP IMAGES FOR COMCAST
CREDIT: JEFF FUSCO/AP IMAGES FOR COMCAST

Cable giant Comcast doesn’t necessarily conjure up warm and fuzzy feelings, and more likely associated with feelings of frustration and primal rage.

So when news broke of a leaked internal memo that outlined what customer service representatives should say when callers complain about new data caps for broadband access, the internet collectively lost it — and understandably so.

The correct response when someone asks why Comcast is switching their tiered pricing plan to a 300 GB monthly data cap in limited markets, including Arkansas, Louisiana, Tennessee, and Virginia, is: “Fairness and providing a more flexible policy to our customers,” according to the memo circulated by Comcast’s public relations team and leaked on Reddit.

Not: “’The program is about congestion management.’ (It is not.)”

Those three little words in parentheses were the confirmation anyone who has ever been on hold waiting for a Comcast customer service representative needed to hear — Comcast betrayed us all.

“Anyone with half a brain knows that Comcast has been ripping off America.”

“Comcast’s recent confession begs the question, how much more evidence has to be gathered before the government agencies responsible for protecting consumers actually put a stop to these egregious business practices? Anyone with half a brain knows that Comcast has been ripping off America,” said Sascha Meinrath, tech policy expert and director for X-Lab a tech think tank in Washington, D.C.

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Meinrath’s fervor echoes with public opinion of Comcast, which suffered a failed merger with Time Warner Cable earlier this year after much public criticism and industry opposition.

Other industry experts weren’t taken aback by the memo.

“I thought this wasn’t news. Some cable companies have used [data caps] already — Comcast has experimented with different models,” said Doug Brake telecom policy analyst for Washington, D.C.-based think tank Information Technology and Innovation Foundation.

Telecommunications companies are known for up-charging customers for mediocre or slow service, in a large part because of thin competition. The use of data caps is familiar among wireless internet providers, but they’ve also long been embraced by broadband internet providers.

Michael Powell, the former Federal Communications Commission chairman and current head of telecom lobbying group National Cable and Telecommunications Association (NCTA), previously encouraged cable companies to switch from the tiered internet speed-based plans to monthly data caps.

“The cable industry used to complain about bandwidth hogs…but has largely backed away from those claims unless they haven’t gotten the memo.

In a 2013 interview with Multichannel News, Powell said the industry wasn’t “moving with some urgency and purpose” to switch customers to data-based caps. “I don’t think it’s too late…But it’s not something you can wait for forever.”

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“We’ve known for a while,” said John Bergmayer, senior staff attorney for Public Knowledge, an advocacy group in Washington, D.C., that focuses on the open internet, digital and telecom law. “The cable industry used to complain about bandwidth hogs” — customers who stream, download and upload a copious amount of data through videos, games, or other high-resolution content and caused data traffic jams — “but has largely backed away from those claims unless they haven’t gotten the memo.”

Bergmayer said the excuse of data hogs clogging up broadband internet traffic was debunked “nonsense” and only held true for wireless internet, which can have some capacity issues.

But it does come down to money. “[There are] people who are cord cutters watching more online, and companies are losing money because they’re only paying for internet, not a cable package,” Bergmayer said. “Data caps are a way to make up for lost revenue,” opposed to raising everyone’s costs at the same time.

“Data caps are a way to make up for lost revenue.”

Data caps for broadband internet are more or less a new way of price discrimination. Billing customers for what they use, Bergmayer said, tends to be reserved for “scarce resources — electricity from mining coal, water, etc. Bandwidth is not a resource it’s a coordination issue.”

Data caps have been criticized for limiting consumer access to the internet as providers charge fees and slow down or throttle internet speeds if a customer exceeds their allotment. Mobile internet access — which is the most common way people and particularly marginalized groups use the internet — is also stifled because they just stop altogether.

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“People will work up to the amount that they paid for and then they only use WiFi or stop watching YouTube on the bus,” ITIF’s Brake said.

“People use broadband very differently — causally using email, streaming video over the internet. Hopefully if it’s done well it can be a bit cheaper,” he continued. “Obviously there’s a potential for [data caps] to be abused, limiting the amount of streaming video, and we should keep an eye on it to make sure it’s not being used in anti-competitive ways.”

Ultimately, how Comcast and other companies following the data cap model design the new broadband plans will determine that, he said.

The 300 GB monthly cap for broadband use is generous considering that cord cutters use about 212 GB of data on average, according to Sandvine’s 2014 broadband usage report. That cap might prove insufficient sooner rather than later as people partake in 4K video, virtual reality, and other data-consuming tasks more frequently.

“There’s criticism that we’re pricing broadband all wrong and this is the only way to get the pricing right,” Brake said. “I’m hoping that these caps stay large enough for most users.”

Correction: An earlier version of this story misstated Sascha Meinrath’s role. He is no longer the director of the New America Foundation’s Open Technology Institute and now runs his own Washington, D.C.-based think tank, X-Lab.