Comcast's Usage Cap: What Does It Mean?
Posted by: Olga Kharif on August 29, 2008
Comcast has posted a change to its broadband user policy today. It’s now limiting subscribers to 250 Gigabytes of monthly usage, which can include e-mailing friends or uploading photos.
Near term, the limit may not do much to curtain the average consumer’s Web usage. After all, 250 Gigabytes is a lot: You could download 100 HD movies over the Web, and still have some of that capacity left. Chances are, 99% of consumers will not even notice the change — for now.
But the decision carries weighty implications for the future. As Sanford C. Bernstein analyst Craig Moffett pointed out in his Aug. 29 note, “While the usage level specified is high, it is now finite…. A line has been crossed.” This is the end of unlimited broadband use as we know it. The end of an era.
Chances are, other broadband service providers will follow suit and institute similar — or even lower — limits. In Texas, Time Warner Cable is already trialing usage-based, or tiered broadband pricing. Users’ monthly fee are tied to their broadband usage, which is capped at 5 Gigabytes to 40 Gigabytes. That’s actually not that much: A colleague routinely backs up 8 Gigabytes of photos and video a week. I bet that if you start tracking your broadband usage, with software listed here, you’ll be unpleasantly surprised.
AT&T and Verizon may soon follow in Time Warner’s footsteps, say analysts. I am still waiting for comments from both companies.
In the coming years, as users start to download HD movies en masse, and to watch a ton of Web video, even the Comcast cap — a cap that seems ample today — may not seem so high. A growing percentage of users may have to curb their online activities. And that’s bad news for Web businesses such as those pushing bandwidth-thirsty videos: Think YouTube, Netflix and Joost. Consumer groups hint that the usage cap could eventually curb innovation on the Internet; and, unless Comcast and other providers agree to eventually bump up their usage cap, I tend to agree with that view.
That said, I believe that Comcast and others will be reasonable, and will increase their caps in the future as needed. That will have nothing to do with goodwill, and everything to do with rising competition. Home broadband providers are increasingly competing with a slew of new, wireless broadband carriers like Clearwire.
Traditional wireless networks are getting faster, so that many people now access the Internet via mobile devices like the iPhone for around $30 a month. With consumers having more choices about which broadband provider to go with, Comcast and others simply can’t afford to tighten their usage caps too much – or to keep them at the current levels for long.