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AT&T to Cap Data Use, Stick 'Hogs' With Extra Fees

By Erika Morphy
Mar 15, 2011 11:25 AM PT

AT&T is going to start placing caps on data usage for its DSL and U-Verse customers beginning May 2. Users who exceed a 150 GB data cap will be charged US$10 for every additional 50 GB of data consumed.

AT&T to Cap Data Use, Stick 'Hogs' With Extra Fees

Most DSL customers use about 18 GB a month, AT&T said, which means only 2 percent of its Internet customers are likely to be impacted by the data cap. U-Verse Internet customers have a 250 GB cap.

AT&T will notify customers when they have exceeded certain thresholds every month: namely, at the 60 percent and 90 percent data allowances, and after they have exceeded their full monthly allowance.

It will also offer tools to monitor customer activities and examples of the types of activities that use up the most data.

AT&T publicly confirmed reports of its plans that appeared in media outlets, but it did not respond to the E-Commerce Times' request for comment by press time.

Comcast's Caps

This is not the first time a broadband provider has instituted data caps.

Comcast did so a few years ago, but in a ham-handed fashion and without providing information about how much bandwidth each customer was using.

It also cut off, or throttled, customers' access to certain P2P services, prompting intervention from the FCC and fueling a Net neutrality tussle that is still playing out in Congress and in the courts.

Today's Data Hog, Tomorrow's Everyday Consumer?

AT&T appears to be trying for a more conciliatory approach by portraying the caps as necessary for only a very small percentage of the user base that it characterizes as "data hogs."

Trouble is, the activities that are now earning the "data hog" label -- file-sharing, video conferencing, high-definition movie downloads, constant online video viewing -- are likely to become commonplace activities soon.

There's a good chance AT&T's moves will be accepted by its customer base, especially as they are couched in terms of necessity and accompanied by tools to help customers keep from going over their caps. More than likely, other providers will follow suit. In the long run, however, the caps may just be a stop-gap mechanism for providers.

"What telecom providers see as high usage today will be average use tomorrow," said Rick Rotondo, VP of marketing for xG Technology.

The expansion of online content and video services, to name just two drivers, will be the reason, he said. As that happens, it will get harder and harder for telco providers to impose caps.

Besides having to incent high users to exercise restraint, providers will have to build out additional capacity in their networks, Rotondo predicted.

"We are all morphing into hogs, from the operators' perspective," Patrick Lopez, CMO of Vantrix, told the E-Commerce Times. "The very fact that the majority of users are stepping up their consumption means that eventually there will not be enough capacity in the network for everyone."

Also, more consumers are abandoning cable and satellite television services altogether, streaming content over the Internet instead. That introduces another wrinkle for providers that bundle their Internet, TV and telephone services.

"While they are happy to see Internet usage increase, the shift in usage does cause resource management and investment problems for these companies," said Lopez.

For that reason, the providers will likely find it is not sustainable simply to charge for additional capacity, he continued. Rather, they may choose to invest in intelligent billing and similar solutions that will allow the carriers to better target specific uses with appropriate fees.


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What's most likely to cost a company your customer loyalty?
a major product fail
major unethical corporate behavior
public advocacy of social or political views I oppose
a really bad customer service experience
stagnation -- I'm attracted to innovation
none of the above -- I'll stick through thick and thin