Comcast To Shift From Broadband Caps To Usage-Based Pricing5/17/2012 1:09 PM Eastern
Comcast will eliminate the 250-Gigabyte monthly broadband-usage limit on Xfinity Internet, moving over time instead to a usage-based pricing model that will provide at least 300 GB of data usage before customers incur additional charges, the operator said Thursday.
The cable operator is making the change after it was criticized by competitors and public-interest groups for allowing unlimited usage of its IP video-on-demand service on Xbox 360, while applying usage of other Internet-video services to the cap.
"[I]n recent weeks, some of the conversation around our new product introductions focused on our data usage threshold, rather than on the exciting opportunities we are offering our customers," Cathy Avgiris, Comcast's executive vice president and general manager of Communications and Data Services, wrote in a blog post.
Comcast will "replace our static 250 GB usage threshold with more flexible data usage management approaches that benefit consumers and support innovation and that will continue to ensure that all of our customers enjoy the best possible Internet experience over our high-speed data service," Avgiris said.
In the next few months, the MSO will test least two usage-based pricing approaches in different markets. Comcast did not provide details about timing or locations.
Comcast's first new approach will offer a 300-GB usage allotment for Internet Essentials, Economy and Performance tiers, and with increasing data allotments for each successive tier of high speed data service (e.g., Blast and Extreme). The "very few customers" who use more data at each tier can buy additional Gigabytes in increments; for example, $10 for 50 GB, according to Avgiris.
The second approach will increase data-usage thresholds for all tiers to 300 GB per month and also offer additional gigabytes in increments (e.g., $10 per 50 GB).
With the changes, Comcast subscribers will be able to access an "effectively unlimited amount of usage, because they will be able to buy and use as much data as they want," executive vice president David Cohen said on a call with reporters Thursday.
As far as the rationale for the change, Cohen said, "It's a matter of messaging, rather than capacity. We just didn't like the message we were sending to consumers, that they had a static, 250-Gigabyte cap."
For both approaches, Comcast will increase the initial data-usage threshold to at least 300 GB per month. In markets where Comcast will not be trialing a new data usage management approach, the company will suspend enforcement of its current usage cap, "although we will continue to contact the very small number of excessive users about their usage," Avgiris noted.
She continued, "Our goal with this improved approach, these consumer trials, and our continued investment in our network is to create products that meet the needs of all of our residential customers (even the heaviest users) and provide everyone with a choice."
Last week, Netflix argued in a presentation to Federal Communications Commission staff that Comcast's Xfinity TV app for Xbox -- as well as Time Warner Cable's TWC TV iPad app and AT&T's U-verse on Xbox -- violated the commission's network neutrality regulations.
The video-rental company told the FCC that the operators' policy of exempting their own video services from usage caps -- while metering Internet-delivered video services such as Netflix's -- is "economically irrational or anticompetitive," and contrary to the FCC's Open Internet order.
Comcast chief technology officer Tony Werner responded earlier this week, disputing that the VOD-on-Xbox service is "prioritized" over Internet traffic. According to Werner, because the VOD in this case is delivered over the MSO's private network over a separate, dedicated IP flow, the service complies with all FCC regulations and the Department of Justice's consent decree in the NBCUniversal deal.
Comcast first introduced the 250 GB cap on all broadband users in October 2008. According to the MSO, only a very few subscribers have even come close to hitting that limit. The median monthly data usage among Comcast subscribers is 8 to 10 GB, according to Avgiris.
Other Internet service providers that have established monthly usage caps for broadband customers include AT&T, Charter Communications, Cox Communications and Suddenlink Communications. Charter and Cox do not charge customers overage fees for exceeding monthly limits, while AT&T and Suddenlink do.
In addition to Netflix, a Sony executive, speaking at an industry conference this month, claimed that the CE manufacturer had considered introducing a broadband TV service -- but that it had held off because of Comcast's bandwidth caps and its policy of exempting usage on the Xfinity TV app on Xbox.
Avgiris, in her blog post, said the purpose of the data-usage cap was "simply to ensure that all of our customers were treated fairly and had a consistent and superior experience while using our high-speed data service... We've never had any intention to limit the lawful use of the Internet or restrict our customers' ability to view online video."
During Comcast's pilot tests of the usage-based pricing models, "we will be transparent to our customers," Avgiris said. "We will provide our customers with the information they need to select the service level and options appropriate to their needs, including providing our customers the tools necessary to manage their use of our high-speed Internet service."
Comcast will continue to exempt usage of the Xfinity TV app for Xbox from bandwidth-consumption limits, but executives said traffic from the Skype on Xfinity service, which the MSO introduced this week, will count toward usage because it traverses the public Internet. All other Internet traffic, including video from XfinityTV.com and the Xfinity TV mobile apps, will also apply toward total usage.
Cohen, regarding Netflix's complaint that Comcast was unfairly treating its own VOD on Xbox differently from Internet video services, said "it is a real stretch to create a discrimination argument. Even Netflix, on its earnings call, acknowledged that a static 250 Gig didn't get into its way.... It's going to be a stretch that we haven't transitioned to an approach that is significantly pro-consumer and pro-innovation."
Cohen said that the change was not in anticipation of the company transitioning its own video service from traditional delivery to an over-the-top model, saying the company had no plans for such a migration.