AT&T to introduce data caps on DSL

The carrier plans to set limits of 150GB and 250GB on its DSL and U-verse broadband services as it clamps down on heavy data users, who it claims use a disproportionate amount of bandwidth.

Unlimited data will soon be a thing of the past for all AT&T customers, as the company confirms it will put a cap on data usage for its DSL and U-verse broadband services.

The blog Broadband Reports confirmed over the weekend that AT&T will introduce a data cap for its broadband services. Customers who exceed a monthly limit of 150GB of data in three separate months will be charged $10 extra for every additional 50GB of data they consume. Customers subscribing to AT&T's faster U-verse broadband service will have a limit of 250GB. The new policy goes into effect starting May 2, the company said.

The new capped data policy is aimed at reining in heavy data users. The way it will work is that only users who exceed the new usage cap three times will be charged the overage fees. AT&T will then alert customers multiple times if they are near the limit or if they exceed their limit. These notifications will occur when usage hits 65 percent, 90 percent, and 100 percent of total usage. The carrier also plans to provide online tools to help customers track their usage.

AT&T said that the new policy will affect only a small percentage of customers--roughly 2 percent--who it claims use a disproportionate amount of bandwidth.

The company already caps data usage on its wireless service. Last year, it revised its smartphone data pricing, eliminating its unlimited plan and instead offering customers the choice of a 2GB service for $25 a month or a $250MB service for $15 a month. Customers who exceed those limits are charged for the additional usage.

AT&T's move to impose caps on its wired broadband service follows similar action by other broadband providers. Comcast imposed usage caps on its broadband service in 2008. The company limits residential customers to 250GB of data per month. Comcast says that median monthly data usage of residential customers is about 2GB to 3GB of data per month.

To put this type of usage into context, Comcast says on its Web site explaining the policy that customers would have to do any one of the following to exceed its 250GB cap:

  • Send 50 million e-mails (at 0.05KB per e-mail)
  • Download 62,500 songs (at 4MB per song)
  • Download 125 standard-definition movies (at 2GB per movie)
  • Upload 25,000 high-resolution digital photos (at 10MB per photo)

AT&T has been experimenting with usage-based broadband service. In 2008, it conducted a trial in Reno, Nev., and Beaumont, Texas, in which it capped usage between 20GB and 150GB, charging up to $1 per gigabyte, Broadband Reports said in its report.

While the caps that AT&T is imposing are large, analyst Craig Moffett at Sanford C. Bernstein said that as people watch more video online, these caps may not look so large in the future.

"Only video can drive that kind of usage," he said in an e-mail to investors. "To be sure, the caps are high, and the number of customers who will be affected is low. Still, the importance of the move cannot be overstated."

He expects other broadband providers to follow in AT&T's footsteps. Charter Communications, Cox Communications, and Time Warner Cable are likely first movers, he said.

"Usage Based Pricing is one of two critical feedback loops that must be considered in any serious analysis of over-the-top-video (the other is content availability)," he said in his e-mail. "To wit; if consumption patterns change such that web video begins to substitute for linear video, then the terrestrial broadband operators will simply adopt pricing plans that preserve the economics of their physical infrastructure."

In other words, broadband providers can't lose .

 

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