Comcast Turns the Broadband Meter On, and Moves to Usage-Based Billing
Important for people who stream a whole lot of Internet video, or think they might one day, or would like to make money by streaming a lot of Internet video: Comcast is overhauling its rules which limit the amount of data its broadband subscribers can use.
In short, Comcast is moving from a flat cap to usage-based billing.
It is scrapping its 250-gigabytes a month cap and trying a couple different plans in its place. One version will introduce a 300-gig cap and offer additional tiers of service, with bigger caps, along with the ability to buy more chunks of data. Another version also uses a 300-gig cap and the ability to buy incremental blocks of data as needed.
Comcast, which has more than 18 million high-speed data customers, says it will experiment with the two plans in some of its territories.
It also says that in markets where it’s not trying the new plans, it will scrap its data cap entirely until it settles on a new plan.
The move comes as Comcast has taken heat about the way it treats data on some of its proprietary video services, in particular the Xfinity app for Microsoft’s Xbox console.
Netflix CEO Reed Hastings has argued that because Comcast doesn’t count data delivered via that service against its usage caps, it is violating “net neutrality” principles. Comcast says it’s in the clear because that data isn’t delivered via the public Internet but on its own network, and doesn’t plan on changing its policy.
Comcast executives referenced the debate as they introduced the new plans today. “There has been a little bit of noise along with the Xfinity Xbox plan,” said Comcast EVP David Cohen. But Comcast also insists that only a small handful of its users come close to using the 250-gig cap today. The company says median usage runs around 8 gigabytes to 10GB a month.
Other broadband providers, notably Time Warner Cable, have also moved to usage-based pricing. If you take the companies at their word, they’re doing it because they need to charge more money to provide more bandwidth because “our network is not an infinite resource, and it is expensive to build it,” as Cohen says.
But usage-based pricing is also a useful tool to have available if cable TV users really do stop subscribing in large numbers, and replace their pay TV packages with Web video. That gives the cable (and telco) guys a way to replace the video revenue they lose with more broadband dollars. A bonus for them: Broadband subscriptions are much more profitable than video subscriptions.