AT&T's Broadband Caps Go Live This Week And Are The Opening Salvo In An All-Out War On Cord Cutters
from the tightening-the-noose dept
For a company that just spent $69 billion on DirecTV to unlock “amazing synergies” across the TV, wireless and broadband sectors, AT&T’s latest quarterly earnings subscriber tallies landed with a bit of a thud. The company actually posted a net loss of 54,000 video subscribers, a net loss of 363,000 postpaid phone subscribers, and a net gain of just 5,000 broadband customers during the quarter — suggesting that any “synergies” AT&T envisioned are going to be somewhat slow in coming, if they arrive at all.
That AT&T spent $69 billion on a satellite TV provider on the eve of the cord cutting revolution — especially given its fixed broadband network lags cable speeds and is in desperate need of upgrade — turned numerous heads on Wall Street. But skeptics haven’t yet really keyed in to the cornerstone of AT&T’s plans or its ultimate secret weapon in the war on evolving markets: usage caps.
We’ve long noted how usage caps are little more than anti-competitive weapons and glorified price hikes levied on uncompetitive broadband markets. And this week, AT&T formally took aim at millions of you with the launch of usage caps on all of the company’s broadband customers. Starting this week, U-Verse customers now face caps ranging from 300 GB to 1 terabyte depending on speed — caps that users can avoid if they’re willing to pay an extra $30 per month. Things are worse for DSL customers, who face a fixed cap of 150 GB and need to pay $10 for each additional 50 GB of data consumed.
But usage caps don’t just have the benefit of letting duoplists like AT&T and Comcast charge customers more money for the same exact product. In addition to using caps to punish cord cutters, AT&T hopes to (ab)use usage caps to prevent cord cutting altogether. The company has announced it’s eliminating caps entirely for customers who subscribe to DirecTV service. In other words, you can avoid aggressive price hikes on your broadband line — if you pay even more money for a TV service you may not even want. AT&T’s doing something similar in wireless, where customers can now only get unlimited data — if they subscribe to DirecTV.
So while the merger may not have provided notable “synergies” yet, the long play is that it gives AT&T the ability to effectively abuse the lack of fixed-line competition — to drive captive, capped customers toward AT&T TV services. And as the justification for usage caps has been increasingly debunked, ISPs have stopped really justifying the moves at all. AT&T’s statement on the matter barely even tries to give a reason for the new limits:
“We want to continue providing a great experience for our Internet customers so we?re giving U-verse? Internet customers more choices and more data, including an unlimited data option available to any U-verse Internet customer.”
And here’s the thing: AT&T’s only just getting started. Leveraging its NFL Sunday Ticket platform acquired in the merger, AT&T says it wants to launch not one — but three nationwide streaming services later this year in a bid to become the streaming video provider across the United States. And should the FCC’s net neutrality rules fail to stand up in court (and perhaps even if they do), guess who’s streaming video service won’t count against any of these usage restrictions?