Comcast Says It's Going To Slap All Of Its Customers With Data Caps, Makes Half-Hearted Attempt To Walk Back Earlier Statements When Backlash Kicks In
from the what-are-you-going-to-do?-go-without?-HAHAHAHAHA dept
Comcast, perhaps feeling a bit too confident about its chances to swallow up Time Warner Cable, is talking about rolling out data caps to all of its subscribers. It had, up to this point, only "offered" it in certain areas on a "trial basis." Customers hated it, of course, but that's not really what Comcast was gauging with its trials. It was only interested in seeing a) how profitable it was and b) whether that profit would offset losses caused by the few customers lucky enough to have options.
With a merger on the line, Cohen chose his words very carefully, responding to a rather dancing, ambiguous question by industry analyst Craig Moffett (long an avid supporter of usage caps, and, apparently, "variabilization") with some dancing ambiguity of his own:As Karl Bode points out, it's fun to watch Cohen pretend that Comcast isn't eventually going to cap everyone. If the merger goes through, you can be sure former Time Warner customers will be experimented on and eventually capped as well. But, hey, it's not really a monopoly because the two companies don't compete head-to-head, as someone at the Washington Post claimed in defense of the merger. Instead, it's more customers being screwed by the same company's lousy idea.
Moffett: Bottom line is, 5 years, 10 years from now, do you think that we will be in a model where the Internet is fully variablized, or usage is fully variablized, or at least variablized to the extent that most people are selecting from a reasonably large number of usage plans that match their usage to their price?
Cohen: I actually think the answer to that is, no. I would say, if you made me predict today, and I don't want to get myself in any trouble, if you made me predict today, I would predict that in 5 years Comcast at least would have a usage-based billing model rolled out across its footprint.
But I would also predict that the vast majority of our customers would never be caught in the buying the additional buckets of usage, that we will always want to set the basic level of usage at a sufficiently high level that the vast majority of our customers are not implicated by the usage-based billing plan. And that number may be 350 -- that may be 350 gig a month today, it might be 500 gig a month in five years, but it will never -- I don't think we will want to be in a model where it is fully variablized and 80% of our customers are implicated by usage-based billing and are all buying different packets of usage.
Surely the contingent that declares "vote with your wallet" during these sorts of announcements has dwindled to near zero at this point. For most of the country's population, the choice is that or DSL, the offering AT&T and others can't wait to rid themselves of. And it's not like other companies won't initiate their own caps once Comcast puts its limits in place. If one big player is doing it, then everyone can hop on the money train without shedding a ton of customers. In an inversion of the "if everyone's special..." argument, the cable companies will operate under the "if everyone's a crappy service provider, then no one's a crappy service provider" motto.
With this in place -- along with the pay-for-play internet -- Comcast can collect on its customers' Netflix addiction on both ends. The easy money will now be even easier, and no expense will be spared to ensure
Even if Comcast isn't granted its monopoly, its willingness to deploy unpopular usage caps will only encourage Time Warner to speed up its roll-out of the same terrible plans. At this point, the biggest players are hardly putting any energy into maintaining the farcical facade of "network congestion." After all, Netflix chews up a ton of bandwidth, and Comcast has just bumped the speed at which this gets "used up" in exchange for an untold amount of money. If congestion was actually a problem, data hogs like streaming services would either be priced out of the market or more of the market would already be laboring under restrictive caps. But Comcast says "Use more internet!" -- just as long as it gets a larger cut of the action.
There's zero benefit for the consumer.
What companies like Comcast are doing is simply taking current, already-expensive flat-rate plans and pricing -- and affixing usage caps and overage fees on them, making existing product immeasurably more expensive. Under that model, everybody pays more -- no matter what. The industry claims they're just "experimenting" with "creative pricing," but the end result is usually just a rate hike wearing lipstick and a dress.To extend the metaphor, Comcast's cap plan is like a hooker putting an egg timer on the nightstand and charging you every time she flips it over -- all the while telling you she's just "variabilizing" your sexual experience. And as she walks out the door with a handful of "overage fees," she points out that her service isn't really that restrictive because most of her customers "never achieve orgasm."
Now, Comcast has since made a half-assed retraction of these statements, which doesn't change anything for the thousands of users in uncompetitive Southern markets that are still dealing with data caps. Karl Bode does a great job taking apart the PR speak hastily assembled in the wake of its earlier remarks. Here's Comcast:
We have been trialing a few flexible data consumption plans, including a plan that enables customers who wanted to use more data be given the option to pay more to do so, and a plan for those who use less data the option to save some money. We decided to implement these trials to learn what our customers’ reaction is to what we think are reasonable data consumption plans.And here's Bode:
Except as we noted the other day, Comcast knows full well what the consumer reaction to these plans is: they hate them. The company's 300 GB offer simply puts pricey overage fees on top of already-steep flat-rate pricing, and their other plan offers users a small $5 discount off flat-rate pricing if they agree to a 5 GB usage cap. Comcast isn't testing whether consumers like caps, they're testing how they can market usage caps in such a way that sees the minimal amount of user revolt.While it's truly wonderful that Comcast will give customers the "option" to pay more for using more data, most customers would just rather have uncapped connections or data caps high enough that they don't need to cut the kids off Netflix mid-month. Add to that the fact that these caps are wholly reliant on Comcast's unverified measurement of data usage -- along with the fact that Comcast is openly pursuing paychecks from data-heavy services -- and you have the makings of a very profitable "offering." And Comcast has never been coy about preferring larger margins to satisfied customers.