ISPs Now Charging Broadband Users A Steep Premium If They Want To Avoid Usage Caps

from the captive-audience dept

Thanks to the lack of broadband competition, the ISP push to impose unnecessary and arbitrary usage caps shows no sign of slowing down. Comcast continues to expand its "trial" of usage caps and overage fees, while AT&T has followed suit. And both companies have now started adding a new wrinkle to the mix, charging consumers $30 to $35 more per month if they want to avoid usage caps entirely. That's right, despite broadband getting cheaper than ever to provide, ISPs are now charging you a massive monthly premium if you want the same unlimited broadband service you enjoyed yesterday.

Now Suddenlink, a US cable operator recently bought by French telecom Altice, is also joining the festivities. The company is now informing customers that they can avoid usage caps if they're willing to sign a long-term contract. In year one of that contract avoiding usage caps is "free." In year two it will cost users $5 more a month, and $10 a month after that. Obviously there's nothing stopping the "hey, don't cap me" fee from skyrocketing further down the road. The caps and added fees are necessary, Suddenlink insists, to improve the "consumer experience":
"Data plans are one step among several that help us continue delivering a quality Internet experience for our customers. Other steps include the sizable investments we’ve made and continue making to provide greater downstream and upstream system capacity and more bandwidth per home. Even with those investments, a relatively few customers use a disproportionate amount of data, which can negatively affect the Internet experience of those who use far less. That’s why, as a complement to our network investments, we’ve established data plans."
The particular usage cap "experience" at Suddenlink has been a rocky one for customers. Suddenlink originally imposed usage caps back in 2012, but had to back off the attempt after users complained they were being billed for usage when their modems were off or they weren't at home (regulators have shown no interest in regulating meter accuracy, so as a result they often aren't). By 2013 the ISP claimed it had sorted out most of its problems, and now imposes current usage caps that range from 250 GB to 550 GB, depending on speed. Users pay $10 per each 50 GB over the cap they travel.

While Suddenlink's $10 is better than the $30-$35 being charged by AT&T and Comcast to avoid being capped, the precedent remains problematic all the same. Usage caps simply aren't necessary on modern, well-managed networks; flat-rate pricing has proven perfectly profitable enough to help fund infrastructure improvements. What usage caps do is protect legacy TV from Internet video, while letting companies charge a captive audience more money for a product whose provisioning costs are dropping. Just ask Suddenlink CEO Jerry Kent, who acknowledged the latter to investors a few years ago:
"I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity. Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”
Kent has since crowed to investors about how usage caps "have become a significant revenue stream for us." And that's great for broadband duopolies, but notably less great for consumers already paying some of the highest broadband prices in the developed world. It's also problematic for the startups, small companies and other innovators that are going to be hurt by the move toward zero rating only the biggest, wealthiest companies from usage caps (yet another layer of new revenue on a service that costs less and less to provide, especially if you're happily skimping on customer service).

As we've noted a few times companies like AT&T and Verizon are giving up on unwanted DSL customers, in turn creating a stronger cable monopoly -- one that intends on taking full advantage.

Filed Under: broadband, isp, usage caps
Companies: altice, suddenlink


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  • icon
    That One Guy (profile), 6 Apr 2016 @ 5:26am

    Flimsy excuses

    Other steps include the sizable investments we’ve made and continue making to provide greater downstream and upstream system capacity and more bandwidth per home.

    So they're continually paying to improve their networks to keep up with increased use, and that's why prices have to rise to keep match. That excuse might have been valid if their CEO hadn't been bragging on the subject elsewhere...

    "I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity. Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

    As the statement seems to make pretty clear, despite what they are telling their customers they aren't spending notable amounts to upgrade their networks, which means the price increases have nothing to do with that, and are instead just blatant cash-grabs simply because they can.

    'Even with those investments, a relatively few customers use a disproportionate amount of data, which can negatively affect the Internet experience of those who use far less.'

    This excuse also falls flat under even the most trivial of scrutiny, as if the majority of people don't use that much data, with only a 'relatively few' customers using a significant amount, then the fair thing to do would be to impose restrictions on the 'super-users', such that they don't negatively affect the connection for others, not hit everyone with a data cap that according to their own words wouldn't even be necessary for the vast majority of their customers.

    The excuse for caps is even more full of holes when you factor in the fact that customers can simply pay more for 'unlimited' data, which means that the 'super-users' can still put significant strain on the network, causing problems for other users, they just need to pay a little more to do it. Given that the idea that the caps aren't due to wanting more money, but because the network simply can't handle the load is rubbish; if that were really the case then no amount of extra money would allow one to bypass the caps.

    reply to this | link to this | view in chronology ]

    • icon
      Mason Wheeler (profile), 6 Apr 2016 @ 7:05am

      Re: Flimsy excuses

      This excuse also falls flat under even the most trivial of scrutiny, as if the majority of people don't use that much data, with only a 'relatively few' customers using a significant amount, then the fair thing to do would be to impose restrictions on the 'super-users', such that they don't negatively affect the connection for others, not hit everyone with a data cap that according to their own words wouldn't even be necessary for the vast majority of their customers.

      But isn't that exactly what they're doing? Placing a cap high enough that the vast majority of their customers won't hit, so that it only affects the "super-users", who end up paying more because they're using more?

      I'm all for calling ISPs out on bad behavior, but I don't actually see anything unfair here.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 Apr 2016 @ 7:35am

        Re: Re: Flimsy excuses

        The cap is there for people who stop using the ISPs video services and start trying to use alternatives available on the web. They have become state actors since they now provide any and all data on their customers to anyone in government that pays them. They don't have to worry about competition or regulation and so the customer experience declines year over year while the cost rises. Caps are a hidden cost.

        If I had Bill Gates wealth, I would copy Google Fiber and invest everything I earn from it back into extending and improving the network. Once it reaches everyone in america, start spreading it throughout the world. If the world had gigabit internet available everywhere to everyone, education would be universal.

        reply to this | link to this | view in chronology ]

      • icon
        That One Guy (profile), 6 Apr 2016 @ 7:37am

        Re: Re: Flimsy excuses

        Before streaming services like Netflix came about I'd agree, 250GB a month is probably not something your average user is going to hit, but now and even more so in the future I imagine that cap is going to start looking a lot 'smaller', as it becomes all too easy to burn through that with just a few people in a household watching shows.

        reply to this | link to this | view in chronology ]

        • icon
          Karl Bode (profile), 6 Apr 2016 @ 8:20am

          Re: Re: Re: Flimsy excuses

          Correct. On a per household level (streaming, patches, steam game downloads) we're not talking a huge allotment.

          And one also needs to ask if ISPs will grow those caps alongside usage, or if they'll squeeze to make more profit from more people. As companies that need improved quarterly earnings bumps, I think the answer to that should be pretty obvious.

          reply to this | link to this | view in chronology ]

          • identicon
            Anonymous Coward, 6 Apr 2016 @ 8:52am

            Re: Re: Re: Re: Flimsy excuses

            Well, I know what the Big Five will do - steal form their customers any way they can. Because they can.

            reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 Apr 2016 @ 8:26am

        Re: Re: Flimsy excuses

        "But isn't that exactly what they're doing?"

        It's called quality of service. Usually when you first start using your Internet you are given a token but if you keep using it and there is a lot of other traffic your token wares off to give someone else an opportunity.

        What they can do is throttle high profile users during times of high usage to give everyone equal bandwidth but allow anyone to consume as much bandwidth as they want during low usage hours. During low usage hours intense usage has no effect on anyone else. It's not like a bandwidth hog affects anyone else when he's hogging the bandwidth during a time no one else is using it and his time using it while no one else is using it doesn't affect anyone else during times that everyone else uses it.

        This is just a matter of them

        A: managing what bandwidth they have

        B: Investing in their infrastructure to make upgrades

        but with little competition thanks to govt laws why should they?

        reply to this | link to this | view in chronology ]

      • identicon
        Derek G, 6 Apr 2016 @ 9:13am

        Re: Re: Flimsy excuses

        The problem is the slippery slope that this creates. Sure, there aren't many "super users" now, but what about when cable TV is more widely streamable? I have PlayStation Vue right now and if they improve quality past 720, I can see that eating up 350GB combined with online gaming and Netflix/web surfing. How did they decide the cap? Will they increase it when more people depend on streaming services? Who knows.

        reply to this | link to this | view in chronology ]

    • identicon
      Anon, 6 Apr 2016 @ 8:06am

      Re: Flimsy excuses

      I can get a business+residential 70/70 uncapped dedicated fiber line for $35/m. the actual bill is almost $40 after sales tax. No SLA though, even though they rarely have issues.

      If I want an enterprise SLA, that same 70/70 line is now closer to $1,000/m, but identical performance characteristics. The ISP claims that the main difference is the SLA, how you're connected to the core(strait connection instead of a fiber aggregator and aggregators are not over-subscribed), and how maintenance is handled. Other than that, I should never notice a difference in performance between the two. Both residential and enterprise connections are dedicated and they do not do any QoS, and all customers take the same routes.

      reply to this | link to this | view in chronology ]

      • icon
        Mason Wheeler (profile), 6 Apr 2016 @ 8:43am

        Re: Re: Flimsy excuses

        Really? Where do you live?

        reply to this | link to this | view in chronology ]

        • identicon
          Anon, 6 Apr 2016 @ 8:58am

          Re: Re: Re: Flimsy excuses

          Midwest USA, small town. All traffic is over Level 3 and about a 10ms ping to Chicago. At one point I had a 6ms ping to Chicago based game servers. If you read up on Level 3, they have a very strict 95th percentile should not go over 50% of link utilization. This pretty much means no congestion even during peak hours.

          I have a friend that works at a company with an OC3 connection to AT&T, and his ping to Hawaii is about 2x that of mine(I'm about 100ms and he's about 200ms). Because Level 3 has awesome world wide routing and only peers with the best for long haul.

          No congestion in my ISP and no congestion on the Internet backbone. I've done multi-hour load tests during peak hours, 8p-10p, and when fully saturating my connection from a server in New York City, I averaged 99.5Mb/s +-0.2Mb/s. I have the 100/100 package. Pretty much a flat line. All the while I maintained my 10ms ping to Chicago with no additional packet loss. Low ping under load because they use an anti-bufferbloat AQM.

          I have fractional millisecond NTP jitter to time servers from around the USA.

          reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 8:29am

      Re: Flimsy excuses

      "I think one of the things people don’t realize [relates to] the question of capital intensity and having to keep spending to keep up with capacity. Those days are basically over, and you are seeing significant free cash flow generated from the cable operators as our capital expenditures continue to come down.”

      Yet Whatever will argue tooth and nail that this is not the case even as executives of these corporations admit to it.

      How does Whatever plan on responding to this ... (crickets, crickets).

      I know, I know. He will pretend he didn't read it and make his same nonsense claims elsewhere about how bad the bandwidth hog is and how expensive running an ISP is. He will pretend this statement was never made and continue on his business accordingly.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 9:32am

      Re: Flimsy excuses

      "So they're continually paying to improve their networks to keep up with increased use, and that's why prices have to rise to keep match. That excuse might have been valid if their CEO hadn't been bragging on the subject elsewhere..."


      That's what they receive government subsidies for, and they still mismanage those funds.

      reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 6 Apr 2016 @ 7:04am

    It takes minimum knowledge to notice such caps are arbitrary and flat out robbery (the gun: nearly monopolistic market). If there are network capacity issues, data caps will not prevent people from using the network all at the same time. Speed caps or even (God save us!) throttling but not data caps. And any decent company will not sell you what they can't deliver so if a company is throttling it's users because they can't deliver the full contractual speed then it should be punished for false advertising.

    Heck, if you want to optimize the network sell a tier where speeds are throttled during peak times at a discount but don't do caps. Of course if the idea is to make free money and the Govt is a little sheep who won't move a finger to punish misdeeds then go for it. Better than cocaine.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 9:03am

      Re:

      I was going to post something similar myself. When an ISP says it's going to sell you internet access at a certain speed with data caps and justifies the caps with "fair for all" arguments, the real message is "we're lying to you". If the ISP can support all their customers connecting simultaneously at full speed, it doesn't matter how much any user consumes in a month, it can't affect any other customer. So the "fairness" argument is a lie. Alternatively, if the can't support all their customers simultaneously at full speed and they are counting on stochastics to lower the capacity they need to supply, they are lying by claiming to sell access at that speed.

      The arguments I've heard from (greedy - sorry, redundant) ISPs draw analogies like they're providing gas or coal, and if one user consumes a large amount, there's less for everyone else. A truer analogy is selling access to a private road where you are allowed to run a certain number of vehicles per hour. If the road will support all users running that number of vehicles per hour, it won't matter if a user runs that number of vehicles per hour every hour of the month, it won't lessen other users' ability to run their number of vehicles per hour.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 6 Apr 2016 @ 10:20am

        Re: Re:

        Where that argument falls apart at, is if it is like a utility and you get charged more for more use, where is the drop in price for less use?

        reply to this | link to this | view in chronology ]

      • identicon
        ZIF, 6 Apr 2016 @ 11:00am

        Re: Re:

        You do realize your analogy is called a cap right? You limiting the about of cars that can use the road so no one continuously sends cars back to back an congest the road. That's a usage cap.

        If you're suggesting that an ISP capacity to support all users using full bandwidth at the same time then that's as unrealistic as saying a highway should be able to support all the drivers in town at the same time. That would require a private lane for each customer if they ever expect to get their speed (whatever the speed limit is). The only reason we can afford to have a road to drive on is because we share the cost with other people who use the same road.

        The premise is that you will drive on the road and when you get where you're going you will get off the road and go watch a move, work, play at the park etc. Now that people are streaming everything, it's like everyone in town are jobless rich people that stay on the road at all times never running out of gas. Imagine the traffic jam.

        So the analogy is true to compare to a utility because the only reason you have water pressure in your house is because everyone in your neighborhood are not leaving every tap in their houses on at the same time. When people talk about cheap capacity a lot of people don't realize they're talking about the network core. The access network (house to local office) is the most expensive part and most likely to be where the bottleneck is.

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Apr 2016 @ 7:11am

    It can be argued that internet connectivity has become a necessity. In many locales the ISP industry is not very competitive, some only have one source for such services. Based upon this assessment, the ISP function could be considered a public utility and subject to regulation. One way for the industry to avoid such measures is competition, but that is anathema to their business model. What a quandary.

    reply to this | link to this | view in chronology ]

  • identicon
    Kirion, 6 Apr 2016 @ 7:21am

    Example of competion in broadband

    Just a small example from Moscow, Russia. I have ~7 ISP available at my appartment complex, I pay $12 for 100/100 mbit/s a month. Unlimited. No caps whatsoever.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 7:38am

      Re: Example of competion in broadband

      And here I am in one of the richest and fastest growing counties in the US, in a long-established suburb (ie not a new development) paying $93 for 50/50. I have a choice of 2 providers.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Apr 2016 @ 7:50am

    I will not pay a robber. So no $30 for privacy a month and no addition $30 for removing the cap I don't have at present. Paying nearly 3 times the price for the same service I get no isn't going to happen.

    Privacy I can take care of much cheaper myself; it's called VPN. Let them Sandvine the encrypted tunnel for their data. It's much cheaper than $30 a month.

    I don't have what I consider a dependable connection. Nor is it broadband by the FCC's definition. So I won't pay for this service what I might be willing to pay were it meeting the requirement speed for broadband.

    What I will do is the same thing I did for PPV many years ago because it wasn't meeting my needs for the price being paid. I will simply terminate the service first time my bill goes up.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Apr 2016 @ 8:10am

    It Could Be Worse

    At least they haven't figured out they could charge internet users by the minute like old cellphone plans.

    reply to this | link to this | view in chronology ]

  • icon
    TheResidentSkeptic (profile), 6 Apr 2016 @ 8:29am

    No choice and no choice.

    As I do development at home on my own servers and clusters, I need a static IP. Because I need static IP, I have the choice of one provider - bonded DSL at 20MB for $100/month.

    Doesn't qualify as broadband, or even state-of-the-art.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 8:37am

      Re: No choice and no choice.

      Part of that is because U.S. ISPs are very slow to adopt IPv6. Part of the reason for that is a lack of competition ...

      ISP's also don't like users running their own web servers over their bandwidth. Again, they get away with these requirements due to a lack of competition ...

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Apr 2016 @ 8:33am

    FTC.

    reply to this | link to this | view in chronology ]

  • icon
    John85851 (profile), 6 Apr 2016 @ 8:37am

    Money comes first

    Unfortunately, we seem to live in a country where money comes first.
    It's no longer a case of "how can we make a profit in this business" but "how can we make an even larger profit, preferably without delivering a product or service". There's no reason to have data caps like there's no reason to charge a $5 ATM fee to access your own money or a $35 fee to carry luggage on an airplane or charge $50 to choose a seat on an airplane.

    And I think it may only be a matter of time until other industries figure out ways to charge for things that were previously free.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 11:05am

      Re: Money comes first

      Oh .. you want water free of contaminates? That will be $30 extra because of the discount we provide.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 6:49pm

      Re: Money comes first

      It's almost like regulatory capture is working as designed and we might want to consider stopping the revolving door as well as reversing Citizens United. Until then the elite will continue tripping over themselves to the next to rip off consumerland. They don't even have to hide they're corruption anymore they've become so powerful. Might need to update the bill of rights and the constitution to address some of the society ruining issues that have arisen in the last few hundred years.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Apr 2016 @ 8:38am

    I have Suddenlink. They started injecting warnings into my browser when I'm at 80% of my data. Usually a week before my next bill is due. It warns that if I go over twice they'll start charging and then conveniently suggests I upgrade my plan.
    I live in a two person household. No cable TV or phone, just internet. We watch Netflix in the evenings and on weekends and I sometimes download an Xbox one game (~5gb), normally not more than one a Month.
    My only other options are DSL or wireless, both sub-par. There is a fiber optic cable running not one block from my house but the company that owns it (NTS) services only Businesses. I can only assume they have agreed not to compete with Suddenlink.

    reply to this | link to this | view in chronology ]

  • identicon
    AnonCow, 6 Apr 2016 @ 8:54am

    Data caps create angry customers. Angry customers express themselves to elected officials and oversight agencies.

    Is the broadband industry making enough incremental revenue on cap overcharges to warrant the blowback from angry customers?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 6 Apr 2016 @ 11:46am

      Re:

      they have a sickness that requires them to hoard money. It is never enough money for them they must have more always more.

      reply to this | link to this | view in chronology ]

    • icon
      nasch (profile), 7 Apr 2016 @ 12:34pm

      Re:

      Is the broadband industry making enough incremental revenue on cap overcharges to warrant the blowback from angry customers?

      As long as there's no competition, they don't have much to worry about. The FCC might clip their wings a bit, but they'll find somewhere else to make it up.

      reply to this | link to this | view in chronology ]

  • identicon
    Bob Buttons, 6 Apr 2016 @ 9:26am

    TWC

    I have Time Warner Cable for internet who at the moment doesn't have a cap and probably won't for a while to save face with the Charter merger (who themselves said they wouldn't enforce one for 3 years if it goes through). But when they eventually do, if they have an unlimited tier, I'll pay it, but you can damn well be sure I'll be getting my bandwidth's worth out of it. I'm pretty conservative with 'unlimited' now just because I don't care to abuse it for the hell of it but if I'm being charged extra fees to remain unlimited, I'm taking 100% full advantage of it. Any time my connection isn't being used it'd be wasted so look forward to endless downloading and uploading.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 6 Apr 2016 @ 10:25am

    I use around 2tb to 8tb of bandwidth per month.

    I would happily pay the usage cap fee of $30 while jacking my bandwidth usage to 100% max line speed, both up and down, * 24 hours per day, * 7 days per week, * 365 days per year.

    I will spend some of my free time badmouthing my ISP everywhere I'm able to online, even picking out names from local office's management to spread rumors about marital infidelity.

    reply to this | link to this | view in chronology ]

  • icon
    Almost Anonymous (profile), 6 Apr 2016 @ 11:47am

    Oxymoron

    profitable enough
    There. Right there, Karl, is what you don't get. There is no such phrase in the religion of capitalism.

    reply to this | link to this | view in chronology ]

  • identicon
    Rekrul, 6 Apr 2016 @ 3:20pm

    Now Suddenlink, a US cable operator recently bought by French telecom Altice, is also joining the festivities. The company is now informing customers that they can avoid usage caps if they're willing to sign a long-term contract. In year one of that contract avoiding usage caps is "free." In year two it will cost users $5 more a month, and $10 a month after that.

    This is just GREAT news for me, considering that Atlice is trying to buy my ISP, Cablevision. :(

    What should be obvious about this extra fee, but which I haven't seen anyone clearly point out is that by charging an extra fee for unlimited usage, they've effectively created a new "unlimited" tier of service. In the past many ISPs have offered a lower-priced, capped service and a higher-priced unlimited service. Now they cap the previously unlimited service and offer a new uncapped one. How will this be any different?

    How long will it be before the users who are paying the extra $10-35 a month for "unlimited" service are told that they're using an "unreasonable" amount of data and that they'll capped/throttled/have to pay more?

    Jacking up the price for unlimited service for no valid reason is sleazy enough, but there's absolutely nothing to prevent them from pulling the same bait and switch again and again.

    reply to this | link to this | view in chronology ]

  • identicon
    Kronomex, 6 Apr 2016 @ 3:33pm

    To paraphrase a line from a book, "The ISP's taketh and then taketh some more."

    reply to this | link to this | view in chronology ]


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