from the captive-audience dept
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.