Chicago (IL) - AT&T is using Reno, Nevada, area as a testing ground for a bandwidth cap experiment, with another market scheduled to be added before end of the year. AT&T will limit the monthly bandwidth to up to 150GB. The cap will apply to new users and existing users will be automatically put into the scheme if they exceed 150 GB within a month, regardless of their connection plan. Subscribers will be able to track their data usage in real-time on the web and will get a call from AT&T if they reach 80% of their set limit. Users who exceed the 150 GB bandwidth limit will pay extra.
AT&T claims the move is part of a broader effort among service providers to limit the maximum amount of data users can transfer every month, which should ensure that excessive bandwidth use of a minority of users is treated in a fair manner when compared to the vast majority of the customer base. "This is a preliminary step to find the right model to address this trend," said AT&T spokesman Michael Coe. The company said it will limit downloads to just 20 GB per month for users of their slowest DSL service with 768 Kb/s download link. The cap limit increases with the connection speed of the plan, up to 150 GB per month at the 10 Mb/s level.
How many GB per month are enough?
AT&T’s move is the most recent announcement in a path laid out by other service providers who recently started capping the available bandwidth as a stop-gap measure to protect their infrastructure from excessive caused by a small portion of users. AT&T claims that 5% of its subscribers take up 50% of the network capacity. Some service providers were forced into revealing limits they have always had in place anyway. For instance, three months ago the Federal Communications Commission (FCC) ordered Comcast to publicize its network management policies that involve bandwidth throttling.
The cable operator publicly revealed that it has set a cap for each subscriber to 250 GB per month some time ago. Comcast said it would terminate the service provided to customers who exceed the 250 GB limit twice within six months. Two other service providers, Time Warner and FairPoint Communications, are also considering caps as low as 5 GB per month. Verizon confirmed it does not plan to throttle bandwidth at this time.
Our take: Capping the bandwidth will strangle Internet innovation
Let’s look at these bandwidth caps with common sense. 250 GB is enough volume in most cases, even if you plan on using Netflix's streaming movies service in a reasonable way throughout the month. But what is it that you buy with a broadband service today, especially if all providers are advertising the highest speed or the most speed for the price? Exactly. You buy speed and available bandwidth. And what reason would you have to buy more bandwidth, such as Comcast’s $140 50 Mb/s service if you can’t use it? At least in theory, if you continuously use the 50 Mbps/250 GB model of Comcast, you will run into the bandwidth after about 11 hours and 33 minutes. In the case of AT&T’s 768 Kbps/20 GB model, you would run into the limiter after about two and a half days and the 10 Mbps/150 GB versions would last about one day and ten hours.
AT&T, however claims that subscribers who download constantly at maximum speeds up to 42 hours will not exceed set limits, depending on the tier, which seems not be entirely true.
Our concern is not today’s Internet world, but tomorrow’s Internet that, as far as we can see today, will transition to a cloud computing model and will embrace new Internet services such as video streaming. Imagine your entire family streaming all of your video entertainment via services such as Netflix and it does not take much to see that you will run into those bandwidth caps every month. In 2004, AT&T executive Kirk Brannoch stated that he could not see a reason why consumers would need more than 1 Mbps download speed and it seems a similar opinion still exists with the telecommunications still today. Or, Internet service providers are a bit scared of these new Internet application models and want to squeeze a bit more money out of their aging networks. Or they are just laying the foundation for some extra revenue once these services will be adopted by consumers.
So why don’t we call these announcements what they really are: Price increases.
We aren’t sure if that strategy will actually work and whether consumers will simply pay more. In a worst case scenario, bandwidth caps will have a negative impact on innovation that will include high bandwidth services, will make sure that the U.S. falls even further behind in the global broadband race, and we may even see antitrust issues evolve, if, for example, Comcast makes sure that services such as Netflix can’t compete with its own video delivery service.
If you ask us, these bandwidth caps sound fishy.