AT&T today rolled out major change to its DSL terms of service, notifying its customers of new data caps, network management rules, and usage metering tools. Judging by company forums, many users aren't pleased, but they had better keep their anger in check. The new terms of service also allow AT&T to cut off subscribers "who repeatedly harass or abuse our employees."

The data caps are official: 150GB per month for DSL users and 250GB per month for fiber-to-the-node U-Verse subscribers. Repeated overages will result in a $10-per-50GB charge. The caps begin May 2, as we have already reported. AT&T has created a "broadband usage FAQ" to address questions about the new policy. Here's why the caps are coming:

AT&T has experienced a dramatic increase in the amount of data that is sent and received over its wireline broadband networks. This dramatic increase is driven primarily by a small fraction of our customers. In fact, the top 2 percent of customers use about 20 percent of the total capacity on our network. A single high-traffic user can utilize the same amount of data capacity as 19 typical households. Lopsided usage patterns can cause congestion at certain points in the network, which can slow Internet speeds and interfere with other customers' access to and use of the network.

Several days ago, we asked AT&T where this congestion was located and how often it was present. The company did not reply. Industry analyst Dave Burstein said in an e-mail that "AT&T has done an excellent job of finding a system that affects cordcutters but creates few problems for other than consistent heavy users, most of whom are downloading video." But it's hard to know without real data.

There's reason for skepticism, though. For one thing, Verizon doesn't currently impose a cap on its FiOS and DSL lines (something it brags about). For another, all the same arguments AT&T makes were deployed by DSL operators like Bell Canada, which charges CAN$34.95/month for 6Mbps service with a meager 25GB data cap. Bell has said for years that it invests heavily in its network and that it still needs to throttle P2P traffic and impose tough cap data rates to keep the network running properly.

AT&T's own history shows us just what a ridiculous claim this is for a DSL provider to make. ("Of course it can be done better; just look at AT&T!") Even its new caps are six times higher than Bell's, and its DSL business is insanely profitable. Do AT&T's own claims therefore add up when other competitors still manage to have higher or nonexistent caps? (Indeed, AT&T appears to be lowering its network operations spending, which would help to address congestion issues.)

If the concern was congestion, one might expect more of a focus on an actual congestion throttling system like Comcast's, where heavy users find their traffic slowed a bit during periods of actual network congestion and then restored to full speed when congestion disappears. Monthly data caps don't actually discourage people from using the Internet during the busiest times, though they may lower some total monthly usage.

The carriers have made things harder on themselves by making it clear in the past that they'd love low caps, despite the continued profitability of their ISP businesses (in which profit margins make Apple look like Walmart). When AT&T tested caps in Texas in 2008, it proposed 20GB-150GB caps, depending on subscription tier, with $1/GB overages.

In 2009, Time Warner Cable began testing caps from 5GB for $30 to a max (!) of 40GB for $55. The perceived price-gouging was so obscene that the company had to retreat completely in the face of public (and even Congressional) pressure.

All of this led The Economist to blast the data caps yesterday in a blog entry worth reading in full. A taste:

Regardless of providers' public pronouncements, the root of the problem is Internet video... Caps are a last-ditch effort to preserve a fusty model with artificial limits that resemble broadcast TV... The use of caps allows providers to dish out bandwidth with one hand and take it away with the other. The companies have vastly increased the capacity of various copper, coaxial and fibre lines, but artificially separate out a portion—at least half and often much more—for video which a set-top box or a broadband modem spits out as an apparently distinct service. Cable firms simultaneously push out hundreds of digital channels, while telecoms firms rely on multiple digital streams from live broadcast or cable TV or on-demand pay-per-view. It is as though the water main were divided as it entered the home and a steady, modest stream was made available for showers and at the tap, while most of it was always at the ready for a coin-operated washing machine.

The usage meter

Whatever the reasoning behind AT&T's new caps—which are far superior to the old system they were trialling—they are coming. AT&T has provided a metering website where users can see their current and last few months of historical broadband usage.

For most customers, the caps won't be an issue. I use the Internet extensively, for instance, including regular Hulu video streaming, and have transferred only 16GB and 18GB of data in the last two months using my AT&T DSL connection. The service has been exceptionally stable.

Still, my family is small, we don't currently use Netflix, and my kids aren't old enough to use the 'Net on their own. Here's one parent of a larger family complaining about the caps in an AT&T forum: "This stinks. We are a family of 7 and we watch a lot of movies via the internet and our average usage is about 275 GB per month. We are also paying about 65 [dollars] a month for their 18 Mbps plan. To make things worse, AT&T won't work with Level 3 which is the CDN that is the backbone for CDN's such as VUDU and Netflix. I think I will be going down to their lower end plans because why pay for speed if it just gets you to the cap faster?"

Another complained: "We have 5 PCs in the house (2 Desktops, 1 HTPC [home theater PC], 2 Notebooks)... What about all the bandwidth that is used by Micro$oft and other programs that like to continually "update" themselves? That can be anywhere from a few KB to well over 100MB a pop... PER COMPUTER. Digital downloads of software (legitimate) is also not uncommon, which those programs are typically hundreds of megabytes if not in the gigabyte range. Likewise I had a PC crash on me the other month and I had to re-download all my games in Steam... That was over 60GB right there! Why in these hard economic times do big corporations do this to us little guys? Especially when THEY are making record profits???"

The caps can apparently be avoided by switching to a business-class offering, but this isn't a way to save money unless you're burning through terabytes of data each month. AT&T's 6Mbps home DSL connection runs about $35, while its 6Mbps "small office/home office" DSL connection is $80.

Finally, what about that "employee abuse" mentioned above? Glad you asked. AT&T now prohibits subscribers from "making threats to physically harm or damage employee or company property; frequent use of profane or vulgar language; or repeatedly contacting our customer service representatives for reasons that do not pertain to our provisioning, maintenance, repair or general servicing of your high speed Internet access service after you have been asked to stop such conduct."