AT&T's Caps Are a Giant Con and an Attack on Cord Cutters Earlier this week we noted that AT&T would be imposing usage caps on the company's U-Verse broadband customers. But the company also announced it would be following Comcast's lead and "allowing" users to pay $30 more a month if they wanted to avoid usage caps entirely. In short, both companies have now effectively made unlimited data a luxury option, while simultaneously charging their customers more money -- for the exact same service. This glorified price hike is, of course, a clear example of the lack of real broadband competition facing both companies.

Unlike Comcast, AT&T has added a new wrinkle to the mix: it will allow users to graciously avoid the $30 fee -- if they just subscribe to DirecTV or U-Verse TV service. To be clear: neither AT&T or Comcast's usage caps are necessary due to company financials or network congestion. Flat-rate broadband has proven to be incredibly profitable for both companies (check any earnings report). It's more than profitable enough to pay for the modest network upgrades needed to meet capacity needs. Flat-rate broadband pricing also more than pays for the small number of extremely heavy users usually cited by both companies as why caps are necessary, though these users could easily be pushed to business-class tiers if extreme usage were really the issue. No, the telecom industry's plan is to use arbitrary and unnecessary usage caps to wage war on Internet video and cord cutting. Caps are a multi-win for ISPs like AT&T and Comcast. They allow the ISP to cash in on Internet video by making streaming more expensive. They allow the ISP to make cord cutting less viable by, again, making streaming more expensive. In some cases, they can be used to give the ISP's own content an unfair market advantage. And now AT&T's using caps to force users to subscribe to traditional TV -- if they want their broadband connection to work like it used to. That fixed-line usage caps are an anti-competitive assault unrelated to congestion isn't theory, hyperbole or opinion, it's fact. It's why you'll never, absolutely ever see an ISP release raw network performance data proving caps are needed. In fact, the industry a few years ago finally admitted caps weren't about congestion, instead insisting it's about "fairness." But what's fair about charging even more money for what's already some of the most expensive service among all developed nations (OECD broadband global comparisons)? And if a "small minority" of customers are "using too much bandwidth" you push them onto business-class tiers, you don't impose a huge new price increase on all your customers, then insist it's "only fair." DSLReports was the first to report that AT&T was planning to implement caps back in 2011, but only enforced them on its older DSL lines, not U-Verse customers. When I asked AT&T just three years ago why that was, AT&T offered me this statement: quote: Due to the greater capacity of the U-verse architecture as compared to legacy DSL, we have not prioritized implementation of applicable usage allowances. So please note that three years ago AT&T's U-Verse network had so much capacity that caps were totally unnecessary. Also please note that after acquiring DirecTV, AT&T is So please note that three years ago AT&T's U-Verse network had so much capacity that caps were totally unnecessary. Also please note that after acquiring DirecTV, AT&T is backing away from offering TV over its U-Verse infrastructure and moving its video users to satellite. This means, combined with routine upgrades, the U-Verse network should technically have more capacity than it has had in years. Due to the greater capacity of the U-verse architecture as compared to legacy DSL, we have not prioritized implementation of applicable usage allowances.

-AT&T, 2013 So what changed to suddenly make usage caps "necessary?" AT&T's been losing TV customers to Internet video. In fact, despite the "amazing synergies" of the DirecTV merger, AT&T still managed to lose 24,000 TV subscribers last quarter. That's on top of the company seeing net losses in traditional phone, wireless, and broadband customers. What does a giant, lumbering, government-pampered duopolist do when the going gets tough in the face of unfamliar competition? It cheats. So what changed to suddenly make usage caps "necessary?" AT&T's been losing TV customers to Internet video. In fact, despite the "amazing synergies" of the DirecTV merger, AT&T still managed to lose 24,000 TV subscribers last quarter. That's on top of the company seeing net losses in traditional phone, wireless, and broadband customers. What does a giant, lumbering, government-pampered duopolist do when the going gets tough in the face of unfamliar competition? It cheats. Meanwhile, the press remains utterly clueless when it comes to adequately educating consumers about AT&T's plans, letting themselves be manipulated all week into stories that left consumers with the impression that what's happening is a good thing. If you look at the press coverage of the caps, you'll notice nearly all news outlets focused on the idea that AT&T was "raising" or "boosting" usage caps, giving consumers the impression that AT&T did them a favor. But as we noted, the caps on U-Verse are effectively new, since until now they've never been enforced. Yes, the previous unenforced cap (250 GB) has been replaced by higher, enforced caps depending on tier speed. But that's not really relevant when users on modern, fixed-line networks shouldn't be facing usage caps in the first place . Politicians and regulators at the FCC remain equally useless when it comes to protecting consumers and policing usage caps. As we've long noted, ISPs are eager to bill like utilities, but they refuse to be regulated as such. And regulators are happy to comply, failing to make sure ISP meters are accurate (and lo and behold, they often aren't). And like we've seen on the zero rating front, regulators don't see the problem with price gouging uncompetitive markets, using caps to hinder competition and innovation, using caps to unfairly protect legacy TV, or using caps to give an ISP's own streaming services an unfair advantage in the market. So if you've got any alternative broadband option vote with your wallet, switch ISPs, and let AT&T and Comcast know that at least some consumers are smart enough to realize when they're being swindled. So if you've gotalternative broadband option vote with your wallet, switch ISPs, and let AT&T and Comcast know that at leastconsumers are smart enough to realize when they're being swindled.







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