Broadband ISP Cox Will Now Charge You $50 More To Avoid Usage Caps, Overage Fees

from the thanks,-competition dept

We've noted repeatedly how large ISPs for years have happily abused the lack of competition in the broadband market by imposing arbitrary, unnecessary and confusing usage caps and overage fees. While ISPs had tried for a while to suggest these caps were "only fair," or necessary due to congestion, repeated debunking of those excuses forced the ISPs a few years back to finally stop pretending there's any good reason for these limits.

These days, ISPs don't even give coherent reasons for the limits, because they know caps are about one thing: abusing a lack of competition to raise rates and protect TV revenues from streaming video competition. More importantly, they know that thanks to this limited competition, there's nothing you can do about it either way.

Cox Communications is one of several cable providers that have taken full advantage of the reduction in competition by telcos to drive up rates via usage caps and overage fees. Back in June, Cox announced it would be imposing usage caps of one terabyte, then charging users $10 for each additional 50 GB of data consumed. And this week, the company unveiled the other arm of the company's ingenious plan -- charging its users $50 more per month if users want to avoid usage caps entirely:

"A memo being circulated among employees on the changes downplays the impact of these restrictions on consumers, repeatedly trying to argue that confusing and unnecessary usage limits aren't a big deal because the majority of Cox customers won't run afoul of them...today. "An overwhelming majority of data is consumed by a very small percentage of internet users," the memo reads. "The new choices are great options for the small percentage of heavy users who routinely use 1TB+ per month and prefer a flat monthly rate, rather than purchasing additional data blocks.".

If it's truly only a "very small percentage" of users causing problems with "excessive" usage, Cox could have simply pushed these users to business-class tiers. Instead, they made the conscious decision to impose confusing new rate hikes on all users, feebly trying to insist that this can't possibly impact their consumption. And while it might be true it won't impact consumption today that's not really the point. Once caps are imposed, ISPs can tighten the noose at their discretion. And in a few years, when 4K video streaming and other new high-bandwidth applications emerge, ISPs have a wonderful new way to raise rates on a consistent basis.

But consumers realize they're being screwed, which goes a long way toward the cable industry's utterly abysmal customer satisfaction ratings. In just a few months, Cox imposed pricey and confusing new surcharges knowing a lack of competition would let them get away with it. They then offered users the "option" to pay $50 more just to enjoy the kind of unlimited connections they had last year -- for notably less money.

It's a wonderful racket, and one regulators at the FCC and elsewhere (regardless of political party) have pretty consistently made abundantly clear they couldn't give two shits about. And while many people reading these reports get bogged down over whether one terabyte limits are fair, that misses the entire point. There's no technical reason to impose these limits in the first place. They're glorified rate hikes, poorly justified, shoveled on the backs of captive users who already pay more for bandwidth than users in most developed nations. All thanks to a broken market very few people seem all that interested in fixing.

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Filed Under: data caps, fees, overage fees, usage caps

Companies: cox