AT&T, Verizon say broadband data caps are helpful, not harmful

AT&T (NYSE: T) and Verizon (NYSE: VZ) not only think that 4 Mbps is a sufficient definition for broadband, but they have told the FCC that the regulator should not look at data caps when defining whether an Internet service should be qualified as a broadband service.

Unlike its cable competitors Time Warner Cable and Canadian providers like Bell Canada, Verizon has not implemented usage-based billing on its FiOS or existing DSL services.

AT&T currently advertises 150 GB and 250 GB monthly usage limits and will charge users penalties when they go over their limit. Although AT&T will send letters telling customers that they are using too much bandwidth, the service provider has not meted out those financial penalties.

In separate FCC filings published yesterday on the FCC's website, AT&T and Verizon expressed their disagreement with a proposal made by Netflix to include data caps in the FCC's new 10 Mbps broadband definition.

"Despite Netflix's assertion that data usage thresholds should be accounted for in the Commission's deployment benchmarks, the Commission should not utilize pricing plans in its determination of whether advanced capabilities have been deployed to all Americans," AT&T wrote. "As an initial matter, AT&T is not aware of tiered data plans that actually limit the amount of data a customer can use. Rather, to the extent providers use tiered data plans, those plans attach different prices to different buckets of data and require that customers who exceed the allowance associated with their chosen plan to pay for their additional usage. In this respect, tiered data plans are no different from any other pricing model that relates charges to usage."

For its part, Netflix said in its own filing that the regulator's "revised benchmark also should account for data caps and other terms of service that may restrict broadband use even when a broadband connection is technically capable of achieving minimum threshold speeds."

Taking it a step further, Verizon wrote that usage-based pricing can also provide benefits to both consumers and broadband providers.

Implementing usage-based pricing "provides a way for consumers who are not heavy users to keep their costs down" and "increases incentives to invest in broadband networks," wrote Verizon. "Because such pricing helps ensure a superior broadband experience for most consumers, it better enables providers to win and retain subscribers, thereby generating the revenue necessary to make broadband investments in the first place. By contrast, rate regulation, such as through restricting usage-based pricing, would suppress investment and risk undermining the goals of Section 706 [of the Telecommunications Act]."

The Internet Association, which includes various content providers such as Amazon, eBay, Facebook, Google, reddit, Netflix, Twitter, Yahoo and others, wrote that data caps should be monitored because they "effectively ration consumer use of broadband."

For more:
- see the AT&T filing (.pdf)
- and the Verizon filing (.pdf)
arstechnica has this article

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