Building in protection from cord-cutting, AT&T today announced it was bringing back its unlimited data wireless plan for customers that subscribe to U-verse TV or DirecTV.

The new AT&T Unlimited Plan claims to offer unlimited data, talk and text for $100 a month. Additional smartphones are $40 per month each, with a fourth smartphone free to add at no extra charge.

“Video traffic continues to grow on our network as fast as ever because people enjoy viewing their favorite video content on their favorite devices,” said Ralph de la Vega, CEO of AT&T Mobile and Business Solutions. “And, they will get a high-quality video streaming experience from the start. No compromises in video quality.”

Except that AT&T discloses in its fine print, “After 22GB of data usage on a line in a bill cycle, for the remainder of the bill cycle AT&T may slow data speeds on that line during periods of network congestion.”

Speed throttles often affect video quality and can stall playback.

It’s the first time in five years AT&T has offered an “unlimited data” wireless option to its mobile customers. Analysts suspect the offer is designed to compete with T-Mobile’s free video streaming “BingeOn” promotion, while also protecting AT&T’s video platforms from cord-cutting. AT&T also gets an opportunity to add new video customers to its recently acquired DirecTV service, because only customers with a qualifying video subscription are allowed to buy the unlimited data plan.

AT&T is tying the unlimited data promotion to its satellite offering DirecTV, not U-verse, with a promotional satellite TV package for new video customers beginning at $19.99 per month for 12 months, with a 24 month agreement. After one year, the base TV package increases to $49.99 a month.

To bring back AT&T wireless customers that left for another carrier, AT&T is offering up to $500 in incentives when customers switch to the AT&T Unlimited Plan with an eligible trade-in and buy a new smartphone on AT&T Next. Customers who combine their U-verse or DirecTV account with AT&T Wireless on a single bill will also get an extra $10 off per month.

AT&T is effectively selling its Unlimited Plan for $60 a month, double AT&T’s original rate for unlimited data of just under $30. With a video subscription pre-qualifier, customers enrolling in the plan can expect a substantial bill.

On the mobile side, customers will be initially expected to pay up to $220 a month for four active lines. The $40 credit for the fourth smartphone only begins after two billing cycles, finally reducing the bill to $180 a month before taxes and surcharges. A required video package will range from $19.99 for a basic DirecTV plan ($49.99 in year two) to as much as $80 or more for U-verse TV, bringing a combined television and wireless bill to more than $300 a month.

Those with 4G tablets can save some money dropping the $40 unlimited data device access fee and choosing a $10 1GB data plan for tablets instead.

Does Canada’s Food TV need special protection when it made 53% gross profits on the backs of cable subscribers that pay for the network whether they watch it or not?

“If you cut your cable, then your Internet is going to go up,” predicts Gary Pelletier, president of the Canadian chapter of the Cable & Telecommunications Association for Marketing.

That is just one of several predictions many Canadian cable and phone companies are claiming will come from the “disastrous decision” to allow consumers the freedom to pick and pay for only the cable channels they want to watch. Amidst claims that over 10,000 jobs will be lost, chaos and bankruptcy will stalk minority and niche cable networks, consumers will pay much higher bills, and American programming will boycott Canada fearing a-la-carte could make its way into the United States, Canada is at least having an adult discussion about the future of television and where it fits in the country’s identity.

Big changes are coming as a result of the latest great soul-searching made by our good neighbors to the north, always concerned about the potential of the Canadian Experience being overrun, if not decimated by the United States’ entertainment hegemony. In a moment of clarity, regulators have just realized what the rest of English-speaking Canada already knew: protectionist content regulations don’t work on the Internet. Canadians routinely bypass geographical restrictions and Canadian content laws with virtual private networks that relocate them, online at least, to a home address in the U.S. so they can binge-watch the unrestricted American versions of Netflix, Hulu and other online video services.

Regulators have now adopted the attitude – “if you can’t beat ’em, join ’em,” encouraging Canadian entertainment producers to create fewer, but better shows that will not only attract Canadian audiences, but those abroad.

Only the exchange is supposed to be mutual. High quality Canadian television productions like Orphan Black, Schitt’s Creek, X Company, The Book of Negroes, This Life, 19-2, Vikings, Killjoys, Rookie Blue, and Murdoch Mysteries are all among Canadian critics’ top favorites. But relatively few Americans know these shows exist or assume they are co-productions owned by some American entertainment conglomerate. Only a brief glimpse of a Canadian flag during the warp speed end credits might clue viewers this isn’t the case.

Despite protectionist media policies that have endured since 1970, the Canadians are now boldly going where Americans have so far feared to tread. They are having the conversation about the future of television and online entertainment in all forms while American media barons remain in denial.

For average consumers, the biggest change will begin next spring when the era of Canadian a-la-carte cable television arrives, allowing consumers to take an ax to the expensive 120-300 channel television package once and for all. Starting March 1, all Canadian providers will be required to offer consumers a basic cable package priced at no more than $25 a month, containing Canadian and U.S. over the air stations and networks, educational, and public channels. If you want more, you can have it by buying channels or mini-packages of networks individually to create a personalized cable TV lineup of networks you actually care to watch.

Programmers across Canada, particularly those catering to sports fans, foreign audiences, religious viewers, and minorities are horrified by the idea. So are media critics that fear the change could help bring an end to Canada’s unique multilingual and multicultural identity.

Customers like James Rehor of Hamilton explains why.

“Why would I pay for it? Why do I get it? Why does it come on my TV?” asks the 60-year-old construction worker. He’s ready on day one to purge the large number of French and other non-English channels from his Cogeco Cable lineup. Rehor offers comfort to sports programmers, however. He’s a big fan of the Toronto Maple Leafs, so Leafs TV, Sportnet, and TSN will stay.

Non-sports fans are another matter. They can’t wait to ditch the sports networks that are always the most expensive channels in a Canadian cable package.

“Clearly the most expensive (channels) will always be sports,” Pelletier tells the Canadian Press. “At the end of the day, for sports watchers, their cable bill will probably stay the same or increase, maybe … In the case of someone who doesn’t watch any sports at all, their bill will probably decrease.”

[flv]http://www.phillipdampier.com/video/CRTC Supporting the creation of content made by Canadians for Canadians and global audiences 3-2015.mp4[/flv]

An Age of Abundance: Canadian telecom regulators are transforming media regulations in Canada, recognizing the way Canadians watch television has changed. Quality, not quantity, is now most important. CRTC chairman Jean-Pierre Blais discusses the new reality. (6:08)

Pelletier and his industry friends are on a mission to convince Canadians to leave well enough alone and not drop the current all-for-one price cable television package for a-la-carte — not realizing the potential consequences.

Some in the cable industry have tried other scare tactics to no avail.

One industry-backed study predicted pick-and-pay could cost the economy 10,000 jobs. Consumers could care less. Unifor, a union that represents many in the television sector, seemed to agree Canada’s cultural heritage will be at risk with lowest common denominator programming dominating from St. John’s to Vancouver, much of it shoveled from the United States. But Canadians still want their House of Cards and Homeland.

Howard Law, a media spokesman for Unifor, predicts less profitable Canadian channels will fold under a pick-and-pay pricing model.

“The introduction of pick and pay will, in itself, lead to a major loss of revenues to Canadian broadcasting system, which ultimately plays out in less Canadian content and less Canadian jobs and less Canadian broadcasting,” he said in an interview on CBC’s The Exchange with Amanda Lang.

Minority interest and religious channels are also worried about their future. Most of those networks are classified as “specialty channels” by the Canadian Radio-television and Telecommunications Commission (CRTC). Legacy networks that have been around since at least the 1990s have been sitting pretty, protected by their designation as a “Category A” specialty station. Unlike in the United States, Canadian cable networks are licensed to operate by the CRTC, and at least 60 of those Category A networks also enjoy “genre protection,” a CRTC policy that guarantees their channel carriage on Canadian cable, satellite, and telco TV systems and protection from other cable networks that want to run the same kind of programming.

[flv]http://www.phillipdampier.com/video/CBC How New CRTC Rules Will Change Canadian TV 3-2015.mp4[/flv]

For decades, protectionist Canadian content regulations made certain Canadian television reflected its audience. But online video and the Internet has allowed Canadians to bypass traditional cable television to watch they want, not what the government hopes they will. New CRTC rules reflect that reality as Canadian TV rethinks how to get the viewer’s attention. From CBC-TV’s The National (4:16)

CRTC policies have allowed Canadian specialty channels to flourish despite operating in a smaller marketplace with fewer viewers than their American counterparts. That means networks like FoodTV and HGTV in Canada have profit margins ranging from 53-58 percent. Fashion Television and BookTV made an improbable $2.7 million in pre-tax profit, not so much from viewers but from the licensing fees every Canadian cable customer pays for the four networks whether they watch them or not.

From its start, Canadian TV has always faced a looming shadow from the south. Protecting Canada’s identity has been a priority for decades.

“If you’re a specialty channel that’s lived within the protective cocoon of bundling for years, you’ve gotten used to having a full-time job with benefits,” independent technology analyst Carmi Levy told CBC News. “Contrast that with living outside the protective cocoon, you’re essentially a freelancer, you fight for every contract, you have no benefits, there are no guarantees that money will be coming tomorrow or next week.”

It probably won’t be coming from subscribers like Mr. Rehor, who won’t hesitate to drop channels if they go unwatched.

The CRTC is also doing some dropping of its own, starting with genre protection, which could lead many specialty networks to follow American cable networks that today depend on chasing ratings to justify their licensing fees. The unintended result in the United States has been questionable lineup changes like the appearance of Law & Order rerun marathons on WEtv, a network supposedly dedicated to women’s entertainment. Ovation, a fine arts independent cable network that is about a niche as a network can be, depended on weekend binges of PBS’ Antiques Roadshow reruns in 2012 just to attract enough viewers to show up in the ratings.

Lesser known networks like OutTV, Canada’s only network dedicated to lesbian, gay, bisexual, and transgender viewers, may face an uncertain future if it can’t charge a premium price to make up for expected subscriber losses from pick and pay. Other niche channels may have to merge with other networks or more likely relaunch with an online platform and deliver a reduced menu of content to audiences.

Large Canadian mainstream networks and programmers don’t expect too much change from pick and pay, as most Canadians will likely still demand a package with their programming included. But distributors – cable, satellite, and telco TV platforms, do expect some major changes. The average Canadian now pays around $50 a month for basic cable, a price that will be cut in half next spring.

Rogers Cable already knows what is coming. It ran a trial in 2011 in London, Ont., with 1,000 customers who were given the choice of picking and paying for the channels they wanted. It didn’t take long for the cable company to discover customers loved it and TV stations and cable programmers hated it.

“We found that customers like bundles, but want to build their own. They want a basic package and an extra package they create,” Rogers spokesman Kevin Spafford told the Toronto Sun. “We did get push back from TV stations. There was concern about offering this service. They did not want us to proceed with that model.”

After the trial ended, Rogers allowed the pilot project participants to keep their pick and pay packages, something they’ve held tightly for over four years.

Rogers’ pilot offered something like what the CRTC is demanding be available to all Canadians:

ROGERS PICK AND PLAY PILOT

• $20 a month for “skinny basic” TV package of Canadian stations. (The CRTC plan mandates no more than $25.)
• 15-channel package for $27 a month. Other packages of 20 and 25 stations also offered, for more money. (The CRTC wants networks to offer channels individually or in mini-bundles.)
• U.S. major networks offered for $3 a month. (Under the CRTC policy, these stations may appear under the basic or a-la-carte tiers.)

REGULAR ROGERS

• Basic: $40 a month, 190 channels
• Digital Plus: $63, 220 channels
• Sports packages: $77, 230 channels
• VIP TV: $77, 270 channels
• VIP Ultimate: $119, 320 channels

The upcoming changes are probably the biggest in Canadian cable television history, but they still may not be enough to attract cord-nevers — those who have never subscribed to cable TV. Most are under 30 and already watch all their favorite shows online. Some budget-minded Canadians who want to cut their cable bill may consider joining them by cutting the cord altogether or slimming down their cable packages, but Pelletier warns that cable operators will not leave their money on the table.

Supplementing a slimmer cable package with a streaming service or two could increase data charges, Pelletier warns. Plus, you may have to surrender any discounts you get from bundling cable with home phone, Internet and/or wireless service.

Usage capped Internet is also still an effective deterrent for cord-cutting and whether your television entertainment comes over the cable or online, providers will still make a run for your wallet. Some observers predict providers will dramatically increase the retail prices of a-la-carte networks to limit potential savings while also continuing to raise broadband prices.

A 2014 national PIAC poll found 90 per cent of 1,000 consumers polled were willing to pay an additional $1 a month per channel, while 54 per cent would be willing to go $3 a month, and 21 per cent would be willing to pay $5 a month for an extra channel of their choosing. Many don’t realize under the current system the wholesale rate for many channels is under 50 cents a month. Considering what Canadians are willing to pay, it is likely cable companies will price channels according to what the marketplace will tolerate, which could be around $3 for each channel a month.

Suspicion about any cable company offering a New Deal is something Americans and Canadians have in common. Mr. Rehor is already keeping a wary eye.

“I think it’s a good idea, I just don’t know how they’re going to really work it,” he says, fearing it could ultimately end up costing the same amount he pays now.

[flv]http://www.phillipdampier.com/video/CBC Pick and Pay TV 3-2015.flv[/flv]

CBC News offers this extended discussion about the implications of “pick and pay” cable television. (10:11)

Stop the Cap! has received a growing number of complaints from Comcast customers in Georgia who are paying the cable company an extra $35 a month to get back unlimited Internet access that is performing worse than ever before for online video streaming.

J.J. LaFrantz in North Druid Hills reports his Internet speed for streaming videos dropped from 60Mbps under Comcast’s usage cap regime to less than 20Mbps after agreeing to pay for Comcast’s unlimited use insurance plan.

“Right after I paid The Great Satan their extortion to get unlimited service back, my Internet speeds dropped,” LaFrantz tells Stop the Cap!

LaFrantz has been in touch with Comcast several times about the speed degradation, with each representative providing a different excuse:

It’s the cable modem. “Comcast loves to blame customer-owned equipment for Internet problems, urging the unknowing to pay endless rental fees for Comcast equipment that supposedly fixes everything,” said LaFrantz.

It’s the holidays. “With the kids home from school, apparently Comcast cannot manage to handle the strain, or so they seem to suggest,” said LaFrantz.

It’s everyone but Comcast. “If their speed test performs adequately enough for them, it is no longer their problem, it is yours.”

Mysteriously, after Comcast “reprogrammed” his cable modem, his speed returned to normal.

Jakfrist posted a similar complaint on Reddit after he signed up for Comcast’s $35 insurance plan:

The speed test shows slower than I am paying for but still a reasonable speed but videos that previously started instantly are now saying I have to wait an hour to start so it can buffer out (iTunes Movies on AppleTV).

Like LaFrantz, a call to Comcast eventually led to the company reprogramming Jakfrist’s modem, which also made the video streaming issues disappear:

How much will your next broadband bill be?

After calling Comcast the first guy had no clue what I was talking about and I got escalated to another guy. The new guy tried to tell me that it was because I was using my own modem and it would be resolved if I used their modem.

I explained that I had opened a terminal window and was running a ping to google, Ookla (the speed test org), Bing, Netflix, Hulu, and iTunes. The only two experiencing issues / delays were iTunes and Netflix so my modem appears to be fine. They also asked if I had tried their video streaming service to see if it was slow as well. I just kinda laughed and said no thanks.

He asked me how old my modem was and tried to convince me my modem was bad again and all would be solved if I just leased a modem from them. I insisted my modem was fine that it doesn’t choose to filter out video content. He then told me that they would send a tech out to look at it.

I insisted that everything inside my house was fine and if they wanted to send someone out to check the things outside my house that would be fine but I wasn’t going to take a day off of work to have someone take a look at something I know is set up correctly.

He sighed deeply and said that he would see if he could update some settings in my modem. All the sudden my speed test went from 20Mbps to 60Mbps.

I ran the test on Netflix and told him even with the 60Mbps I was still only pulling 720p on Netflix and iTunes was even worse. He put me on hold for a couple minutes and reset my modem again and afterwards Netflix and iTunes seem to be functioning perfectly.

Customers not paying Comcast the extra $35 a month to rid themselves of usage caps are not getting off scot-free either.

Jeff Wemberly reports his Comcast usage meter is recording unprecedented levels of usage he has never seen on his broadband account before the caps.

“We were well aware of Comcast’s new 300GB usage cap and began closely monitoring how we use our broadband service,” Wemberly writes. “We even have the kids streaming 100-150GB of streaming videos from a grandfathered Verizon Wireless unlimited data/hotspot account every month instead of using Comcast (serves Verizon right for jacking the price up – now we’re going to use it until we drop). We have three years of usage data from our router and we were certain we’d be using no more than 225GB a month after making that change.”

Instead, starting the same month Comcast’s cap went into effect, their reported usage more than doubled.

“Their meter is absolute bull—- reporting more than 700GB of usage every month starting after the caps went into effect,” Wemberly writes. “They aren’t just putting their finger on the scale, they are sitting on it!

Wemberly’s router reported the expected usage drop, with the family turning in 217GB of usage in November and 189GB so far this month. But Comcast’s meter reports 711GB in November and 748GB so far this month.

“We started getting the usage warning 11 days into November and 14 days in December,” Wemberly tells Stop the Cap! “It recorded 63GB of usage on Dec. 19, a day the family was out Christmas shopping. If someone was into our Wi-Fi, the router would have reported it. It doesn’t.”

Next month, Wemberly expects to begin getting bills that run $80 higher after Comcast’s overlimit fee grace period ends. Comcast told him its meter cannot possibly be inaccurate.

“You are forced to pay the extra $35 so you don’t have to pay $80,” Wemberly said. “The Gambino crime family must be kicking themselves wasting time with loan sharking and shakedowns. They should have learned from Comcast and extorted people legally with data caps.”

Wemberly intends to say goodbye to Comcast when AT&T’s U-verse with GigaPower arrives in his neighborhood.

“Paying AT&T $70 a month is cheap compared to Comcast’s endless greed,” Wemberly said. “We can’t wait to cancel.”

An AT&T Logo is pictured on the side of a building in Pasadena, California, January 26, 2015. REUTERS/Mario Anzuoni

Editor’s Note: Stop the Cap! learned in May from a well-placed source that the FCC would “get serious” about data caps if Comcast moved to further expand them in its service areas across the country. It appears that day has arrived although it is too early to tell what direction the FCC will move in. Comcast’s data cap program has grown the most controversial, triggering at least 13,000 consumer complaints from what the company continues to claim is only a limited “trial.” But wireless providers’ growing interest in exempting certain data from counting against a customer’s allowance — a practice known as “zero rating” — has also attracted interest because of its potential impact on Net Neutrality policies.

WASHINGTON (Reuters) – The Federal Communications Commission said on Thursday it has asked major Internet providers to discuss innovative data policies in the wake of the government’s Net Neutrality rules.

FCC chairman Tom Wheeler told reporters Thursday that commission staff sent letters on Wednesday to AT&T, Comcast and T-Mobile “to come in and have a discussion with us about some of the innovative things that they are doing.”

Wheeler said the letters are focused on data policies.

T Mobile has introduced a new “Binge On” policy that does not count some digital video services against data limits.

Comcast is rolling out its own live streaming TV service called “Stream TV” that would not count usage against data caps if using Comcast services.

AT&T has had “sponsored data plan” programs that allow content providers to subsidize users wireless data.

Wheeler said the commission wants to welcome innovation in its open Internet order. He said the commission wants to “keep aware” of what is going on.

On Dec. 4, a U.S. appeals court heard arguments on Friday over the legality of the FCC’s Net Neutrality rules, in a case that may ultimately determine how consumers get access to content on the Internet.

The fight is the latest battle over Obama administration rules requiring broadband providers to treat all data equally, rather than giving or selling access to a so-called Web “fast lane.”

(Reporting by David Shepardson; Editing by Chizu Nomiyama)

Encouraging customers to accept data caps. (Image courtesy: Hairspray/New Line Cinema)

Comcast CEO Brian Roberts this week ignored customer opposition to his company’s expanding trial of usage caps, insisting usage billing “balance[s] the relationship” between the customer and the cable company.

“The more bits you use, the more you pay,” Roberts said.

Taking questions from Business Insider CEO Henry Blodget at the publication’s Ignition conference, Roberts immediately bristled at the idea Comcast had usage caps at all.

“They’re not a cap,” Roberts said. “We don’t want anybody to ever not want to stay connected on our network.”

Many Comcast customers would disagree, noting Comcast’s trial now limits most customers to an arbitrary 300GB allowance, after which a penalty overlimit fee of $10 for each additional 50GB applies.

Comcast’s public relations defense of usage caps depends on redefining a “limit” on usage into an “allowance” — one that also introduces the concept of usage-based billing. The company abandoned its old defense of usage caps as a congestion control measure, admitting in internal company documents Comcast’s 300GB allowance is nothing more than an arbitrary “business decision.”

It’s a decision Comcast’s broadband customers obviously don’t like. Customers in Shreveport, La., one of the latest markets to get Comcast’s cap treatment, are up in arms over the new limit, according to the Shreveport Times newspaper:

Stephen Pederson, social media manager for the Highland Restoration Association, said data caps are the most recent transgression from a company without a reputation for good customer service.

“This is utterly ridiculous,” Pederson wrote in an email. “Our various utility providers hold us hostage for basic necessities of modern life, and it is a serious injustice that seems to represent an insurmountable obstacle. What can we do? Is not our government in place to protect us from these injustices?”

When Blodget asked Comcast customers in attendance at the conference for questions he should bring to the head of America’s largest cable company, he got an earful.

“‘Ask him about these data caps. They’re driving me crazy,'” Blodget asked Roberts during a sit down interview. “Why data caps and what about this accusation that you don’t charge for your own data but you clobber people when they watch Netflix?”

“Just as with every other thing in your life, if you drive 100,000 miles or 1,000 miles you buy more gasoline,” Roberts lectured. “If you turn on the air conditioning to 60º vs. 72º you consume more electricity. The same is true for usage.”

Roberts added mobile companies were already billing for data usage this way. He rhetorically asked Blodget, ‘why not cable Internet, too?’

Robert Marcus already answered that question for Time Warner Cable’s investors and customers.

“We know customers do place a value on the peace of mind that comes with unlimited plans,” CEO Marcus said on a conference call in late July. “[Time Warner Cable is] completely committed to delivering an unlimited broadband offering in connection with whatever else we do.”

Unlike Comcast’s trials that force usage caps on customers, Time Warner Cable chose to gauge customer interest first, introducing optional usage capped tiers offering a modest discount. Marcus quickly conceded they were a flop with customers.

Business Insider CEO Henry Blodget (L) displays Comcast customers’ frustration over data caps to Comcast CEO Brian Roberts (R). (Image courtesy: Business Insider)

“Very few customers — in the thousands (out of more than 10 million Time Warner customers) — have taken the usage based tiers and I think that speaks to the value they place on unlimited — not bad because we plan to continue to offer unlimited for as far out as we can possibly see,” Roberts said in 2014.

*In contrast, Roberts showed no interest in listening to customers’ criticism of Comcast’s caps, claiming they only affected a tiny minority – about 5% of customers, a fact quickly proven false by Comcast itself when it confirmed at least 8% of customers are already exceeding their allowance and that number is climbing. Roberts also ignored Blodget’s question about how Comcast’s usage caps will affect online video services, particularly those competing against Comcast’s own online video platform that won’t count against a customer’s usage allowance.

Online video competitor Sling TV has an answer to Blodget’s question.

“I think one of the areas we’re quite focused on is what’s happening in Washington, DC around Net Neutrality,” Sling TV CEO Roger Lynch told Cordcutting.com. “We see concerning things happening if you look at cable companies like Comcast now instituting data caps that just happen to be at a level at or below what someone would use if they’re watching TV on the Internet—and at the same time launching their own streaming service that they say doesn’t count against the data cap.”

Stop the Cap! also challenges Roberts’ philosophy on data caps and his flawed logic, which simply fails to withstand basic scrutiny and common sense.

Phillip Dampier: Who knew Comcast was just being ironic when it promised improvements to the customer experience.

First, unlike water, gas, or electricity, data transmission is not a finite resource that must be captured, generated, or pumped from the ground. Roberts follows the grand tradition of pro-cap propagandists that claim it is ‘only fair’ that customers should pay for what they use without ever actually offering that option. Indeed, Comcast ignores the utility it most closely resembles — your home phone company. Like broadband, telephone calls are transported digitally across a national network that costs the companies nearly the same if you place 10 or 1,000 calls a month. Capacity is abundant and cheap to expand. The evidence of this is best represented by the near elimination of the concept of a long distance call. Most companies now offer nationwide calling plans that make it no longer necessary to wait for nights or weekends to grab discounted calling rates. Much the same is true for broadband. Despite increasing traffic, technological advancements have actually reduced the costs to transport data, despite usage growth.

Comcast’s broadband prices are already way and above anything reasonable to cover those costs and deliver a healthy return. In fact, the Wall Street Journal noted in 2012 that 90%+ of your monthly broadband bill represents gross margin, meaning if your broadband bill was cut by two-thirds, Comcast would still have more than enough money to cover their costs, upgrade their networks, and even cushion some of the revenue pressure coming from their cable television side of the business.

Second, if Comcast wants to idolize usage-based utility pricing, then like other utilities, it should be regulated on the state and federal level to ensure fairness in pricing and accuracy of measurement. Currently, Comcast’s usage measurement tools are subject to no independent oversight to guarantee accuracy. Comcast also faces scrutiny for its claimed advocacy of usage pricing without actually moving towards a “pay per use” model. Ask yourself when your gas and electric company charged you an arbitrary amount not based on actual usage? Comcast is not offering customers the option of paying for only exactly what they use. If you consume 30 or 300GB, the charge is the same. Your unused usage allowance does not rollover to the following month and is forfeit. Does the electric company charge you for electricity you never used? If you happen to go on vacation, Comcast still collects. If you shut your modem off, Comcast still collects. Heads they win, tails you lose.

Comcast’s idea of “balance” is to charge you not only for different speed tiers, but also for how much you use them. This ice cream cone costs $2.99. But if you eat more than 1/2 of it, you have to pay an extra ice cream consumption charge to be fair. Yet Comcast does not allow customers to choose only the TV channels they wish to watch — they pay for the entire lineup, whether watched or not.

Third, Comcast’s pricing isn’t focused on cost recovery, it is based on meeting shareholder’s revenue expectations and charging whatever the market will bear. Except this particular market is often a monopoly for High Speed Internet, and it is largely unregulated. That’s the classic recipe for robber baron price gouging. Cue Comcast.

This week, MoffettNathanson analyst Craig Moffett warned the days of cable companies finding lots of new customers to boost broadband revenue are ending.

“Broadband in the United States is rapidly approaching saturation, and the pool of legacy DSL subscribers from which cable has recently drawn so much market share is rapidly declining,” Moffett said.

Wall Street revenue growth expectations are not slowing, however. That means companies will have to earn more revenue from existing customers to keep investors happy. If they continue raising the price of cable TV, cord cutting will accelerate. If they try to gouge their landline customers, people will stick with their cell phones. Broadband is the one service most consumers cannot do without. Economists recognize that a highly valued product will easily command higher pricing, which is why several Wall Street analysts are pushing for broad-based price hikes and usage-based billing. Monetizing broadband usage, limiting potential savings for light users, and continuing the usual rate increases is a formula for heavy profits, especially when there are few competitors to disrupt the marketplace.

What evidence do we have of this? Our friends at the wireless phone companies offer a great example. Nobody gouged more for a telecom service than your wireless carrier’s text message fee. Texting cost carriers little to offer but it quickly became a profit center as demand rose. Carriers routinely charged 100,000 times more for a text message than they did for using a comparable sliver of 3G or 4G data. Your carrier’s cost to deliver 5,000 text messages a month is less than a penny. But not too long ago, AT&T and Verizon would have charged you $1,000 if you sent and received that many messages and didn’t buy one of their texting plans.

Pricing can change customer behavior in many ways. If you were charged several dollars for text messages every month, the companies encouraged you to sign up for texting plans that ranged from $5-20 a month to reduce the sting. You might even be grateful they offer such plans. What you didn’t realize is AT&T’s effective cost for each message was about $0.000002 per text—two ten thousandths of a cent. The same holds true for Comcast’s new $30-35 insurance plan that restores unlimited access. You might be relieved such an option is available in parts of Florida and Georgia, but you have effectively given Comcast up to $35 a month more for the exact same level of service you used to receive.

The plans and dollar amounts charged for telecom services often have little relationship to actual costs. Cell phone plans were originally based on an allowance of the number of voice minutes included with the plan. Exceed that and you would have paid upwards of 20 cents for each additional minute of talk time. But the carriers’ actual costs were much lower, evident when most suddenly transformed their business models to stop relying on voice minutes and texting for most of their revenue. The big money would now come from data usage — after companies ended flat rate usage plans. Carriers understood third-party apps like Skype, Hangouts, Whatsapp and others were bypassing their artificially inflated prices for voice calls and texting by relying on your data plan instead. Prices for voice and texting plans were no longer sustainable with app-based competition. But keeping competitors that rely on those data plans to connect their users in check can be easily accomplished by installing a meter on data usage and billing accordingly. Either way, companies like Verizon and AT&T guaranteed they would be paid.

Comcast is laying the groundwork to do the same. If you cancel Comcast cable TV and watch programming online, chances are excellent you will end up forking over another $30-35 a month to get rid of their usage cap. That’s almost pure profit Comcast can keep for itself and not share with any programmer. Either way, Comcast gets paid.

Roberts’ positive attitude about unpopular usage caps comes at the same time the company continues to claim it is cleaning up its reputation with customers. Not listening to what customers want sounds a lot more like the Comcast most customers are used to dealing with, and threatens to further diminish the company’s standing with consumers.

[flv]http://www.phillipdampier.com/video/Business Insider Comcast CEO responds to usage caps 12-8-15.mp4[/flv]

Comcast CEO Brian Roberts answers questions about data caps at the Business Insider Ignition Conference (2:03)