“Note: Enforcement of the 250GB data consumption threshold is currently suspended.” (Image: Houston Chronicle)

AT&T’s enforces usage caps with overlimit penalties on its slow speed DSL service while waiving overlimit fees for its higher speed U-verse Internet service.

In 2011, AT&T introduced a 150GB monthly data cap on its DSL customers and a 250GB cap on U-verse Internet access, promising an overlimit fee of $10 for each 50GB customers stray over their allowance. Since that time, although AT&T continues to claim all customers have a usage allowance, it only penalizes DSL customers with overlimit fees.

What makes one customer subject to a higher bill while another can use as much data as they like without penalty? Competition.

Stop the Cap! has found AT&T’s DSL customers are among those least favored by the phone company. Subjected to a data cap with penalty fees for exceeding the allowance is just one of the issues bothering customers like Sheila Rivers, who lives on Houston’s west side. Her Internet bill has gone up year after year no matter how much data she uses. Her phone line with DSL used to cost her around $45 a month. Last year, it increased to $65 and AT&T has now informed her they want another $10 a month, bringing her phone bill to almost $75 a month. As long as it hasn’t rained recently, she gets just under 6Mbps speeds from AT&T. This past spring her connection barely exceeded 2Mbps.

When Rivers complains about her bill, she is quickly offered U-verse at about half the price for faster speeds. She’d take advantage of the offer, except she can’t. AT&T’s engineers tell her there are “no more ports” open in her neighborhood at the moment.

That’s also true for Jim in downtown Chicago. He’s an AT&T DSL customer and not by choice. AT&T was supposed to upgrade his building to U-verse more than a year ago, but it still has not happened. Comcast has a record of delivering appallingly bad service in his building, judging from his neighbors who cannot stay connected to Comcast’s Internet service. That leaves him with AT&T DSL with that 150GB usage cap. He regularly pays $30 in overlimit fees every month for exceeding it.

“AT&T won’t budge on waiving the extra fees on DSL, unless I agree to sign up for U-verse and then they will issue me a courtesy credit,” Jim tells Stop the Cap! “I keep telling them ‘yes, please’ and around a day later I receive another call canceling my order because U-verse is not available in the building. It’s clear the DSL usage cap is supposed to convince people to switch to U-verse for a bigger allowance.”

(Image: Houston Chronicle)

Except AT&T has not enforced its 250GB usage allowance with overlimit fees anywhere we could find. In fact, customers tell us they are specifically exempted from any U-verse caps based on a message they see on AT&T’s usage measurement tool:

Note: Enforcement of the 250GB data consumption threshold is currently suspended.

This week, the Houston Chronicle’s TechBlog reports usage caps for U-verse have been suspended across the city of Houston. AT&T’s current reasoning for harshly enforcing caps on its DSL service while not enforcing them at all for U-verse customers was murky:

“We’re educating our customers on Internet usage, and we inform them if their usage might affect their monthly bill.”

So what is different about AT&T’s lower speed DSL service that presumably generates less traffic than its higher speed U-verse counterpart?

The answer seems to be competition.

AT&T has aggressively upgraded many of their urban and suburban service areas to U-verse. That upgrade alone does not mean the end of DSL for customers in an upgraded area, but AT&T has clearly embarked on an effort to convince customers to abandon older DSL service in favor of U-verse. In most cases this is accomplished with promotional pricing, dramatically reducing the cost of U-verse and convincing customers sticking with DSL is an expensive mistake.

AT&T also faces cable competition in nearly 100% of their U-verse service areas — competition that has raised broadband speeds and cut prices for new customers. If the competition offers faster Internet speeds with no usage cap, toughing it out with AT&T U-verse may seem unwise. Enforcing that 250GB cap would likely drive a number of customers to the competition.

In contrast, more rural and outer suburban communities are less likely to have a cable competitor and much more likely to qualify only for DSL because AT&T has not upgraded those areas to U-verse. That leaves AT&T with a monopoly, where customers have no other choices for service. It is very easy to enforce usage caps in these areas.

“It doesn’t make any sense that AT&T would cap me to 150GB on my DSL line and charge me overlimit fees for using too much when my next door neighbor with U-verse can use the Internet 24/7 and never be asked to pay anything extra for doing it,” Rivers said. “It rubbed me wrong enough to call Comcast, where I was offered more than 10 times faster service with cable TV thrown in for $15 less than what AT&T has been charging me and no usage caps for now at least. I can’t stand Comcast but AT&T is worse.”

Rivers thinks AT&T is making a big mistake having usage caps at all.

“That one issue just cost them my business after eight years with them.”

Rachelle Chong, a former commissioner of the Federal Communications Commission during the Clinton Administration, member of the California Broadband Task Force (2006-2008), commissioner of the California Public Utilities Commission (2006-2009), and Comcast’s vice president for government affairs for the California region (2011-2013) also happens to be a Comcast broadband customer.

She took to Twitter this morning to complain the company she used to work for was giving her a fraction of the speed she was paying for.

At least Comcast’s poor service doesn’t discriminate. Less prominent customers are experiencing the same issues:

I feel like if @comcast internet is reliably running at 20% of the speed I pay for I should only be expected to pay for 20% of the bill.

— Brian E. McElaney (@McElaney) July 29, 2015

4th attempt to contact @comcastcares for same slow internet speed issue, no response. Left wondering what @comcast actually cares about.

— Dave Perks (@writegud) July 28, 2015

One customer isn’t too sure fast speeds matter much. He lives in one of Comcast’s usage cap test markets, where Comcast enforces a usage allowance on their Internet service, with a bill-shocking overlimit fee if you dare exceed it.

Congratulations! Comcast has increased your speed so you can now hit your data cap 50% faster! https://t.co/Vh7Y9fwkgg

— Doug McCaughan (@djuggler) July 25, 2015

Suddenlink’s Operating GigaSpeed has reached parts of Texas, Missouri and North Carolina — the first areas to get 1,000/50Mbps service from the cable company. But customers are not happy to learn it is accompanied by a 550GB usage cap.

The first markets qualified for gigabit service include:

• Bryan-College Station, Texas;
• Nixa, Mo.;
• Greenville and Rocky Mount, N.C.

Customers learning about the faster speeds tell Stop the Cap! they are deeply disappointed Suddenlink has kept a cap on the premium-priced speed tier.

“Here in Greenville they are charging $110 a month for the service, $5 for a cable modem or $10 for a Wi-Fi router, and a $35 mandatory technician visit fee which sounded reasonable until they mentioned there was a 550GB data allowance on the service,” said Stop the Cap! reader J.J. Wallace. “That killed it for me. That is nothing short of outrageous to charge that kind of money and place a ridiculously low cap on it. It’s funny the local newspaper and Suddenlink’s press releases never bother to mention the usage cap.”

Wallace says he avoids usage caps by subscribing to Business Class service, which carries no usage allowance but forces him to a slower speed tier to keep things affordable. A 50/8Mbps business plan costs around $80 a month with modem rental and Suddenlink does not mind selling it to residential customers who refuse to deal with a usage cap.

“That is just about the most affordable plan they have that is tolerable,” Wallace writes. “If you want gigabit speeds on a business account, that will run you at least $575 a month plus equipment fees.”

“Suddenlink is no Google Fiber,” adds Pitt County resident Jennifer Davis. “Google is coming to the Triangle and Charlotte and can easily sell gigabit service for $40 less with absolutely no usage cap or equipment fees. Suddenlink wants another shake of our pocketbooks to grab even more money from us. You can’t even buy your own modem for gigabit service. You have to rent theirs. My area of the county is stuck with Suddenlink like a punishment. As a small business owner who depends on the Internet I am tired of being jerked around by these people.”

Some Suddenlink customers have managed to score better deals for broadband by threatening to leave Suddenlink for the phone company, often CenturyLink, AT&T, or Windstream.

“If you impress on them they are charging too much, they will often find a promotion for you, but so far I’ve had no luck getting them to waive the caps unless you switch to business service,” said Wallace. “They always act like you are the first person to complain about usage caps, but if you read their social media pages, there are many others very upset to find they’ve lost unlimited use service after Suddenlink introduced speed upgrades. Most of my friends would rather have unlimited than faster service you can’t use.”

As for speed upgrades, the communities now qualified for gigabit service will find some changes as Suddenlink adjusts their Internet tiers:

• Internet 50: 50/5Mbps is the new base speed with a 250GB cap
• Internet 100: 100/10Mbps comes with a 350GB cap (current 75Mbps customers upgraded to this tier)
• Internet 200: 200/20Mbps comes with a 450GB cap (current 100Mbps customers upgraded to this tier)
• Internet 1 Gig: 1,000/50Mbps comes with a 550GB cap
• Overlimit Fee: $10 per 50GB of usage, not pro-rated

Suddenlink is pushing existing DOCSIS 3.0 technology to its practical limit offering gigabit service. The latest DOCSIS 3.0 chipsets in newer model cable modems can bond up to 32 downstream channels, enough to support up to 1.2Gbps. To make room for gigabit speeds, Suddenlink needs to migrate its cable television offering to an all-digital format in the cities where it offers the fastest service. It also needs to retire any remaining legacy DOCSIS 2 modems still in use.

Operation GigaSpeed will offer gigabit broadband to all Suddenlink customers in the markets where the service is offered. The company considers that an advantage over Google Fiber and AT&T U-verse with GigaPower, which is only available in certain neighborhoods.

DOCSIS 3.1, expected to make gigabit speeds available more widely on cable systems, is expected to begin market trials as early as later this year with an expectation it will begin to see wider deployment in 2016.

Comcast will challenge cord cutting and entice cord-nevers with an online video package of about a dozen television channels it will sell for $15 a month and likely exempt from its usage cap.

“Stream” will offer about 12 channels — almost all over the air stations including NBC, CBS, ABC, PBS, Fox, The CW, Telemundo, Univision — and HBO to Comcast’s broadband customers and deliver the package over Comcast’s privately managed IP network, which it considers separate from the public Internet. That will also allow Comcast to offer on-demand programming, cloud DVR storage and access to Streampix, Comcast’s movies-on-demand feature it largely abandoned a few years ago.

Comcast’s new no-contract video service will begin in Boston by the end of summer, quickly followed by launches in Chicago and Seattle. Comcast plans to expand the service nationwide by early 2016.

Stream will target millennials and others that have turned their backs on traditional cable television. It will also directly take aim at competing Sling TV, which sells streaming cable TV channels for about $20 a month.

But at first glance, Comcast may have one up on its competition.

Comcast will deliver Stream over the same network it uses for content delivery to game consoles that does not count against Comcast’s trialed usage caps. Watching competitor Sling TV does count against your Comcast usage allowance because it is delivered over the public Internet.

That advantage alone may not help Comcast overcome some of the harsh restrictions it will impose on Stream customers that could prove major turn-offs:

• Viewing must be done from a web browser, tablet, or phone. Stream will not be available on TV-connected platforms like Roku or Apple TV;
• Viewers must stay inside the home to access live streamed content;
• Customers must subscribe to Comcast High Speed Internet service to buy Stream;
• Only Comcast customers inside a Comcast service area can subscribe;
• There are no cable networks offered, except HBO, for now.

Customers will be able to sign up for Stream (and cancel it) over the web with no service technician visit needed. Customers can cancel anytime.

A well-placed source in Washington, D.C. with knowledge of the matter tells Stop the Cap! the Federal Communications Commission is prepared to take a hard look at the issue of Internet data caps and usage-based billing if a major cable operator like Comcast imposes usage allowances on its broadband customers nationwide.

Comcast introduced its usage cap market trial in Nashville, Tenn. in 2012 but gradually expanded it to include Huntsville and Mobile, Alabama; Atlanta, Augusta and Savannah, Georgia; Central Kentucky; Maine; Jackson, Mississippi; Knoxville and Memphis, Tennessee; Charleston, South Carolina; and Tucson, Arizona.

“Two and a half-years is exceptionally long for a ‘market trial,’ and we expected Comcast would avoid creating an issue for regulators by drawing attention to the data cap issue during its attempted merger with Time Warner Cable,” said our source. “Now that the merger is off, there is growing expectation Comcast will make a decision about its ‘data usage plans’ soon.”

In most test markets, Comcast is limiting residential customers to 300GB of usage per month, after which an overlimit fee of $10 per 50GB applies. Despite that, Comcast’s forthcoming premium gigabit speed plans are exempt from usage caps, the company announced.

Comcast sustomers in market test cities have not been happy with the usage caps, some confronted with inaccurate usage measurement tools or “bill shock” after claiming to find surprise charges on their cable bill. One federal employee offered his own story of bill shock — $200 in overlimit fees on his April Comcast bill. The customer spent $70 a month on broadcast basic cable television and Comcast Internet service. As an almost cord-cutter, he could instead rely on one of several alternative online video providers like Netflix or Hulu, but watching video that did not come from Comcast’s cable TV package contributed to eating his monthly usage allowance and subjected him to hundreds of dollars in extra fees.

“I’ve reviewed [the] account to see and can confirm the charges are valid,” responded a Comcast representative who defended the company’s usage cap trials. “Please understand that we are not here to take advantage of customers. We are here to provide a great customer service experience.  After researching [the] account, at this time no matter what level of service you obtain, the Internet usage [allowance] will remain the same.”

To date, the Federal Communications Commission has left the issue of data caps and usage-based billing on the back burner, despite a Government Accounting Office report that found little justification for usage limits or compulsory usage allowances on broadband.

In 2012, former FCC chairman Julius Genachowski defended the practice, claiming it would bring lower prices to light users, spur “innovation” and enable consumer choice. But Comcast customers have found little, if any savings from Comcast’s so-called “data usage plans.” The only savings comes from enrollment in Comcast’s Flexible Data Option, which offers a $5 discount if a customer keeps usage under 5GB a month on just one plan — Comcast’s 3Mbps $39.95/mo Economy Plus tier.

“We don’t see much innovation coming from Comcast’s usage limit trials because Internet pricing continues to rise and the plans have the side effect of discouraging customers from using competing video providers, which can consume a lot of a customer’s usage allowance,” our source adds.

You are over our arbitrary usage limit!

As far as enabling consumer choice, Comcast’s own representative put the kibosh on that, unless a customer wants to pay higher Internet bills.

Net Neutrality and issues surrounding Title II have consumed much of the FCC’s attention in the residential broadband business during the first half of the Obama Administration’s second term. Usage billing and data caps are likely to become bigger issues during the second half if there is a decisive move towards compulsory usage limits and consumption billing by large operators.

“An operator the size of Comcast absolutely will draw scrutiny,” said our source. “If Comcast decides to impose its currently tested market trial plans on Comcast customers nationwide, the FCC will take a closer look. Under Title II, the agency is empowered to watch for attempts to circumvent Net Neutrality policies. Usage caps and charging additional fees to customers looking for an alternative to the cable television package will qualify, especially if Comcast continues to try to exempt itself.”

Cable industry officials have also become aware of the buzz surrounding usage caps and growing regulator concern. Some reportedly discussed the possibility of FCC intervention behind closed doors at the recent cable industry conference in Chicago. Multichannel News reported (sub. req.) cable industry executives increasingly fear federal officials will ban usage pricing for wired broadband service on competitive grounds. Online video competitors rely on large cable and phone companies to reach prospective customers, many that may think twice if usage allowances are imposed on consumer broadband accounts.