Comcast Exec Predicts Data Caps Within 5 Years
"I would predict that in five years Comcast at least would have a usage-based billing model rolled out across its footprint," David L. Cohen, Comcast executive vice president, said during a Wednesday appearance at a Thomson Reuters event.
However, Cohen suggested that the large majority of customers would never hit that cap. "I don't think we will want to be in a model where it is fully variablized and 80 percent of our customers are implicated by usage-based billing and are all buying different packets of usage," he said. "I don't think that's the model that we are heading toward, but five years ago I don't know that I would have heard of something called an iPad. So very difficult to make predictions."
Comcast has already experimented with usage-based billing. It introduced data caps for its residential customers in October 2008 after accusations in 2007 that it was cutting off bandwidth hogs without warning. Consumer groups filed complaints with the FCC, resulting in an enforcement action against Comcast - and the birth of the FCC's activity on net neutrality.
By 2012, however, Comcast opted to ditch those data caps and explore other options. Comcast said it would try out two approaches in select markets: a 300GB monthly cap for basic service and higher caps for more advanced levels of service, plus $10 for an additional 50GB; or 300GB for all tiers of service and $10 for 50GB more.
Comcast now has a series of pilots to test usage-based options, including one in Atlanta, Cohen said this week. "We are trying to go slowly here because we have no desire to blow up our high-speed data business," he said.
A monthly cap with the option to purchase more capacity if you run out appears to be the most popular option, Cohen said, as is a low-usage option for those who don't use the Web as much. "We continue to tweak this and we continue to work it around," Cohen said. But "in our pilot markets, more than 98 percent of our customers are not affected by this."
Cohen did not believe usage-based billing would be a point of contention in the regulatory review of its merger with Time Warner Cable because "it's a generic industry-related issue."
But "I wouldn't be stunned to see usage-based billing questions in the NPRM [notice of proposed rulemaking] around the open Internet because people have tried to make this an open Internet issue," Cohen continued.
That includes Netflix CEO Reed Hastings, who has called for strong net neutrality rules that make inter-connection deals like the one Comcast struck with Netflix a thing of the past. At this point, the FCC is not including inter-connection, or peering, deals in its net neutrality proposal. And Cohen said this week that Netflix needs to pay its fair share.
"If Netflix doesn't bear its share of those costs to connect to the network then we have no choice but to raise prices for everyone else," he said. "Even though Netflix is responsible for one-third of the traffic on the Internet at peak times, that means two-thirds of the traffic is not Netflix. And making a rough approximation here, why should two-thirds of the people who never use Netflix pay for the cost for Netflix to attach to our network?"
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