Oh, Comcast. You really do know how to make people love you, don’t you? Comcast CEO Brian Roberts this week tried defending his company’s embrace of data caps through a new usage-based pricing scheme that has caused an outcry from both customers and online content providers such as Sling TV.
“If you turn on the air conditioning at 60 versus 72 you consume more electricity,” he explained at Business Insider’s Ignition conference this week. “The same is true for [data] usage, so I think the same for a wireless device — the more bits you use the more you pay.”
There are a couple of points to make about this comparison. In the first place, electric companies are utilities that have their prices regulated so they can’t get away with gouging customers. Comcast, despite being reclassified under Title II, faces no restrictions on what it can charge customers for their data — in the immortal words of the Pixies, it can gouge away.
Second, Comcast is simply creating artificial shortages here where none exist. The costs associated with moving data from one point to another are nothing like the costs of producing electricity or water. This is why ISPs have been able to offer unlimited data usage for so long without going broke.
The only way this data cap scheme makes sense is for Comcast’s bottom line. It’s setting a usage threshold at 300GB right now because it knows that while only 8% of its customers use that much data per month right now, that number is going to increase significantly in the coming years. This will allow it to do several things:
- Offer higher data usage tiers that also happen to cost significantly more than the baseline 300GB threshold, which will give the company a healthy boost to its average revenue per user.
- Entice subscribers to pay for its own Stream TV service that is delivered over a different channel from the public Internet and is thus exempt from usage limits.
- Charge online content providers money to get their own video streaming services zero rated.
- Just grow fat off charging customers overage fees when they inevitably go over their monthly limits.
The sheer cynicism of Comcast’s ploy is galling. All the “benefits” of its scheme revolve around enriching itself at the expense of its subscribers. This is especially true since Comcast isn’t offering to do things like refund customers for data they don’t use every month or to give them options for rollover data. Instead, it’s just a straight-up cash grab that is only possible because it lacks any kind of competition for broadband services in so many markets.