Comcast – the nation’s biggest broadband provider – is announcing a big shift in the way it sells the service.
The company’s adding tiered pricing for customers that exceed their monthly data allotment, an approach similar to that taken by wireless phone companies as they grapple with huge increases in data traffic.
For now most Comcast customers are unlikely to be affected by the change, although data caps and pricing tiers could become more critical as more high-def video is delivered via broadband.
Comcast is also increasingly delivering “on demand” video via broadband. Most of its video services are still carried by traditional cable, but a shift toward broadband delivery combined with tiered data pricing could change the billing equation in the future.
Although Comcast tried to characterize the shift as removing caps on service – since customers can pay to get more capacity, instead of face cutoff at 250 gigabytes per month – it’s moving away from what’s basically unlimited service toward a metered approach.
Customers are already used to that kind of pricing on wireless networks and some other broadband networks, said David Cohen, Comcast executive vice president.
“I think the answer is that in any business with a scarce resource – our network is not an unlimited and free resource – appropriate and fair pricing models absolutely should include and can include differential pricing based upon different utilizations of the network,” he said, when I asked if this is conditioning Comcast customers for wireless-type billing.
To soften the blow a bit, Comcast is boosting its current 250 gig per month data cap to 300 gigs. Customers that use more than 300 gigs a month will face metered charges, along the lines of $10 for an additional 50 gigs.
Comcast is still tinkering with the final pricing approach and will be testing different options in a a few markets. It may offer a range of data caps with various rate plans, with 300 gigs as the minimum. Or it may use 300 gigs as the standard data cap across the different tiers of service it offers.
Currently Comcast customers’ median usage is 8 to 10 gigabytes per month. Only a small percentage hit the 250 gig threshold, but that percentage is increasing, Cohen said.
During this testing phase, the company is dropping enforcement of data caps altogether, so start your downloads.
But don’t go too crazy. The company will continue to “contact the very small number of excessive users” to see if their usage is being shared through an unsecured router or spiking because of malware, Cohen said.
Comcast won’t raise prices as a result of the higher caps, Cohen said.
“We don’t have any current intention to change our pricing,” he said.
The pricing changes come after Comcast drew heat for a plan to exclude its Xfinity broadband video service on the Xbox from data caps that applied to competing video services. Comcast draws a distinction between services on the “public Internet” such as Hulu and controlled-access services such as Xfinity which don’t count against the data caps.
In its announcement today, Comcast executive Cathy Avgiris said the company is treating other services fairly.
“Importantly, we have consistently treated all video carried over the public Internet the same whether it comes from our sites or anywhere else on the public Internet,” she said in the announcement. “XfinityTV.com, nbc.com, Hulu, Netflix or YouTube, and every other Internet video site (whether our site or a third-party site) is treated, and will continue to be treated, exactly the same. That’s consistent with FCC rules and consistent with what we have always done and continue to do.”
Avigris – executive vice president and general manager of communications and data services – said the pricing changes are a response to the changing market and technology. She called them “more flexible data usage management approaches that benefit consumers and support innovation.”
Comcast also reiterated that it started applying data caps in 2008 to ensure the overall quality of service wasn’t degraded by abnormally high usage.
The 300 gigabyte per month allotment will apply to its Internet Essentials, Economy and Performance tiers. Additional caps will be provided to higher tiers such as Blast and Extreme. Additional gigs will be available in blocks.
Comcast isn’t yet saying where the testing of different options will happen. Here are FAQs the company posted.