Comcast tells government that its data caps aren’t actually “data caps”

For the past couple of years, Comcast has been trying to convince journalists and the general public that it doesn’t impose any “data caps” on its Internet service.

That’s despite the fact that Comcast in some cities enforces limits on the amount of data customers can use and issues financial penalties for using more than the allotment. Comcast has said this type of billing will probably roll out to its entire national footprint within five years, perhaps alongside a pricier option to buy unlimited data.

“There isn’t a cap anymore. We’re out of the cap business,” Executive Vice President David Cohen said in May 2012 after dropping a policy that could cut off people’s service after they use 250GB in a month. Comcast’s then-new approach was touted to “effectively offer unlimited usage of our services because customers will have the ability to buy as much data as they want.”

Setting limits on data and charging extra when customers exceed them is precisely the type of scheme that nearly everyone besides Comcast considers to be a “data cap.” It’s the phrase normal people use to describe wireless data plans with exactly the same type of structure.

Comcast has gone so far as to ask for a correction to an article that called the limits “data caps” instead of “data thresholds” or “flexible data consumption plans.” Now it’s trying to convince the government that its data limits aren’t actually data caps.

“Comcast does not have ‘data caps’ today,” the company wrote this week in a filing with the New York Public Service Commission on its proposed acquisition of Time Warner Cable. “Comcast announced almost two years ago that it was suspending enforcement of its prior 250GB excessive usage cap and that it would instead be trialing different pricing and packaging options to evaluate options for subscribers—options that reflect evolving Internet usage and that are based on the desire to provide flexible consumption plans, including a plan that enables customers who want to use more data the option to pay more to do so as well as a plan for those who use less data the option to save some money… Some of these trials include a data usage plan that allows customers who use very little Internet each month to receive a discount on their service fee, and variations on a plan that provide customers with the ability to buy additional increments of usage if they exceed a base amount (starting at 300GB) that is included with their service.”

Comcast argued that the federal government is the appropriate entity to investigate data caps, and that, as a consequence, New York regulators shouldn’t bother examining them in their review of the Comcast/TWC merger—even though Comcast could impose data caps on TWC customers who don’t face them today.

“[W]hether data caps are appropriate is a matter of federal regulatory concern, not one that relates to this proceeding or that is even transaction specific (since nothing precludes TWC from adopting caps at any time, as it has in the past),” Comcast wrote.

Data caps, defined by an FCC panel that includes a Comcast VP

So what does the FCC have to say on the matter? The FCC doesn’t seem to offer its own definition, but the commission asked its Open Internet Advisory Committee to examine a variety of concerns related to Internet service, resulting in an August 2013 report titled, “Policy Issues in Data Caps and Usage-Based Pricing.”

The working group that wrote the report consisted of seven people—including Kevin McElearney, senior VP for network engineering at Comcast. Comcast’s friends at Netflix were represented as well, along with T-Mobile, the Writers Guild of America, the National Urban League, Union Square Ventures, and Northwestern University.

Here’s how Comcast VP McElearney and his colleagues defined data caps in their report (emphasis ours):

Data caps are often considered to be a form of UBP [usage-based pricing]. The term data cap is characterized by several phenomena. In general, if a user is within a cap, he or she pays a set price. That is, the cap defines a limit on amount of data per month per household expressed in gigabytes). Exceeding the cap could subject a household to alterations to its Internet access, possibly after one or more warnings, such as reduction of access speed, additional charges, suspension of service, or even termination of service.

The termination of service has received particular attention in public discussion, though to date, this appears to be a rare event, as noted below. A cap is rarely, if ever, a hard and fast ceiling on a customer’s ability to access the network. A cap is usually better understood as a threshold after which the user is subject to a different set of conditions for access, such as movement to a higher priced tier, different product or different speeds. As discussed below, another way of thinking of this is as the boundary between different ‘tiers’ of service.

While the working group said data caps can be hard caps in which customer access is cut off, that isn’t the only approach that is considered a data cap. The group also defined “data caps” as the imposition of additional charges for excessive usage—exactly what Comcast does. Still, a footnote in the report accepts Comcast’s definition, stating that “At the time of writing Comcast does not have any caps in place but is trialing two UBP plans.”

Note that Comcast’s extra charges are not voluntary. “Once you have incurred charges for exceeding your data usage plan amount, you will automatically be charged $10 each time we provide you with up to an additional 50GB of data,” a Comcast FAQ says.

Even in areas where Comcast’s data cap trials haven’t begun, the company isn’t entirely abandoning its old policy of having uncomfortable conversations with customers who use too much data.

“Does this mean you’re going to stop cutting people off who exceed your allowance?” a Comcast FAQ asks. Answering the question, Comcast said, “For non-trial markets, we will continue to contact the very small number of excessive users about their usage, which can be indicative of security or related issues.”

It’s about money, not congestion

The federal government is investigating data caps in both cellular service and fixed broadband, and the preliminary findings probably won’t shock you: data caps for companies like Comcast are more about boosting revenue than preventing network congestion.

“Some wireless ISPs told us they use UBP to manage congestion,” the US Government Accountability Office wrote. On the other hand, “wireline ISPs said that congestion is not currently a problem.”

Why impose the limits? Because charging extra when customers exceed their data limits “can generate more revenues for ISPs to help fund network capacity upgrades as data use grows,” the GAO wrote.

The caps can also push customers to use Comcast’s own content services instead of those offered by rivals, since certain Comcast services don’t count against the limits.

There are other consequences. The GAO interviewed experts who said usage-based pricing “may be unnecessary because the marginal costs of data delivery are very low, [and] heavier users impose limited additional costs to ISPs.” Policies that compel consumers to use less data could “limit innovation and development of data-heavy applications,” restricting technological progress that relies on abundant access to Internet service.