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Comcast Plans to Slap a Cap on Data

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An executive reveals plans to roll out a usage-based billing model -- and customers aren't happy about it.

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A Comcast (NASDAQ:CMCSA) executive revealed this week that the company expects to roll out a "usage-based billing model" over the next five years, meaning a monthly cap on consumers' use of Internet data and overage charges for exceeding it.
 
Then the Internet blew up with furious commentary from customers.
 
There are plenty of them out there. If its planned merger with Time Warner Cable (NYSE:TMC) is approved by regulators later this year, Comcast will have a combined 30% to 35% share of the US market for Internet services.
 
David Cohen, Comcast's executive vice president, wasn't just putting out a feeler at the communications industry meeting in New York. Comcast is already testing usage-based billing in some parts of Alabama, Georgia, Kentucky, Maine, Mississippi, Tennessee, and South Carolina. Its Flexible-Data Option is capped at 300GB of data per month, with a $10 fee for each additional 50GB of data.
 
Various combo plans are offered in the test markets. In one market, consumers are offered several choices, with higher data limits combined with higher delivery speed.
 
According to Cohen, the company expects to set the limit high enough to exclude "the vast majority of our customers" from overage charges. He guesses that this would be 350GB to 500GB monthly.
 
If you don't know offhand how much data you would need to buy to avoid overage charges, be assured that Comcast doesn't know, either. That proposed level would probably cover most of its customers most of the time -- unless the household is, say, a family of four that habitually downloads movies to watch on portable devices (as increasing numbers of consumers are doing every day).
 
According to DigitalTrends.com, only the top 5% of online video-watchers use an average of 328GB per month, though that number inevitably will rise with the growth of Internet options for downloaded entertainment. It estimates that streaming a 13-episode season of the Netflix series House of Cards at 4K resolution would eat up about 200GB of data.
 
In a highly subjective but probably correct analysis for ComputerWorld.com, blogger Richi Jennings notes that Comcast customers pretty much can like it or lump it: "Amusingly, the company is still trying to convince regulators that there's adequate competition in American broadband markets, so if you don't like it, you can switch to, errm -- squirrel!"
 
Forbes.com has an interesting take on the plan: It's a neat way to dissuade potential cord-cutters who think they can escape large cable television costs or, alternately, at least make them pay twice for their Netflix (NASDAQ:NFLX) addiction.
 
At the moment, the changeover appears inevitable, but the actual cost to customers is an unknown.
 
Comcast's Cohen said he expects all of the company's customers to be on usage-based plans in five years. "I would also predict that the vast majority of our customers would never be caught in the buying of additional buckets of usage, that we will always want to set the basic level usage at a sufficiently high level that the vast majority of our customers are not implicated by the usage-based billing plan," he says. "I don't think that's the model that we're 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."

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