Comcast Data Cap: The ISP Wants You to Pay for Netflix Binges

If you like to think of subscription services like Netflix as an all-you-can-eat buffet of streaming videos, some Internet service providers want to put you on a crash diet.

To tame your appetite for nonstop streaming and Netflix binges, a number of companies are imposing or testing broadband data caps—also called "usage-based pricing"—that limit the amount of streaming you can do without having to pay extra. Comcast is the largest company applying these caps, and it recently expanded its tests to 10 states, and several large cities, including Atlanta, Miami, and Nashville. On its website, the company says that if you use more than the 300GB allotted each month and want to continue streaming, you'll have to buy additional 50GB blocks at $10 each. The company also has an "unlimited" data option in some markets that costs an extra $30 to $35 each month.

There's one major exception to those caps: Comcast isn't counting programming from its own Stream TV when calculating how much data you use. We think you'll hear more about this practice, called “zero rating,” over the next few months. It's fairly common among cell phone carriers: T-Mobile's Binge On and Verizon's Go90 mobile video services are both exempt from those carriers’ data caps.

At first, zero rating might seem like a good deal for consumers—after all, you get to watch movies without having to pay for the extra data you use. However, groups including Consumers Union, the policy and advocacy arm of Consumer Reports, aren’t so sure, as it provides an incentive for you to choose a broadband provider's own service rather than a competitor's, which seems unfair. Zero rating isn't banned by the FCC's Open Internet rules, but it seems to dance close to the line. While the practice isn't explicitly prohibited, the FCC has said it will evaluate such business practices on a case-by-case basis.

Other companies testing or broadly imposing data caps include AT&T, CenturyLink, Cox, and Suddenlink; surcharges kick in after you've used 150GB per month (for those with slower DSL connections) to 250GB or 300GB (faster connections).

Will You Hit Your Cap?

Comcast argues that fewer than 10 percent of its customers will ever reach a broadband cap under normal usage. The company also has a three-month courtesy plan, so that you only get charged extra for any overages when you exceed your cap for the fourth month.

But here's why Comcast data caps could be a concern for many families. Netflix says that streaming a high-def movie can eat up close to 5GB per hour, so you'd have to burn through 50 hours of movies—25 two-hour movies—or 50 one-hour TV shows, to hit a 250GB monthly cap. Admittedly, few of us watch that much streaming—by ourselves. But those numbers start to look far more modest when you consider a household with a few children and multiple devices—smart TVs, streaming players, game consoles, Blu-ray players, tablets, smartphones—all connected to the Internet via the home's Wi-Fi network. In households where several members like to watch several episodes, or even whole seasons, of a show in binges, data usage grow quickly.

And in the near future, it's likely we'll all be using more, not less data, as more of our entertainment migrates to the Web, and the Internet of Things adds connectivity to all sorts of devices—everything from thermostats to smart refrigerators.

We expect to see streaming services add more higher-bandwidth 4K videos—with four times as many pixels as HD streams—to their mix, some with high dynamic range and wider color gamuts. Even with more efficient video encoding, these enhancements to video picture quality will eat up more data than regular HD streams. And analysts at market-research firms expect more ISPs to try usage-based pricing to compensate for the loss of subscribers to traditional TV services who switch to Internet-based alternatives.

Not surprisingly, data caps have become a hot-button issue with consumers who now have to live with them. A Freedom of Information Act request, filed by the CutCableToday website, revealed that the FCC received 13,000 formal complaints from Comcast customers protesting the practice. Time Warner Cable experimented with usage-based pricing as an option, but abandoned the practice after it was poorly received.

Charter, currently looking for regulatory approval to merge with Time Warner Cable, has pledged to refrain from usage-based fees, at least for the next three years. Neither Verizon nor Bright House, which is also being acquired by Charter, has data caps, and both have said they won't impose them in the near future.

Consumer Reports and Consumers Union have pointed out how broadband data caps could discourage the use of the Internet for a variety of worthwhile activities, including education and small-business innovation.

If you have a broadband plan that is subject to a data cap, let us know in the comments below; tell us whether you regularly exceed your monthly data allotment.