Public Interest Groups Ask for Quarterly Audits of AT&T Broadband ‘Caps’
The FCC should demand quarterly reports from AT&T on the company’s “especially aggressive” broadband pricing plan, said the New America Foundation and Public Knowledge Friday. “Unlike competitors whose caps appear to be at least nominally linked to congestions during peak-use periods, AT&T seeks to convert caps into a profit center by charging additional fees to customers who exceed the cap,” they said in an open letter to Wireline Bureau Chief Sharon Gillett. “In addition to concerns raised by broadband caps generally, such a practice produces a perverse incentive for AT&T to avoid raising its cap even as its own capacity expands."
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
AT&T said its new usage-based pricing plan “is designed to protect the low-volume consumer and provide the high-volume consumer with the necessary information (at least six notifications) prior to being billed for overages.” An email statement from the company said the plan is “narrowly tailored to ensure that only those who use the most bandwidth pay for it. In fact, 98 percent of our customers will not be impacted by our approach.”
The two nonprofit groups said they're worried that pricing plans like AT&T’s “can perniciously undermine each of the goals set out by the Commission in the National Broadband Plan while at the same time stifling the competition and innovation that has established itself as the sine qua non of the internet economy.” The letter claimed 56 percent of Americans are already subject to such caps. “It’s one of these things that just sort of popped up and nobody in the regulatory world is asking questions about it,” Public Knowledge spokesman Art Brodsky told us.
Friday’s letter said the FCC ought to ask: How often AT&T’s “cap” is enforced; What steps are taken to warn customers; The average penalty for going above bandwidth allowances; When and how often penalties are waived; Whether there’s a relationship between enforcement and network congestion; How the bandwidth allowances are set and evaluated, and; Which ISP-offered services are excluded by AT&T’s pricing plan. “There is a fairness element” in the request, Brodsky said. The groups are concerned, for instance, that Netflix usage counts against an AT&T customer’s broadband allowance, but AT&T’s own U-verse video programming does not, Brodsky said. An AT&T spokesman said customers pay separately for U-verse.
The FCC’s net neutrality order contemplated usage-based pricing for broadband service. AT&T has made clear in the ongoing Universal Service Fund and intercarrier compensation regime proceedings that it thinks customers will have to pay a higher share of costs for high-speed broadband. Industry researcher Bruce Leichtman, who has argued that Netflix’ explosive growth isn’t leading to cord-cutting (CD March 31 p13), said New America and Public Knowledge’s concerns were all “hypothetical.” That’s because, “to a large degree, you need to let the market forces take over and see what happens. We don’t know what’s happening with this,” Leichtman told us. AT&T may be a convenient target because it’s trying to take over T-Mobile, Leichtman said. “I do think the merger there does allow for critics to say, ‘is this in the best interest of the consumer?’ And it’s to some degree a fair question. But then the next step is to ask, what is in the best interest of the consumer? And is it regulation? Boy, that’s a scary one.”