Move comes after Netflix raises favoritism concerns
Comcast said on Thursday that it is testing new models for pricing its Internet services based on customer use, a move it says is needed with the dramatic growth of streaming and other video options.
The move is being watched closely by companies like Netflix and Amazon, wary that Comcast, as the country’s largest Internet provider, is favoring its own streaming video services at their expense, or that new pricing will hobble the growth of their businesses.
In unspecified test markets, Comcast will increase its data usage cap on customers from 250 gigabytes to 300 gigabytes. One test will increase data caps beyond that for customers based on their speed of Internet service. Those who go beyond the caps could then buy gigabytes in blocks, like $10 per 50 gigabytes. The other approach being tested would boost data caps to 300 gigabytes and merely allow customers who go beyond that to buy additional blocks.
Comcast exec VP David Cohen, in a conference call with reporters on Thursday, unveiled the new plan, stressing that with existing data cap of 250 gigabytes, in place since 2008, only a “very small” number of customers “have even been close.” Cohen said that the “vast, vast majority” of customers don’t even approach the current limit. For companies not in test markets, the company will suspend enforcement of the current usage caps as it transitions to the new approach, although it will continue to contact the “very small number of excessive users” as they meet or exceed that limit, Comcast’s Cathy Avgiris, exec VP and general manager of communications and data services, said in a blog post.
Internet providers already are getting increased scrutiny and some criticism from customers and lawmakers as they wrestle with meeting the demands for growth of online video. Although 300 gigabytes is quite large — the AP calculated that to meet it would take watching 10 hours of Netflix content per day per month — Cohen also said that their network is not an “infinite resource.”
What concerns online video services like Netflix is that Comcast will favor its own streaming video options. Earlier this month, Netflix executives met with FCC general counsel Austin Schlick and other bureau staffers to argue that “broadband caps should be applied fairly to all online video sources or eliminated entirely.” Sen. Al Franken (D-Minn.) recently sent a letter to the Department of Justice’s antitrust division and the FCC, asking them to investigate whether Comcast’s Xfinity TV for XBox violated net neutrality rules. The reason is that customers usage of the service does not count against their data caps, while other online video competitors do.
After Comcast’s announcement, Netflix said that “increasing the data cap is a small step in the right direction,” but it added that “unfortunately, Comcast continues to treat its own Internet delivered video different under the cap than other Internet-delivered video. We continue to stand by the principle that ISPs should treat all providers of video services equally.”
Cohen acknowledged that those complaints created “a little bit of noise recently,” and was a factor in its announcement. But the company said that its Xfinity for XBox is a specialized service that does not stream content over the open Internet, an exception to the net neutrality rules.
In her blog post, Avgiris said that “as we bring new product innovations to our customers on multiple platforms, we must address the realities of managing a network that services more than 20 million customers.”