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Residents of Fresco, Calif. will soon have the option of saving $5 a month on broadband if they acquiesce to a 5 GB data cap. This is a similar plan to the one Time Warner Cable implemented last summer, and part of Comcast’s overall test of broadband caps in a variety of service areas.
This one is designed to be at the very low-end of the spectrum, according to Comcast spokesman Charlie Douglas, who said that it will be offered to Economy Plus tier subscribers. In Fresno, that tier offers customers 3Mbps downstream and 1 Mbps upstream for $40 a month.
Much like I said when Time Warner Cable offered its own 5GB plan, this is a pretty crappy deal for people, trading $5 off for inclusion in a plan that will limit them to 5GB a month plus add $1 overage fees on top of their bill for every GB over that they use.
Comcast should call it the “2-movies-and-some-email plan”, because that’s about all residents will get. Douglas defended the plan saying that these users are light web users and this gives them flexibility, but then he added, “I think it’s a fair proposition to say that those who use more should pay more and those who use less should pay less.”
And there it is. The traditional argument in favor of usage-based broadband. Time Warner Cable used this reasoning to implement its draconian tiered broadband plan that it later backed off of, while other ISPs have deployed similar logic in arguing for caps.
However, with the median monthly data use on Comcast’s network hitting 16 GB according to Douglas, this plan isn’t about fairness for customers — otherwise customers wouldn’t have to opt-in — they’d just get $5 deducted from their account if they managed to stay below a cap.
This plan, as are the other trials Comcast is implementing around tiers and caps in Nashville, Tenn., and in Tucson, Ariz., are about trying to understand how to implement usage based billing as pay TV providers recognize that their triple and double play customers are dwindling. They must make up for the revenue lost when a customer decides to go broadband only.
Comcast’s broadband business is the source of $2.57 billion in revenue during the last quarter, which is not small. But Comcast brought in $16.27 billion from all of its operations, and some $7.3 billion of that comes from its pay TV and phone business, that stands to dwindle as it loses video and phone subscribers to broadband-only plans.