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Is Broadband pricing moving from Unlimited to Usage based pricing?

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7

Apr, 2016

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Recently Comcast announced that it will be implementing a limit to the amount of data that can be used for a certain period of time. Beyond the set limit the end user will be charged extra for the amount of data he/she uses. Following this AT&T has already initiated data caps and CenturyLink is considering doing the same. Hence the question arises:

“Is Broadband pricing moving from Unlimited to Usage based pricing?”

Is Broadband pricing moving from Unlimited to Usage based pricing?

Home internet will soon give you the feeling of a smart phone with data plans and surcharges. With Comcast having its way into the life ruled by internet at workplaces and at home, likewise, it has managed to bring about yet another surge into the internet usage at home/work. Initiating a data cap or a ‘data usage plan’ as cited by Comcast CEO,  Brian Roberts, Comcast has taken a step forward into regulating the data usage of people at their home or work premises.  Currently allowing 300 GB of free data usage, the company has levied a surcharge of $10 for every 50 GB of data used thereafter. Customers also have an option to take up an unlimited plan for an extra $30 or $35, allowing them to stream as much data as they require. CEO, Brian Roberts, in an interview with Business Insider acclaimed, “They’re not a cap, we don’t want anybody to ever not want to stay connected on our network,” but users feel otherwise. Levying a cap/ data usage plan/ surcharge -all are the same and one way or the other, regulates the internet usage of individuals. While those who use limited internet are untouched by this declaration from last year, those who possibly spend some quantifiable hours on Netflix are irked in many ways than one.

With a lot of debate from the insiders of Comcast, there is still no ground for speculation that this step is favorable to the end users, operators or even the market segment.

 

Home internet will soon give you the feeling of a smart phone with data plans and surcharges. With Comcast having its way into the life ruled by internet at workplaces and at home, likewise, it has managed to bring about yet another surge into the internet usage at home/work. Initiating a data cap or a ‘data usage plan’ as cited by Comcast CEO,  Brian Roberts, Comcast has taken a step forward into regulating the data usage of people at their home or work premises.  Currently allowing 300 GB of free data usage, the company has levied a surcharge of $10 for every 50 GB of data used thereafter. Customers also have an option to take up an unlimited plan for an extra $30 or $35, allowing them to stream as much data as they require. CEO, Brian Roberts, in an interview with Business Insider acclaimed, “They’re not a cap, we don’t want anybody to ever not want to stay connected on our network,” but users feel otherwise. Levying a cap/ data usage plan/ surcharge -all are the same and one way or the other, regulates the internet usage of individuals. While those who use limited internet are untouched by this declaration from last year, those who possibly spend some quantifiable hours on Netflix are irked in many ways than one.

With a lot of debate from the insiders of Comcast, there is still no ground for speculation that this step is favorable to the end users, operators or even the market segment.

Far-fetching Impact of the Data Cap:

While Comcast and it’s team give various justification to their latest development such as claiming “The program is about congestion management,” or “we call it data plan just like wireless companies have data plans,” or even saying that the concept of a surge is explicit in every business just as with every other thing in one’s life, simply said, the more bits you use the more you pay!

The End User Perspective:

These ideologies when dissected from the end users point of view hold no value as they are counter questioned in every aspect. When the company says “the more bits you use the more you pay”, does it also pay a refund to those who use lesser, and when we say lesser we mean lesser than the 300 GB? To this there might be yet another statement by the company offering a tiny deduction of $5 to a consumer who uses less than 5 GB data from the bandwidth. But coming to think of it, in today’s realm of IoT (Internet of Things), finding such a user might just require a fortune. Let alone the fact that, post the slash of $5, Comcast will charge $1 for every GB used by that same user. So if the man was under the notion of making some early savings, the idea is right out of the window!

The Operator Perspective:

Comcast team explains in an interview with Fortune, “Part of the rationale for all of these trials is this principal of fairness. Those who want to use more pay more, and those who want to use less pay less. Just as with other things in your life, if you drive 100,00 miles or 1,000 miles you buy more gasoline. If you turn on the air conditioning to 60 vs. 72 you consume more electricity.” Comcast’s data cap plan however can be the next big step for monetization that can be adapted by other broadband operators. Capitalizing on the usage of the end users with the obvious advancement of the internet technology, this scheme is flawless and cannot be counter – questioned, only because like every other business – this is business as well.

 

                                               “I don’t think it’s illogical or something people should be paranoid about”

                                                                                                                                                          -Brian Robert, CEO, Comcast

 

The Market’s Perspective:

Comcast ideally wants to place the fact that a major share of its users rarely go beyond the 300 GB monthly limit of data usage, giving it a figure of 5% to 10%. “You can watch hundreds of shows and movies and other things before you hit these levels, many devices. I don’t think it’s illogical or something people should be paranoid about,” said the CEO, Roberts. With the growing market scenario, this figure of 5 to 10% and also the levy of 10$ for every 50 GB will sound measly. By 2020, forecasts call for the niche 15% of internet users to require almost 1000 GB of data monthly.

 

 

This said, the cap levied by Comcast can be counter – questioned in terms of the end user but with the market structure turning volatile and the aim of every company to monetize in the growing business scenario, it cannot be argued upon. With Comcast being in the news, and mostly negative, their intentions can be doubted but then, the market structure is all about making profit – profit on the usage of resources and profit on the preserving of resour

By : Ramakrishna Mashetty

Ramakrishna Mashetty is The Chief Marketing officer of SURE! (a Magnaquest product).SURE! is an internationally acclaimed player in comprehensive end-to-end Subscription Business Solutions for PayTV, Broadband and Cloud Computing businesses – through deployment of Metered Billing, CRM, Service Fulfillment, Value-Added Services, and Managed Services.

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