Molly Wood of Buzz Out Loud posted a topic in episode 799 regarding Comcast initiating a policy of limiting broadband service to residential customers. Comcast has initiated a limit on service to 250 gigabytes per month per residential customer. First offense of exceeding this limit will result in a phone call from customer service; second offense will result in suspension of service for a period of one year.
There is debate regarding how much responsibility Comcast has to provide tools to customers to monitor usage. Comcast provides no help and says customers can find software in the marketplace if they feel they need it. Comcast argues that 250 gigs will permit 50 million e-mails, or would allow a customer to download 62,500 songs, or download 125 standard definition movies, or upload 25,000 hi-resolution digital photos on its service.
Comcast says the median customer usage falls somewhere between two and three gigabytes, so the limit of 250 GB will affect few customers. Comcast may be anticipating customers use of file back-up services that require hundreds of gigabytes in backing up computer files. This can occur more than once per month. Such usage could eventually overload Comcast's infrastructure.
Comcast denies that their decision is related to a dispute with FCC regarding rulings about restricting competition. Critics suggest that the move is related to Comcast's video-on-demand service. Competitors such as Cox Communications, Inc. and Time Warner have instituted limits on service. In another announcement, Comcast and Disney have signed a video-on-demand deal. Unlimited internet service could have a negative impact on the sale of video by Comcast, thus leading them to limit customer usage to protect the video sales segment of their business.
Customers who are not happy with the change can seek internet service elsewhere. Then Comcast will have to base their business decision regarding limits on their service to the profit and loss statement. This is the perfect example of capitalism at its best. Decisions are made for the business based on what is best for the business. Every other type of service is either limited or priced by volume. Other types of service (communications, consumer goods, labor, etc.) are provided on a unit cost basis. There is no reason for internet service to be any different. Rulings and regulations by the FCC and other regulatory agencies only distort the market.
References:
http://www.bizjournals.com/portland/stories/2008/08/25/daily35.html
http://news.cnet.com/8301-17939_109-10028506-2.html
http://www.paidcontent.org/entry/419-comcast-to-roll-out-monthly-usage-cap/
http://arstechnica.com/news.ars/post/20061121-8261.html
http://www.msnbc.msn.com/id/15849491/
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3 comments:
We feel that there is some controversy on this issue because the average person will not even come close to 250 gigs. However, those users that are somewhat close to the number should be able to check and see just like with a cell phone. This gives the user the ability to not go over that mark and it is also beneficial for Comcast because they will not have as many customer service calls. We agree that the Internet service should also be a unit based cost and this will help solve this problem for those high end users of the internet. It seems that Comcast has several options and this is what they are choosing to benefit them and not the consumer so that they can keep up with their competitors even though they claim this is not the reason. Good blog with some good insight!
As internet usage has evolved and become more common, the cost for internet service has not. Internet providers still charge a customer based on speed and not usage. The per unit cost approach seems to be the most reasonable, as others have stated not all (or many) individuals will approach the 250 gig limit.
While Comcast has set the limit high, that seems to be the only consideration on the consumer's behalf. Comcast has taken a non-consumer friendly path and instead put competition as the driver of their decisions. Consumers will have the final say as to whether this was a good decision or not. However, with only a few individuals being affected, Comcast most likely anticipates minimal issues with customers.
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