Comcast trying out Internet usage pricing, dropping caps

Reuters News
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Posted: May 18, 2012 2:53 PM
Comcast trying out Internet usage pricing, dropping caps

(Reuters) - Comcast Corp said on Thursday it will introduce a trial for usage-based billing for its Internet subscribers in a move seen to pre-empt more complaints the cable company favors its own Web video service over rivals.

Usage-based pricing would allow Comcast to charge its customers for the amount of data they use with a utility meter rather than pay a flat fee like they do today. Currently, that flat fee is priced on Internet speed and also features a 250 GB data cap each month.

Comcast, the No.1 U.S. residential Internet service provider, said the cap would now be raised to 300 GB for those in the usage trial, the equivalent of downloading about 50 high definition movies. It did not give a time frame for the trial which will take place in two of its markets.

Comcast executive vice president Cathy Avgiris said the average Comcast customer doesn't come close to its current limits.

Executives on a conference call said the changes were being made to adapt to a changing marketplace and technology, but several industry watchers pointed to a recent high profile complaint by Netflix as a possible reason for the move.

In April, Netflix Inc Chief Executive Reed Hastings raised concerns that Comcast was favoring its own Xfinity TV app on the X-box because watching TV through the app did not contribute to a user's Internet cap.

Comcast senior vice president David Cohen said the decision had nothing to do with Netflix or Xfinity.

Crucially in markets which are not part of its trial, the company will suspend enforcement of its current 250 GB cap.

Internet usage-based pricing has previously been a controversial subject for ISPs, particularly Comcast and the No.2 cable operator Time Warner Cable.

Time Warner Cable was forced to cancel a trial of Internet usage-based billing after an uproar in 2009 when customers thought they were being overcharged.

In February, Time Warner Cable launched another trial with more flexible pricing.

Comcast for its part will be keen to avoid sparking a regulatory inquiry into its pricing or business practices -- given that it has been on a relatively short leash on Capitol Hill since it took control of NBC Universal last year.

Cohen said caps would be a thing of the past. "Today, we're getting out of the cap business."

But the company did immediately allay long held suspicions usage-based pricing is a way to charge higher fees to customers.

"The notion Comcast would charge an exorbitant rate for additional bandwidth -- while continuing to exempt its own traffic under its Xbox deal -- illustrates Comcast is really trying to discourage subscribers from experimenting with online video alternatives," said Joel Kelsey of Free Press, an advocacy group.

(Reporting by Yinka Adegoke in New York and Jasmin Melvin and Washington D.C.; Editing by Bernard Orr)