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Regulation - What is it Good For? The Industry

Metering Broadband

A lot of the controversy about Comcast data caps disappeared last year when they raised the monthly threshold for data caps from 300 gigabytes to 1 terabyte. But lately I’ve been seeing folks complaining about being charged for exceeding the 1 TB data cap – so Comcast is still enforcing their data caps rules.

In order to enforce a data cap an ISP has to somehow meter the usage. It appears that in a lot of cases ISPs do a lousy job of measuring usage. Not all ISPs have data caps. The biggest ISPs that have them include Comcast, AT&T, CenturyLink for DSL, Cox and Mediacom. But even these ISPs don’t enforce data caps everywhere, like Comcast not enforcing them where they compete directly against Verizon FiOS.

Many customer home routers can measure usage and there are reports of cases where Comcast data usage measurements are massively different than what is being seen at the home. For example, there are customers who have seen big spikes in data measurement from Comcast at a time when their routers were disconnected or when power was out to the home. There are many customers who claim the Comcast readings always greatly exceed what they are seeing at their home routers.

Data caps matter because customer that exceed the caps get charged a fee. Comcast charges $10 for each 50 GB of monthly over the cap. Mediacom has the same fees, but with much smaller data caps such as a 150 GB monthly cap on customers with a 60 Mbps product.

It’s not hard to imagine homes now exceeding the Comcast data cap limit. Before I left Comcast a year ago they said that my family of three was using 600 – 700 GB per month. Since I didn’t measure my own usage I have no idea if their numbers were inflated. If my measurements were accurate it’s not hard to imagine somebody with several kids at home exceeding the 1 TB. The ISPs claim that only a small percentage of customers hit the data cap limits – but in world where data usage keep growing exponentially each year there are more homes that will hit the limit as time goes by.

What I find interesting is that there is zero regulation of the ISP data ‘meters’. Every other kind of meter that is used as a way to bill customers are regulated. Utilities selling water, electric or natural gas must use meters that are certified to be accurate. Meters on gas pumps are checked regularly for accuracy.

But there is nobody monitoring the ISPs and the way they are measuring data usage. The FCC effectively washed their hands from regulating ISPs for anything broadband when they killed Title II regulation of broadband. Theoretically the Federal Trade Commission could tackle the issue, but they are not required to do so. They regulate interactions with customers in all industries and can select the cases they want to pursue.

There are a few obvious reasons why the readings from an ISP would differ from a home, even under ideal conditions. ISPs measure usage at their network hub while a customer measurement happens at the home. There are always packets lost in the network due to interference or noise on the network, particularly with older copper and coaxial networks. The ISP would be counting all data passing through the hub as usage although many of the packets never make it to customers. But when you read some of the horror stories where homes that don’t watch video see daily readings from Comcast of over 100 GB in usage you know that there is something wrong in the way that Comcast is measuring usage. It has to be a daunting task to measure the usage directed for thousands of users simultaneously and obviously Comcast has problems in their measurement algorithms.

I’ve written about data caps before. It’s obvious that the caps are just a way for ISPs to charge more money, and it’s a gigantic amount of extra revenue if Comcast can bill $10 per month extra to only a few percent of their 23 million customers. Anybody that understand the math behind the cost of broadband understands that a $10 extra charge for 50 GB of usage is almost 100% profit. It doesn’t cost the ISP anything close to $10 for the connections for the first terabyte let alone an incrementally small additional amount. And there certainly is no cost at all if the Comcast meters are billing for phantom usage.

I don’t know that there is any fix for this. However, it’s clear that every customer being charged for exceeding data caps will switch to a new ISP at the first opportunity. The big ISPs wonder why many of their customers loathe them, and this is just one more way for a big ISP to antagonize their customers. It’s why every ISP that builds a fiber network to compete against a big cable companies understand that they will almost automatically get 30% of the market due to customers who have come to hate their cable ISP.