ISPs Move to Tiered Services, Data Caps

Cable giant Comcast is the latest ISP to join the tiered data services parade by rolling out 3.5 megabit per second high-speed Internet service to its newly-integrated AT&T Broadband customers.

Tim Fitzpatrick, a Comcast spokesman, said the Comcast Pro service offers data transmission speeds of 3.5 megabits per second (Mbps) and 384 kilobytes per second (Kbps) upload at a charge of $95 a month with a free modem tossed in and no annual contract.

That’s in addition to its standard 1.5 MB/384kb average rate that it offers its basic cable subscribers for $42.95 a month, which is still the norm for most high-speed data providers to the consumer and small office/home office market.

Comcast’s move to provide tiers of data services to consumers is part of an increasing trend among ISPs to package differnet connection speeds to customers. Just this week, Earthlink rolled out an advanced dial-up service with download speeds that flirt with broadband rates of just under 1 Mbps, but higher than the usual 56 kbps connection on dial-up speeds.

That puts Earthlink in the four tiers range with its business broadband
DSL service beginning at $129 a month, its standard DSL and cable service
costing $45.95 a month, its standard $21.95 dial-up service, and now, the
Earthlink Plus service that puts it somewhere in the middle of the data speeds.

Verizon also offers different packages with its DSL services, and its fellow Baby Bell SBC offers at least five
different data packages for consumers. They range from an average of 384
Kbps download/128 Kbps upload speed ($42.95 a month), to its DSL Expert
package that ranges from $1.5 Mbps to 6 Mbps ($159 a month and up for equipment).

Whether such dices and slices of data packages will help spur faster
adoption of broadband and near-broadband access remains an open question.

But what is expected to follow in the tiered package pathway, however, are data
caps as ISPs try to control costs related to the usual “bandwidth hogs” — advanced users users whose love of music downloads, file-sharing and online gaming, puts them in the high usage group.

For a taste of what may be headed to U.S. ISP markets, look overseas, according to
Jupiter Research Senior Analyst Joe Laszlo.

The U.S. led the way in growth of the dial-up Internet, but other parts
of the world provide lessons for broadband, he wrote in a research report
this week (Jupiter Research’s parent company also owns this publication).

“Other countries have pulled ahead of the U.S. in broadband penetration, and
providers in those countries likely point the way for evolution of broadband
in the U.S.”

For example, “(w)hile U.S. providers continue to offer unlimited service, broadband providers in Canada and Australia are already instituting caps on total monthly data transfers by subscribers.”

Telstra’s BigPond service, he noted, is now offering five tiers of service, that range from 500 MB to 10 GB of monthly download capacity. Bell Canada’s Sympatico offers two tiers, which are capped at 10 GB and 20 GB a month.

“Most providers find a relatively small portion of their user base generates a substantial part of total data usage,” the research report said.

In many ways, capping has already arrived, or is at least getting more noticable in providers’ terms of service postings.

One subscriber of Cablevision’s Optimum Online, which provides 10 Mbps speeds thanks to its fiber optic infrastructure, was trying out the Kazaa file-sharing service a few weeks ago. Later, after running into upload problems with a Usenet news server, the customer was told that his modem had been tagged and that his upload bandwidth was cut from 1 megabit per second to .15 megabits per second, or roughly about 100 kilobits per second.

“If you use your cable modem too much, you run the risk of having Cablevision’s secret bandwidth police cut down your service, and they can’t be bothered to even let you know there is a problem,” the customer told

Jim Maiella, a spokesman for Cablevision, said the terms of service for OptimumOnline haven’t changed. But the company did put up a notice recently warning users of its policies under terms of service that could result in caps. They include running file-swapping servers that usually involve copyright infringement while the user downloads and swaps major files.

In this case, the customer’s bandwidth was restored after he talked it out with customer service.

“Capping usage typically represents a method for regulating that small, yet costly, portion of the subscriber base, not an attempt to generate new revenues. Such caps appear to be an inevitable cost control measure,” Laszlo’s report said. He expects to see capping arrive in the U.S. by early 2004.

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