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BUSINESS
Internet provider's usage cap raises some questions
NEW YORK -- Three months ago, Guy Distaffen switched Internet providers, lured from his cable company to his phone company by a year of free service on a two-year contract. But soon the company quietly updated its policies to say it would limit his Internet activity each month.
"We felt that were suckered," said Distaffen, who lives in the small village of Silver Springs in upstate New York.
The phone company, Frontier Communications Corp., is one of several Internet service providers that are moving to curb the growth of traffic on their networks, or at least make the subscribers who download the most pay more.
This could have consequences not just for consumers -- who would have to learn to watch how much data their Internet use entails -- but also for companies that hope to make the Internet a conduit for movies and other content that comes in huge files.
Cable companies have been at the forefront of imposing and talking about usage caps, because their lines are shared between households. Frontier's announcement is noteworthy because it is a phone company -- and it is matching a seemingly low ceiling set by a main cable rival: just 5 gigabytes per month, the equivalent of about 3 DVD-quality movies.
But since the other option for wired broadband in the village is Time Warner Cable Inc., switching providers isn't necessarily going to get Distaffen away from a bandwidth cap. The cable company is trying out a 5-gigabyte traffic cap for new users in Beaumont, Texas. Every gigabyte above that costs $1. More expensive plans have higher caps -- at $54.90 per month, the allowance is 40 gigabytes. Depending on the results of the trial, Time Warner Cable may apply the same pricing structure elsewhere.
In a sense, caps on Internet use are no stranger than the limited number of minutes a cell phone subscriber gets each month. Internet use varies hugely from person to person, and service providers argue that the people who use it the most should pay the most. But the industry hasn't worked out where to set the limits, or how much to charge users who exceed them. Fearing a customer backlash, most providers are setting the limits at levels where very few would bump into them. Comcast Corp. has floated the idea of a 250-gigabyte monthly cap.
