• by Wendy Davis , Staff Writer @wendyndavis, March 14, 2011

AT&T, the country's second-largest Internet service provider, intends to start imposing monthly bandwidth caps of 150 GB on DSL subscribers and 250 GB on people with U-Verse connections.

The new caps go into effect in May. Users who exceed the caps will be charged $10 per 50 GBs. For now, only around 2% of subscribers consume more than the caps, according to AT&T.

Bandwidth caps aren't seen as violating neutrality rules -- provided that Internet service providers apply the caps to all material equally. Nonetheless, caps such as AT&T's have proven highly controversial for several reasons. One is that many consumers have no idea how much bandwidth they consume, and therefore don't know when they're approaching a limit.

Secondly, even though most users aren't yet approaching the caps, it's inevitable that data consumption will grow. Not only will broadband speeds increase, which in itself will encourage more Internet use, but content is increasingly available online, with companies like Netflix offering to stream movies and TV shows. Downloading one high-def movie usually requires at least 3 GB.

AT&T isn't the only company to consider bandwidth caps and metered billing. Cox, Comcast and Time Warner have all tested or attempted to roll out caps, related pay-per-byte plans or a combination of the two. These efforts so far have had varying degrees of success. In 2008, Time Warner retreated from a plan to test metered billing that would have involved subscriptions starting as low as $15 a month for 1 GB. Comcast announced bandwidth caps of 250 GB per month back in 2008. Before doing so, however, the company warned some users that they might be cut off for excessive consumption without also telling them what the limit was. The attorney general in Florida took a dim view of that practice, ultimately extracting a $150,000 settlement from Comcast.