AT&T's New Data Caps Could Prove Costly For Cord-Cutters

AT&T has launched a new initiative that could help the company combat cord-cutting. As of May 23, the company will start offering home broadband users unlimited data at no charge -- but only if they also purchase a television subscription.

If residential customers don't want to pay for a TV subscription, they can still purchase unlimited wireline data, but will doing so will cost them an extra $30 a month. Cord-cutters who don't sign up for unlimited data will be charged an extra $10 for each 50 GB they consume over their monthly caps. Those caps are 150 GB for DSL users, and range from 300 GB to 1 TB for U-Verse subscribers, depending on the speed of service.

AT&T is trying to spin its new fee structure as a benefit to consumers, because the company previously imposed data caps of 250 GB a month for U-Verse subscribers. But there's a problem with that logic: The company didn't enforce the caps in the past.

The shift in policy will almost certainly rile AT&T's subscribers, if Comcast's experience is anything to go by. Comcast has recently expanded its pay-per-byte billing scheme, which involves charging customers overages after they exceed 300 GB of data. That company also now lets customers in some cities pay $30 or $35 to avoid the caps.

At one time, caps of 300 GB sounded generous. But, as many Comcast subscribers have recently learned, it's surprisingly easy to burn through 300 GB of data.

Currently, around 15% of Comcast's subscribers are subject to the caps. Of that group, 8% exceed the cap. Thousands of those people have complained to the Federal Communications Commission about the system.

"I'm paying more for faster speeds to get to a data cap faster and the only way to prevent going over is to limit my use of Comcast's competitors (Netflix/Hulu, YouTube, etc.)," one Fort Lauderdale, Florida resident said in a letter sent last year to the FCC. "It's the absolute definition of a money grab and it's beyond unfair to consumers when these giant companies are already making trillions."

Even though the caps are unpopular, the FCC has never suggested that capping data or charging by the byte is illegal. When the FCC passed net neutrality rules last year, the agency declined to prohibit broadband providers from imposing data caps, or billing on a pay-per-byte basis.

Instead, the agency said it would examine data caps on a case-by-case basis to determine whether they were hindering consumers' ability to use the Web. Consumer advocates have asked the FCC to look into data caps, but so far the agency hasn't publicly taken a position.

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