Telecommunications giant AT&T said this week that it will join Comcast and other providers in a controversial business model that limits the amount of information subscribers can access, and imposes penalties for overages.
The move will see AT&T broadband users forced into a tiered Internet that would limit accounts to a paltry 150 gigabytes a month. Users who download too much information on AT&T's broadband network will be subject to an additional $10 fee for every 50 gigabytes. Fees on the first three overages will be waived, according to DSLReports.com.
In layman's terms, if you're used to watching Netflix, playing online video games or using your computer to share files with your friends or engage in other bandwidth-intensive activity, get ready to be slammed with additional fees.
The move has some tech businesses and Internet freedom advocates up in arms, calling AT&T's plan a way to force other companies into a restrictive business model. Some are also concerned that with Internet users watching their bandwidth meters, usage may go down and innovation could suffer.
Some analysts are predicting the move could have a tremendous effect on Netflix, the most popular movie rental service online with a massive catalog of watch-anytime titles available for streaming. While it does not yet offer true 1080p video (high definition is at 720p), should Netflix finally upgrade to full fidelity video as planned, AT&T users would have to keep their viewing time to less than 90 minutes a day to avoid overage fees.
In Canada, where users have been forced into much smaller bandwidth allotments by Internet providers, Netflix even offers a option to decrease the resolution and make their videos look much worse in order to save on bandwidth.
But with most Americans watching over 153 hours of television a month according to Nielsen ratings, that leaves little time for Netflix, let alone bandwidth-intensive video games like "Call of Duty" or "World of Warcraft."
That's precisely what Netflix warned about in the lead-up to the Federal Communications Commission debate on net neutrality policies that would prohibit manipulation of traffic across wired networks. Weeks before the vote was taken, Netflix partner Level 3 Communications compared Comcast's business decisions to blackmail and extortion, then agreed to pay a recurring fee for streaming video to Comcast subscribers.
Though Comcast called their demand of Level 3 a mild "commercial dispute," Level 3 said Comcast's new business model of charging for bandwidth "threatens the open Internet."
Comcast became the first major Internet provider to begin instituting rules on how much information users can access, back in Oct. 2008. Their policies were put in place after they were caught "throttling" data on their network, effectively preventing users of peer-to-peer file sharing networks from connecting to one another -- which is now illegal under net neutrality and punishable by a fine.
Sen. Al Franken (D-MN), a key proponent of net neutrality -- or what's become known as the Internet's First Amendment guaranteeing freedom of data transfer -- has even proposed mandating criminal penalties for telecoms that violate the rules by taking "anti-competitive" actions on the Internet.
Like Comcast, AT&T's move appears to be a response to the government. Instead of outright preventing certain communications like file sharing, they're capping how total information can trade hands. Similar schemes in Europe, like bandwidth caps, invasive traffic monitoring and mandatory disconnection laws, have been heavily pushed by US industry groups.
Even so, AT&T admits that only 2 percent of their users regularly go over 150 gigabytes in a month, with the average user checking in around 18 gigabytes. This would seem to imply that they have an excess of bandwidth and no real concerns for network congestion or overflow, no matter how much that 2 percent of subscribers absorbs.
The company says their move is to ensure there's enough bandwidth to go around.
"The top 2 percent of residential subscribers uses about 20 percent of the bandwidth on our network," a prepared statement from AT&T reads. "Just one of these high-traffic users can utilize the same amount of data capacity as 19 typical households. Lopsided usage patterns can cause congestion at certain points in the network, which can slow Internet speeds and interfere with other customers' access to and use of the network. Our new plan addresses another concern: customers strongly believe that only those who use the most bandwidth should pay more than those who don't use as much. That's exactly what this does – and again, 98% of our customers will not be impacted by this."
The company imposed similar system of bandwidth caps on their wireless data services last year, doing away with the $30 unlimited package and offering instead 200 megabytes for $15 or 2 gigabytes for $25.
The net neutrality rules that recently passed the FCC permits "throttling" of data on wireless networks, and explicitly allows the creation of tiered Internet subscription packages similar to AT&T's.
An email to the Netflix public relations department was not returned.
AT&T's bandwidth caps begin May 2.