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Consumers could be spending more on wireless and broadband bills than they need to because of concerns they’ll run over monthly data caps, according to a preliminary Government Accountability Office report released Tuesday (see below).

Government investigators found that consumers are largely confused about how much wireless data they use each month and worried about getting socked with overage charges if they (or a family member) goes over their monthly limit.

“Consumers may not be fully benefiting from lower-cost options under (usage-based pricing)” plans, the GAO said in its report. One wireless Internet provider told government investigators that only a small percentage of customers use 500 megabytes or lower plans even though the average wireless customer in the U.S. uses just 465MB of data monthly, according to a Sandvine survey.

Consumers expressed less concern about going over monthly wireline broadband data cap limits, government investigators said, partly because many people haven’t encountered them or haven’t exceeded their limits.

The preliminary report was released by Democratic Rep. Anna Eshoo of California, who has been critical of data caps in the past and is expected to forward the GAO findings to the Federal Communications Commission, which is currently considering how to craft new rules for Internet lines.

“As the FCC continues to seek comment on its proposed net neutrality rules, it’s more important than ever that policymakers understand data caps and how they might enable broadband providers to circumvent open Internet rules that ensure consumers have uninhibited access to the Internet,” Eshoo said in a statement. GAO is expected to release a final report in November.

Consumer confusion about data caps is nothing new, but it’s become more of an issue as more broadband providers have adopted the practice and more Americans have gone online.

Verizon and AT&T are among the carriers that have posted online calculators on their sites to help subscribers figure out how much wireless data to buy each month.

But it’s been slightly harder to figure out how much data is needed for home broadband connections, particularly as Americans have begun streaming more movies and TV shows. GAO officials cited Sandvine research suggesting that consumers who drop their cable* subscriptions and rely on streaming video services like Hulu or Netflix use significantly more data than other customers.

sandvine cord cutter chart

Sandvine

Another issue that Eshoo and consumer groups are concerned about is mobile carriers allowing companies to cover the costs of subscribers using their apps or services, such as AT&T’s “sponsored data” plan.

Few companies have signed up to use the service, although Amazon is thought to have been looking into it for its new phone.

Meanwhile, T-Mobile has launched a “set your music free” service that allows some subscribers to listen to streaming music services without having that data count against their data limits. T-Mobile cited research suggesting “37 percent of people say they avoid streaming on their phones — the majority out of fear that they’ll use up their data and run into overages” when announcing the plan.

The feature has been popular, even if a few customers complained earlier this year that their accounts were being incorrectly charged for using streaming service Spotify.

* Comcast’s NBCUniversal unit is an investor in Revere Digital, Re/code’s parent company.

7.29.14 Preliminary GAO Report Findings From Data Cap Study Copy



4 comments
Singularity
Singularity

When comcast instituted a bandwidth limit of 250GB, I actually used more internet capacity than I otherwise would have.   The reasoning is, obviously, if you set an arbitrary limit on people, they will want to get what they're paying for.  And this is exactly why comcast took away the bandwidth quota's, because they realized that in an effort to reduce their customers usage, they actually raised it.  


When the limit was on I was averaging about 230GB a month, just to fill that quota.   When the limit went off, I average 100GB or less because I'm no longer having to constantly monitor that limit nor trying to get my moneys worth.  


This same thing applies to even phone based internet.  They'll find that if they charge a one rate flat fee with no caps, they will actually see a reduction in overall usage in the long run.  


Just more proof that many internet providers not only screw us, but also themselves in the process.

uninventive
uninventive

I hate to go umbrella road, but for the lack of buildout that's occured with tiered usage, it's not too far to guess the next bait and switch: we'll build out more infrastructure and cover more cities if users pay "by the byte".


Metered use is the future of monetization, it'll just come as a different name: no, it's not like AOL, it's a "cloud rate" -- instead of $10 per Gigabyte, you'll instead pay .00000002 cents per byte used and pay only for what you've used! It's never been cheaper! (For those who don't want to work a calculator, that's $20 per gigabyte.)


The more that a company can abstract the actual cost away from a user's thought processes, the more effective it is.  No mainstream user cared about how many gigabytes they used on their unlimited mobile plan before the iPhone came out. (Not that iPhones are to blame, mind you, just comparing mainstream users then to now.)

gadget_hero
gadget_hero

What... carriers putting in limits on service (never mind it gets cheaper YoY for that same bandwidth and that the spectrum is owned by the people) and prices the lowest amount in such a way that consumers get higher tiers of data than they use thus wasting money on over paying (oh lets not forget bandwidth cannot be bottled for later use). No way that sounds crazy right /sarcasm.


I mean if carriers are going to charge us for an allotment of data, why not let it roll over like minutes used to. While I am on this rant train why do I HAVE to get unlimited text/minutes? 

uninventive
uninventive

@gadget_hero It's a feint.  Once they migrate voice to be 100% digital, they'll complain that voice traffic takes up too much bandwidth and return to measuring it.


Except next time I imagine it won't be minutes, but also by bytes used, which will be REALLY confusing to consumers (How many minutes can I talk on 2.18MB remaining of Voice Bandwidth?)

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