New AT&T Data Caps Limit Consumer Choice, Add to Excessive Overage Charges

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WASHINGTON, March 15, 2011 – Consumers Union, nonprofit publisher of Consumer Reports, sent a letter to AT&T CEO Randall Stephenson on Tuesday, urging the telecommunications company to reconsider a recently announced policy that would place data usage caps, as well as corresponding overage charges, on its DSL and U-Verse Internet access service. With consumers relying on the Internet for more media purposes, including streaming video, the organization argued that the proposed policy will not only limit the options available to customers, but will also significantly add to the costs of Internet access, which have continued to increase.

Parul P. Desai, policy counsel for Consumers Union, writes in the letter, “These usage caps and overage charges will only restrict consumer choice and demand for online services and activities, as many consumers will not want to or be able to pay excessive overage charges.”

The full letter is below:

March 15, 2011

Randall L. Stephenson

CEO, AT&T Inc.

208 S. Akard Street

Dallas, TX 75202

Dear Mr. Stephenson:

            Consumers Union, non-profit publisher of Consumer Reports® magazine, writes to you regarding the recent announcement that AT&T Inc. will adopt data usage caps and overage charges for its DSL and U-Verse Internet access services.  The data usage caps and subsequent overage charges will limit consumer choice and add to the ever-increasing costs of Internet access for consumers.

            While you have claimed the new policy will only impact the two percent of your customers who use a disproportionate amount of bandwidth, it is difficult to predict which services and activities consumers will demand in the future and how much bandwidth they will require.  These usage caps and overage charges will only restrict consumer choice and demand for online services and activities that consumers desire, as many consumers will not want to or be able to pay excessive overage charges.  Moreover, these overage charges may be out of proportion to the cost for the additional data capacity. 

            Consumers rely on their Internet connection for a variety of activities.  For example, many consumers use their Internet access for online gaming and to stream video.  The average online gamer spends over 6.5 hours per week gaming online.  Heavy gamers often spend upwards of 20 hours per week online.  Consumers who choose to use the Internet for an activity like online gaming will potentially have to choose between limiting an activity they enjoy to keep within their usage limits, or facing punitive overage charges.

            Similarly, consumers are also using their Internet connection to watch video.  According to a recent report, the average American spent over 14 hours watching online video content in December of 2010.  This represented a 12% increase from last year.  In January 2011 alone, online video viewing saw a 45% increase in time spent on viewing video from the same time last year.  This trend demonstrates that online video viewing is becoming more popular with more consumers.  However, consumers who choose to use their Internet connection to watch video may eventually have to choose between limiting their online video consumption and paying excessive overage charges.  The concerning aspect of AT&T’s announcement is that U-Verse video content will not be affected by the cap.  In an effort to avoid excessive overage charges, consumers may be compelled to rely solely on U-Verse for their video and discontinue watching the online video content of their
choice.

            Recently, Bell Canada attempted to implement a metered Internet access regime.  Consumers, however, were so angry over Bell Canada’s proposal that Canada’s Radio-television and Telecommunications Commission reversed its approval of Bell Canada’s metered plan.  While the data caps in Bell Canada’s plan were smaller than AT&T’s proposal, Consumers Union hopes that AT&T will reconsider its data caps and overage charges so that consumers will not be penalized for accessing the Internet content and services of their choice.

Sincerely,

Parul P. Desai
Consumers Union
1101 17th Street, Northwest
Suite 500
Washington, D.C. 20036
202.462.6262