Explain This To Me AT&T

AT&T is now moving into metered broadband with 150 Gig caps for DSL and $10 per additional 50GB overage.

Over the weekend, Broadband Reports broke the story that after plenty of talk about it, AT&T is implementing broadband caps and overage fees. The caps are 150GB per month for DSL and 250GB per month for U-verse. AT&T claims that it’s trying to be flexible, and the cap isn’t quite a “hard cap.” That is, subscribers will only be expected to pay overage fees if they go over the cap 3 times. But, if they do, the overage fees kick in, and it’s $10 per 50 additional GB. AT&T had tested similar caps in the past, but the decision to implement these on a wider scale is pretty much the company publicly admitting that there isn’t enough competition in the market, so it can put in place these kinds of limitations.

Let’s forget for a moment that between my (and my wife’s) podcast downloading, video streaming, YouTube, Xbox Live, Skype and general day to day usage you just made it unfeasible to pay that $8 a month for Netflix as I’d go right over that cap in next to no time.

Lets forget all of that because what I want explained to me is this:

I have a whole bunch of websites and some of them are on shared hosts. Even the ones on shared hosts use a lot of bandwidth.

One site, which is hosted with Bluehost, uses an an average of about half a TERABYTE of bandwidth a month for the paltry sum of $6.99 a month.

Think about it: 500 Gigs of bandwidth (actual usage), plus website hosting for $6.99 a month and you’re looking to charge $10 for 50 Gigs on top of what you charge monthly?

I know that web hosts are in the business of making money too. I know they have to pay for their servers and data centers. They also have to pay for bandwidth. Yet while my usage may be quite high, web hosts offering unlimited bandwidth are the norm.

I wonder how they can manage it? I know that most sites probably don’t have as high bandwidth consumption as the example above. A number of my sites get by in the 20 to 70 Gig per month range and I would consider those to be the “average” account seen by web hosts. Still, it just doesn’t add up.

Unlimited bandwidth, massive storage, server resources, all for $6.99 a month. AT&T want $10 for 50 Gigs after you’ve already payed through the nose for a measly 150 Gigs.

I think I know what the answer is.

It’s competition, or rather the complete and utter lack of competition.

The move may be positioned as helping AT&T deliver “a great experience for all our Internet customers,” but it’s not clear that these actions are necessary to control congestion, and it raises questions about competition for broadband service as many areas still only have one DSL provider.

You see, in order to get my $6.99 a month web hosts have to compete on pricing and services with hundreds of other web hosts all over the country. Web hosts know that if they don’t deliver I will take my cash and go elsewhere.

Where am I going to go if I want to switch from AT&T? Well,according to the National Broadband Map, nowhere!

Broadband Providers Map

Competition drives lower prices. It compels providers to offer superior services at lower costs in order to ensure that they get your hard earned money instead of their competitors.

The sad fact is that, for most people despite what companies like AT&T would like you to believe, there is no real competition.

Most people don’t have a choice of providers.

Those people who do have a choice (and I’m not talking about resellers here, who I suspect will be subject to the caps) tend to find that there is little to distinguish between providers who are all using the same excuses to charge exorbitant prices for frankly, piss poor services.

Without proper competition there is no incentive to build out the network. Actually, with no real competition the incentive becomes to create false scarcity and charge people multiple times for the same bandwidth they are currently using.

Unfortunately I don’t see any real competition coming anytime soon. It’s a very expensive game to get into delivering broadband on the national level and that takes some very deep pockets. Deep enough to discourage most from even trying to play.

Unbundling, in a similar fashion to the UK’s model for Local Loop Unbundling would create massive competition and drive down prices but, as always, the corporate lobbying machine won’t allow that to happen.

So I ask you AT&T: Why are you making it unfeasible for me to pay for new services such as Netflix? Why are you stiffing innovation? Why are you charging so much more than web hosts for considerably less bandwidth?

Why are you degrading your service for everyone instead of building it out? Why aren’t you building your network, improving speeds, offering better cheaper services and trying to draw in more customers, instead of raping the ones that you currently have?

15 thoughts on “Explain This To Me AT&T”

  1. I fully agree with obscene bandwidth caps. But I feel there should be a cap.

    But first. To compare a last mile provider with a data centre is a poor comparison. Last mile providers have a huge amount of infrastructure. Data centres are usually just a few buildings or less. But your last mile provider whether they are Cable or Telco has to keep up a huge support system to
    a) give you service
    b) maintain and upgrade the service as the years go on
    c) physically roll out trucks for troubles and have them fixed by a certain time frame or get fined by governing bodies.

    Data centres dont have exposed infrastructure to weather, poor drivers, and people who dont get locates done on cables before they dig.

    When a Data centre gets a new web customer there usually is not hardware switching involved. And to get a SLA at your data centre is big $$.

    When a new DSL / Cable customer needs service there is usually internal wiring and replacing of station wire (Wire inside the house/business) needing to be done. All in all ALOT more work than a date centre. Also the customer isnt in the data center mucking with things, or in a old house with poor grounding, soup getting thrown on to phone jacks and coax couplers.

    As for bandwidth caps. My friends an I feel 500 Gig a month is fair for 10-15 meg connections.
    It allows you ample room but is tight enough where P2P abuses get to foot the bill for their own dirty work.

    Like

    1. Jay, thanks for responding. First, let me say that I never said that there shouldn’t be a cap but 150 Gigs is pathetic.

      As for the comparison with a data center, it’s more than perfectly reasonable and here’s why:

      You’re already paying for all that you mentioned in your monthly fee. You pay to be hooked up, you pay for installation, you pay for usage and you pay monthly an amount that far exceeds the value of the bits… so when it comes down to the cost of data, the $10 for per 50 Gigs is coming without extra costs that haven’t already been factored into your regular monthly bill, so those types of overage charges are ridiculous.

      Another way to look at it is this. The factors you’re mentioning are not the concerns or problems of the consumer. The consumer looks at how much they are getting VS what they are paying. They see X amount of data from AT&T VS Y amount of data from web host. As far as the consumer is concerned, the cost of delivery/ maintenance / etc… is included in the bill they pay every month. There is no (real) additional cost of delivery for the additional 50 Gigs of data, so why such a disparity of cost?

      Finally, the one thing you didn’t address is the fact that AT&T and other providers need to be building out there network and not creating false scarcity in order to increase prices. The only reason they can do that, is because unlike web hosts and so many other business they don’t really have that much competition.

      Like

      1. Here in Canada nobody pays for the install.

        They might also be trying to reduce load as well. Cable cos generally oversell their lines, are using on average more bandwidth than ever before, and Telco companies want to keep SNR high by reducing loaded pairs.

        The needs are increasing big time with streaming media. Instead of trying to fight the flow ISPs need to create their own Netflix like solutions that are implemented just as well. IE: Deliver TV to your computer and mobile devices.

        Here in Canada Shaw tried to implement a $1 per gig overage fee. Note the ‘tried’.

        Like

      2. Agreed that they’re trying to reduce load, but things aren’t as bad as they want to make it out to be, and things will only get worse if they don’t build out aggressively. They problem is that it’s cheaper and more lucrative to create false scarcity than it is to build out and delay until you absolutely HAVE to..

        Like

  2. I fully agree with obscene bandwidth caps. But I feel there should be a cap.

    But first. To compare a last mile provider with a data centre is a poor comparison. Last mile providers have a huge amount of infrastructure. Data centres are usually just a few buildings or less. But your last mile provider whether they are Cable or Telco has to keep up a huge support system to
    a) give you service
    b) maintain and upgrade the service as the years go on
    c) physically roll out trucks for troubles and have them fixed by a certain time frame or get fined by governing bodies.

    Data centres dont have exposed infrastructure to weather, poor drivers, and people who dont get locates done on cables before they dig.

    When a Data centre gets a new web customer there usually is not hardware switching involved. And to get a SLA at your data centre is big $$.

    When a new DSL / Cable customer needs service there is usually internal wiring and replacing of station wire (Wire inside the house/business) needing to be done. All in all ALOT more work than a date centre. Also the customer isnt in the data center mucking with things, or in a old house with poor grounding, soup getting thrown on to phone jacks and coax couplers.

    As for bandwidth caps. My friends an I feel 500 Gig a month is fair for 10-15 meg connections.
    It allows you ample room but is tight enough where P2P abuses get to foot the bill for their own dirty work.

    Like

    1. Jay, thanks for responding. First, let me say that I never said that there shouldn’t be a cap but 150 Gigs is pathetic.

      As for the comparison with a data center, it’s more than perfectly reasonable and here’s why:

      You’re already paying for all that you mentioned in your monthly fee. You pay to be hooked up, you pay for installation, you pay for usage and you pay monthly an amount that far exceeds the value of the bits… so when it comes down to the cost of data, the $10 for per 50 Gigs is coming without extra costs that haven’t already been factored into your regular monthly bill, so those types of overage charges are ridiculous.

      Another way to look at it is this. The factors you’re mentioning are not the concerns or problems of the consumer. The consumer looks at how much they are getting VS what they are paying. They see X amount of data from AT&T VS Y amount of data from web host. As far as the consumer is concerned, the cost of delivery/ maintenance / etc… is included in the bill they pay every month. There is no (real) additional cost of delivery for the additional 50 Gigs of data, so why such a disparity of cost?

      Finally, the one thing you didn’t address is the fact that AT&T and other providers need to be building out there network and not creating false scarcity in order to increase prices. The only reason they can do that, is because unlike web hosts and so many other business they don’t really have that much competition.

      Like

      1. Here in Canada nobody pays for the install.

        They might also be trying to reduce load as well. Cable cos generally oversell their lines, are using on average more bandwidth than ever before, and Telco companies want to keep SNR high by reducing loaded pairs.

        The needs are increasing big time with streaming media. Instead of trying to fight the flow ISPs need to create their own Netflix like solutions that are implemented just as well. IE: Deliver TV to your computer and mobile devices.

        Here in Canada Shaw tried to implement a $1 per gig overage fee. Note the ‘tried’.

        Like

      2. Agreed that they’re trying to reduce load, but things aren’t as bad as they want to make it out to be, and things will only get worse if they don’t build out aggressively. They problem is that it’s cheaper and more lucrative to create false scarcity than it is to build out and delay until you absolutely HAVE to..

        Like

  3. In the early days AOL charged by the hour and that came to a end and so well the idea of capping..it’s just a matter of time..ok so I can’t watch netflex anymore it’s no big deal..I will go back to dail up …it’s slow yes but it will get me by untill these control freaks are brought to order and the only way to do that is to make it simple…good luck all

    Like

  4. In the early days AOL charged by the hour and that came to a end and so well the idea of capping..it’s just a matter of time..ok so I can’t watch netflex anymore it’s no big deal..I will go back to dail up …it’s slow yes but it will get me by untill these control freaks are brought to order and the only way to do that is to make it simple…good luck all

    Like

  5. i agree it is a very dumb thing to do. I live in china at the moment in a city with a population of 9 million people.. “wuhan” in this massive city there is no cap on the internet, and the price is really cheap.. they just simply give you a yearly bill and done.. aside from if it breaks and you need it fixed, its free. why does AT&T need to be greedy.

    Like

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