AT&T’s Usage Caps and Video Piracy

AT&T has announced that it’s going to set a soft limit of 150 Gigabytes/month for their ADSL customers and 250 Gigabytes for their VDSL+ (U-Verse) customers. The reaction of the piracy and general hysteria lobby to this policy follows the familiar “shoot first and ask questions later” script. The pressure group known as Free Press denounces the policy as harmful to innovation:

AT&T’s Internet overcharging is a poor solution to an unproven problem, and it will have a chilling effect on economic growth and innovation online. AT&T claims that its caps and penalties will only affect a few users, but unless the limits grow rapidly along with usage, many more customers will soon be ensnared. When ISPs force their customers to watch the meter, experimentation, innovation and business will suffer.

One of the more hair-on-fire bloggers, Janko Roettgers at GigaOm, fabricates some usage figures, and from that analysis concludes that AT&T is out to get Netflix:

How much Netflix video does 150 GB get you? Not that much, actually: If you watch a movie like Moulin Rouge in HD, you’re going to use around 3.5 GB of data. A single episode of Weeds equals about 800 MB when watched in HD. If you were going to use all your 150 GB of AT&T bandwidth to watch HD video from Netflix, you’d only be able to watch about three hours per day — and that’s without doing anything else.

See how he does that? Moulin Rouge has a running time of just over two hours (127 minutes,) which by Roettgers’ estimate would consume 1.7 Gigabytes/hour. And sure enough, if he’s right, the ADSL user gets three hours a day of Netflix viewing. He doesn’t bother to do the math for the U-Verse user with a higher cap, because that would be no fun.

Let’s see if Free Press and Janko Roettgers are telling the truth.

Netlfix recently posted performance comparisons of major ISPs in the form of a detailed performance graphs, according to which they stream videos at an average rate of 1.5 Mbps into the AT&T network.

This is not a “back of the envelope calculation” per Mr. Roettgers, this is an actual measurement that works out to 675 Kilobytes per hour. That comes out to 222 hours of streaming TV per month, or 7 hours a day plus change, for ADSL users with the 150 Gigabyte cap (in reality, their actual streaming rate will be lower than the 1.5 Mbps figure that averages all rate plans, including the higher speed VDSL+ plan known as U-Verse.) For U-Verse users, the 250 Gigabyte cap allows a maximum of 370 hours of streaming per month, but probably a bit less as they’re going to be able to handle higher resolution.

AT&T will sell additional bandwidth for $10 per 50 Gigabytes, a generally fair price given the economics of broadband. The excess capacity fee is roughly a 400% markup over the OpEx cost of bandwidth, a typical multiplier that leaves just enough profit on the table to cover the CapEx costs of the long-term bandwidth crunch.

To put these numbers in context, the average American watches a whopping 6.75 hours of TV each day, so if all of AT&T’s broadband customers cut the cord completely on broadcast TV and substituted Netflix, AT&T’s new plan would not raise their prices, so there’s no meaningful argument to be had with this plan in terms of the transition from broadcast TV to Internet TV. AT&T is saying: “bring it on.”

Free Press and GigaOm are both blowing smoke, in other words.

Given that the AT&T caps will allow the typical consumer to completely substitute Netflix for OTA and cable TV, they’re clearly pro-innovation. Given that they’re high enough not to affect streaming and just low enough to raise the price of piracy – most of the applications that run to more than 250 Gigabtytes/month are likely to be those in which the user is not paying for content at all – I’d have to say they’re pretty close to ideal. We want users to have enough capacity for legitimate uses, but not enough for illegitimate ones, after all. And by the way, AT&T is going to warn customers when they’re reaching their limits, on their monthly bills, and at 65%, 90%, and 100%.

The AT&T caps will permit today’s Internet users to cut their cable TV cords completely, and then to increase their TV resolutions substantially before paying a dime more than they pay today. Most people would regard that as a darn good deal. As Jon Healy explains in the Los Angeles Times, this kind of pricing plan is exactly what the normal user wants:

…the caps are a better deal for most broadband users than all-you-can-eat pricing that forces them to subsidize the outsized data appetites of a small minority. That’s the dirty little secret of the flat-rate pricing model that AOL made standard across the Net: It costs most users more than they would have to spend under the pay-as-you-go model.

And that, my friends, is reality: The all-you-can-eat plan passes the costs of high consumption to low consuming users, a great deal if you’re in the upper two percent, otherwise not so keen and marvey at all.

I wonder how advocates of flat-rate pricing for broadband would like an income tax system in which everyone paid the same amount of money regardless of income; I’m guessing that wouldn’t go over too well.

It’s interesting that America’s actual free press, personified by the LA Times’ Jon Healy, understands this issue while America’s notional Free Press, the pressure group that’s all heat and no light, doesn’t; and perhaps even more interesting that a tech blogger who’s supposed to be a video expert isn’t even familiar enough with what Netflix has been saying about the ISPs to pull the right consumption numbers out of the air.

I guess it’s not quite time to give up on the mainstream media after all.

That being said, usage caps are not the best way to deal with network congestion by any means. The two problems with caps both relate to their lack of precision: Monthly caps don’t distinguish between network load offered at times when the network is not congested, and they also don’t differentiate between applications that can afford to wait few fractions of a second between each pair of packets. It wouldn’t be incredibly difficult for operators to count non-congestion packets separately from those that contribute to congestion; it’s actually dead simple. But distinguishing applications from each other and treating them according to their needs raises the ire of the naive net neutrality advocates who insist that all packets are equal.

Usage caps are therefore one of the consequences of net neutrality, so if you don’t want applications distinguished from each other, you’re making the argument for usage caps whether you know it or not.

  • Tim

    Linked here from Twitter – You make a lot of good points that others aren’t making out in the tubes. Netflix and Hulu are not my only concerns. I am a backup fanatic and an amateur photographer. I have ~100GB of photos in the cloud and I’m adding to it. If I had a catastrophic loss of data on my system (fire, theft, etc.) there goes almost half of my bandwidth just restoring my photos. That may not happen, but it could. What about my use of Steam or downloading games from the Playstation Network? What about my legal purchases and rentals of HD movies, HD TV shows, and music? I pay a premium price for their fastest connection so I can facilitate this use of their service. My biggest gripe with this change is the fact that someone paying less than me for slower speeds and who is less likely to consume as much data is getting the same amount of bandwidth as someone like me making the premium purchase. I can live with a cap, but when it’s implemented in a way that guarantees AT&T will fare better while consumers get screwed I get upset. You say yourself that caps are not the best way to deal with congestion – so why are you defending such an anti-consumer, pro-bottom-line move?

    • Richard Bennett

      It’s not true that premium users have the same cap as low-cost users, Tim; you have 250 GB and they have 150 GB.

      AT&T says they don’t charge you for exceeding the cap on a one time or two time basis due to the kind of emergency you imagine.

      And yes, this year’s cap won’t suffice for the usage patterns that come about in five years or so; it’s got to be a moving target.

      • Chris

        This response you made does not make sense to the paying customer. If you work for an ISP then I am sure you can justify anything you want to say. I am not going to have to go to school to buy internet am I? there is no way to track what AT&T, Verizon, Comcast are trying to do to their customer. They can make up any excuse to steal with this setup.

        • Richard Bennett

          The FCC, the FTC, and the Justice Department keep a close eye on the ISPs, as do all the nutty pressure groups such as Free Press as well as the non-nutty ones like CDT. None of this is being done in secret.

  • Chris

    Why do the bandwidth limits seem to advance with what the ISP wants to provide but not with what the consumer wants? 10 years from now fiber will be to a lot of homes, will their be a bandwidth crunch with that? Who cares if the networks slow a little at times we can setup our usage to wait until it clears. with my gigabit network it bottle necks a little at times, but still it is a gigabit line not 10/100 so I am still happy. There is technology that is not being used by the telcos and ISP’s to help the troubles they complain about, but refuse to use it.

    • Richard Bennett

      See my reply to Tim re: moving targets, Chris.

  • Tim

    Richard, you misunderstand me. I’m talking about the premium U-Verse speeds. Leaving out the DSL users entirely, I am purchasing the top tier of service on U-Verse. I have more consuming power than someone who connects at 3Mbps. Their potential maximum monthly bandwidth is lower than mine. Therefore they aren’t experiencing as large an increase in their GB/month cost in relation to how much they could down-/upload.

    You also still focus on Netflix as the only (or at least primary) source for bandwidth concerns. A fair number of AT&Ts customers will consume huge amounts of bandwidth through perfectly legitimate means. Your defense of AT&T attempting to ensure quality service is worthwhile. However this is a pathetic effort on their part. It pads their bottom line and is a simplistic ‘fix’ for a complicated problem. Sure, it’s a nice nod for them to say that they’ll give you two “grace periods” where they won’t charge for overages, but what’s the point? They say they’re putting this cap in place for a reason. Why then are they being wishy-washy about enforcing it? I also wouldn’t be surprised if they tried to renege on that promise.

    • Richard Bennett

      Video consumes so much more than other types of content that it’s the only one worth considering, Tim. You’d have to read 10 web pages per second for hours at a time to come close to using the B/W you use when you watch cats on treadmills on YouTube.

    • Chris

      It’s Big business. It has nothing to do with not being able to handle people using bandwidth and for big business to think that most people will believe this only shows how stupid they really are. I have U-Verse and I’ve been locked out one too many times. I rarely use the internet and now they are going to lose all of my business, home phone, internet and television… and since I don’t like the way they are purposely slowing my internet down when I am not a user that clogs up the internet but they’re blocking me, they’ll be losing all 7 cell phones that I currently get through AT&T. I’m tired of being screwed over. I’m taking my business elsewhere.

      • Carol

        Good luck taking you’re internet elsewhere all of them are starting to limit bandwith. I left Att and went to hughenet I made it 1/2 month before it slowed to dial up since I was in the 30day trial I was able to cancel no charge I called others like Dishnet no good so I went back to Att to find out it limits you’re bandwith too None of them are any good anymore!!!!!!!

  • Chris

    OK, after reviewing the complaints and the bandwidth requirements of most people who just want email. This complaint is all about censorship, and nothing more. ISP’s want to provide content, and the open internet goes against this desire of the ISP to be a content provider. This will go the way of Betamax and will be a complete waist of all of our time and money.

  • James Keagan

    Monopolies (okay, we are talking about telco/cable duopolies) act to protect their interests by crushing competition and limiting customer choices. We are talking about ATT and the cable companies limiting access to internet based companies (content providers and much more), essentially killing our commercial alternatives so that they can protect their own business interests – and we are force to pay them for doing that. That is the definition of a monopoly.

    The article above is certainly flawed because it says ATT is doing the right thing for our benefit. I dare the author to show us the network usage figures that justify the congestion claim. BS period.

    He argues that a “good” user could never exceed the cap. How shortsighted can you be. Just because he thinks everyone is computer illiterate and only uses the Net for watching TV, just proves how behind the times he probably is. People are working from their homes, they are reshaping their lives, and we now have fast networks at both ends (the corporate systems, the public educational systems, small businesses, and in the home). What we don’t have is a fast connection in the middle because government regulation and guidance (from we the people) is sorely lacking to shape ISP services here in America.

    Either join us as we reshaping a better future or get out of the way and quit putting up roadblocks for your friends at ATT. Is the cap illegal – I say yes it is because I see it as a monopolistic, racketeering enterprise. It is also against the economic interests of this nation. The race to the bottom of the broadband list of nations and the rise to the top of the broadband cost per GB list of nations.

    I’ve written the FCC and the Justice Department. Have you? I’ve written my congressmen and senators, have you? I’ve written two state agencies – will you? Will everyone please raise the noise level on every blog in this country? Will you add your voice and stop ATT from taking 10 years off our economic development and becoming the monopoloy of old? Stop the cap!

    • Richard Bennett

      The Netflix ISP speed ratings cited in the article show the evidence of congestion, James. Why do you think the average streaming rate into the AT&T network is only 1.5 Mbps?

  • Mason

    I love that customers have been put in a position where they must prove themselves innocent if they disagree with AT&T’s misinformation campaign.

    You are guilty of dangerous thoughts if you disagree. You are a pirate if you use more than 18GB a month. You are a terrorist if you use more than the cap (i.e., you are trying to take the AT&T backbone down). Guilty they say before you even get a word out. It’s all your fault.

    Defend your innocence and you loose. Attack the con and you can win.

    Nice job with the article hatchet man.

    • Richard Bennett

      If you’re using more than 250GB per month, month after month, you probably are a pirate, Mason. What can you do with that much consumption that involves legal content, download three Linux distros a day?

      I can understand people being upset about some miserly 1-2 GB monthly cap like some of the mobile plans have, but 250 GB is such an enormous amount that won’t bother anybody to speak of; and yes, it will need to be increased in the future, that goes without saying.

      • Bob Marely

        You miss the point. ATT put the onus on the consumer to justify its monopolistic need to defend its business at our expense (literally). Putting the onus on the victim justifies walling-off the internet for their own gain. Sorry if you cannot see this.

        More, you might not be able to use 250GB but plenty of us can. I work on video compositing and motion graphics as a hobby. I work with 3d fluid simulations and 3d modeling to create digital art for which I am not making a single cent. I collaborate with others on learning projects, one for a class at the local community college and some for projects that might go somewhere some day. Please don’t tell me I am pirate. Yet, ATT says my need is illegitimate. They put the blame on me. Really, ATT? You are getting greedy but its my fault. NO, IT IS NOT!

        • Richard Bennett

          I don’t think it’s unfair to ask people who use more of a resource than their neighbors to pay more. If your hobby were ceramics rather than graphics, you’d be paying a high electricity bill to power your kiln; there’s no difference.

          • Oran Tokit

            I recently signed up for a year’s subscription at a site on film-making and DSLR photography. The lessons are all HD videos with extensive project content. Now I find out that I might not get my money’s worth from the annual fee because I share a home connection with my wife, two kids, and my sister-in-law.

            Selling DVD’s for course content is a thing of the past as many educational companies have gone to streaming video. This is just one example of how poorly thought out this cap is. Forget the self-serving motivations of ATT to increase profits and protect their TV business. Instead take a look at how nonsensical a one size fit’s all cap really is.

            We should pay for what we use. We pay for electricity as you say such that financial disincentives kick in for big users. But that is not what is happening here. Instead we are being told that we have stingy quotas that will cause many people to go without service because they are at their cap for the month. Imagine your electric company cutting off power to your home on the 15th because you hit your quota for the month. Really? Is that what you want us to accept? Amazing.

            Regulation is the answer. ISP’s need to become regulated utilities that get audited just like the gas and electric companies. This is a vital step that needs to be taken now. The new draconian usage caps (i.e., quota’s) are a sure sign that we have reached that stage where a vital resource cannot be entrusted to private enterprise without regulation and direction.

            The caps are a sure sign that ATT cannot manage this issue on its own. It has taken the wrong steps in dealing with the no free lunch issue. Pay for your lunch – yes. Take away half your lunch – no. Starving America is not the correct solution is you want the country to grow.


      • Legal Viewer

        hey Richard, I have family in Japan right now, there is an English speaker streaming a couple of hours per day with updated information regarding the nuclear, and also watch the english version of their national tv when they have speeches. I would be completely out of luck once this thing goes into effect and yet I am doing nothing illegal – no piracy. Now I have to be charged more to get important information? It is ridiculous.

      • Keroppi

        Quote:”If you’re using more than 250GB per month, month after month, you probably are a pirate”

        …Even if everything else you’ve said was true, correct, and made perfect sense (which it’s not, and doesn’t), the pitiful short-sightedness of this statement invalidates anything you say. Completely. Fail.

      • barney

        I watch netflix and play pc games that is all i really do,and i went over 250 GB in a little more than half a month. I have dsl and my limit is 150Gb.

  • Mike Forrosi

    From now on I will let everyone know that ATT sucks – their TV service sucks, their Internet services sucks, their mobile service sucks, their wireless service sucks. This may be untrue but if ATT is being dishonest with us regarding the caps and severely limiting access and thereby crippling our ability to use the Internet now and in the future because of their need to kill competition, shouldn’t I return the favor. I mean, if over the next year in various conversations, phone calls, emails, blogs, chats and so on, I just let it drop that ATT delivers very unsatisfactory service, am I not returning just a fraction of the injustice ATT has done to me. And if I can influence just 5% or maybe 15% of the people I talk to, then perhaps the lost revenues will help ATT to understand just how much I hate their monopolistic behinds.

    So take the pledge and return the favor to ATT for their robberbaron theft of access to an Internet that our government developed and gave to its people.

    Take the pledge and return the favor.

    • Richard Bennett

      See my response to Bob Marley and the Wailers, Mike.

  • Fran Lorns

    The ATT Ten Commandments of Usage Caps

    Thou shall not have any other content provider before me.

    Thou shall not have any right to Internet access that is not apportioned to you by me.

    Thou shall not covet thy neighbors Internet nor covet Internet access in more advanced societies.

    Thou shall show steadfast love for me and render onto me all that thine possess in reverence thereof.

    Thou shall not turn to false prophets that preach a free Internet.

    Thou shall kneel to my power over your representatives.

    Thou shall not make false witness against me.

    Thou shall not testify or demonstrate or take action against my corporate body.

    Thou shall take my cap onto your heart so that I may benefit.

    For I am your holy provider, who brought you up out of the land of ignorance and into my house.

  • Abby Hu

    If caps are better for consumers, and will allow them to not subsidize the large users, 2% in AT&T’s opinion, then does that mean that all users with caps will see a price decrease in their bills? If we are no longer subsidizing, then we should get a lower price? right? AT&T is doing this to sell Uverse TV and dominate the markets. Its similar to when the East Indian Tea Company held the sea routes and controlled products, delivery and prices in much of the world. AT&T is attempting to do the same with their lines, which by the way was highly subsidized by the tax payer when it was originally installed. Its a win win for AT&T , as usual, and a lose lose for the consumer, as usual. But, thats American business. Winner takes all, no matter who gets hurt as long as they make big profits.

  • David Summers

    What I really dislike about these caps is that AT&T wants its customers tethered to 200 channels stuffed full of aggravating, demoralizing, and completely unwanted commercials.

    Trying listening to a FM radio channel and you will spend most of your time listening to advertising. Unfortunately, most of AT&T’s 200 hundred channels have the same problem – an obnoxiously high advertising content such that nothing is really worth watching anymore unless it’s seen from a recorded show that can be fast forwarded during the commercial breaks.

    This is what AT&T is protecting and this is the true end result that we will suffer through for another decade. Television content made worthless by endless commercials. Do you like CNN? Actually its called CNNN now – Commercials Not News Network because if you change the channel to CNN, the odds are greater than 50/50 that you will hit a commercial break.

    We are at the threshold of exchanging this tired (and tiresome), ultimately untenable video delivery system with a new model whereby we pay directly for what we want to watch without advertising. We do not need 200 channels. We do not need 500 channels full of content mangled by repetitious, idiotic, insulting advertising. What we do need is five to ten shows we like, some news programs, and the occasional movie without commercials.

    I would pay for that. There are companies poised to provide content directly to viewers commercial free. We have (or had) an Internet that makes that possible. But there are obstacles. First are large ISP’s that act like robber barons. Second are the government agencies (FCC, Justice Department, Congress, President) that act like sheriffs on the take. Frankly, I can’t tell if those agencies are clueless, gutless, or just plain owned by the corporations..

    We need to quit pretending we are powerless in this situation and realize that with principled and throughout regulation, we can indeed shape the society we want to live in. But first, let’s string up the thieves and replace the corrupt sheriffs and corrupt politicians. The sooner the better.

    We live in the 21st century, in the digital age. I will not be dragged back into the last century so some exec can have a bigger bonus and a second vacation home. End the corruption, regulate a vital national resource (a Free Internet is a Free USA), and force ATT and the cable companies to rescind the godforsaken cap.

  • Rob

    Richard, I think you’re missing a couple things about Netflix. Why is 1.5 Mbps the average? Probably because that’s the base tier for DSL, not due to congestion. Middle tier AT&T DSL is 3Mbps … I used that for several years. When I added the Netflix client to my PS3, I upped to 6Mbps service, because Netflix recommends at least 5Mbps for HD streaming … so your numbers are skewed toward SD streaming since the Netflix clients – in the US anyway – auto detect your bitrate and will auto select HD if it can handle it, even if you’re not displaying it (I’ve got a Roku on an SD TV in a second bedroom, but it still detects and streams the HD data). SO, people paying the for the premium of higher bitrates are the ones most likely to get hit with higher volume costs as well.

  • MR Bell

    The answer is regulation. The internet providers must be regulated. They currently have monopolies across the US. This industry needs regulation badly. I have no problems paying for what I use but you sir have extremely poor logic. You stated that users will pay for what they use. How are you to pay for what you use when there is a cap? Also these are the publics airwaves and infrastructure that these companies are using. (Tax dollars put all of this infrastructure in place and provided the research to put this in place) THe fact that it was given to these pirates to turn around and screw over the US voter just shows how far this country has sunk into the slime. Its time for people to vote with their wallet and drop these services. Write to your government and tell them they need to regulate these robber barons. Its time people stood up and stop being mindless consumers.

    • Johnny Broadband


  • Rob

    The author misses one crucial point that seems to also escape the ISPs. Internet service is NOT a physical resource like water, gas, or electricity. Placing caps on a fictional water tower/lake that will “run out of internet” if overused is ridiculous. THIS IS done to limit users from using rival services that the ISPs offer. This is almost like the bad old days of Ma Bell and their silly plans to control everything you did with your phone. Remember when it was a great idea to charge per email sent? No? Too bad because we’ve been here before. Failing to learn from past mistakes and so on…

    • Richard Bennett

      You can certainly run out of capacity on a given wire at a given time. It’s called “congestion” and it’s something that has side-effects on other users. So it’s perfectly rational to try to limit this occurrence.

  • CoxCable Refugee

    I Call BS… Im leaving ATT due to the 150 cap, I have four teen boys and myself with xbox PlayStation smartphones, laptops, PCs and I have payed the Top money 50.oo for measly 6mbps to have the same 150 cap as the never home college student who pays 14.oo and never uses his 150up/download.

    my house needs almost 300GB, cause that is what we can almost get to in summertime. I feel I should get more since I pay more, let alone the 10$ for 50GB extra… I pay close to 100 month for internet… yet I switched, and now get 50Mbps speed and 400GB up/down for the same amount with coxcable.

    Is ATT racketeering, yepper, If they could tell me, or gave me control to limit the stream but they dont, wont, cant, then charges me extra for “a polished turd’.

    I have switched and my almost three decade of a loyal customer is ended and will NEVER go back to them ever. I am sending them invoices for my time having to be on the phone with them to figure out why Im going over the 150 GB that they cant seem to understand why we use that much. three hour each month for five months, They can pay me for consulting.

    ATT is a greedy dinosaur.

  • jm_graphic_designer

    Thanks for the attempted clarification of AT&T’s new policy. I just saw their notice when I logged into my AT&T account and immediately went to the usage reports to see if I could expect to be hit with the new usage charge. Unfortunately, the AT&T “usage” reports only show how much they have charged me – not how much data I have used. So the general usage cap estimates above are helpful but I still don’t know whether my $60/month plan is now a $70, $80 or $110/month plan. And AT&T apparently didn’t think anyone would ask. So I guess my question is, will AT&T tell customers how much data they are using? Maybe even let us set alerts like my Verizon mobile plan? Or do they expect us to just back into the math based on how much they charge us?

    • Richard Bennett

      I can’t tell you what AT&T’s plans are, but if you want to track your mobile data usage there have been apps for that for years.

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