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Posted at 11:33 AM ET, 03/14/2011

More telecom, cable firms likely to adopt data caps

More cable and telecom firms will likely follow AT&T’s decision to impose data caps on broadband Internet customers, analyst say.

So far the limits are set high enough so that the vast majority of users won’t be affected. But that could change, analysts say, as users turn more to the Internet to watch videos.

AT&T said over the weekend that it would move away from unlimited monthly broadband service to two tiers — limits of 150 gigabytes per month for DSL customers and 250 gigabytes for U-Verse customers. AT&T and Verizon Wireless have already announced tiered pricing for wireless customers. The move on fixed-wire underscore how carriers are focusing on billing to handle the uneven costs of providing Internet access to heavy and light users.

Craig Moffett, an analyst at Sanford C. Bernstein, said that television viewers — who are watching an average of 157 hours of video a month — won’t be able to replace cable and satellite television subscriptions with online video streaming at the high end of data caps.

“Any move toward usage-based pricing doesn’t just affect the returns of the operators,”Moffett wrote in a report Monday. “It also affects the demands of end users.”He also predicted that carriers will begin introducing caps for lower-end packages.

To put those limits announced over the weekend into perspective, Barclays Capital analyst James Ratcliffe said 150 to 250 GB equals about three to five hours of streaming high-defition Netflix video a day. It would be about eight to 14 hours a day of video viewed on Hulu.

“We estimate that the caps will affect one to two percent of AT&T’s broadband customers, who generate close to 30 percent of total traffic at a typical ISP,” Ratcliffe said.

The Federal Communications Commission condoned data caps and usage-based pricing in its net neutrality order last December . AT&T joins Comcast, which has 250 GB caps and was the first major broadband service provider to impose data caps.

Related stories:

As telecom industry evolves, Netflix is greatest threat

Faster cell phones to bring new wave of services and charges

By  |  11:33 AM ET, 03/14/2011

 
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