Despite its efforts to improve its reputation, Comcast (NASDAQ:CMCSA) continues some less-than-consumer-friendly practices such as capping data for its broadband customers.
The company, of course, doesn't call its policy "data caps." In fact, it goes out of its way to tell people it doesn't cap data while explaining its practices that either limit data after a certain amount has been used or charge them more for exceeding the threshold.
"There isn't a cap anymore. We're out of the cap business," Executive Vice President David Cohen told Ars Technica in May 2012 after dropping a policy that could cut off people's service after they use 250GB in a month. Comcast's then-new approach was touted to "effectively offer unlimited usage of our services because customers will have the ability to buy as much data as they want."
It's all semantics, and now the company is offering customers in Florida the ability to pay $30 a month for unlimited data, which effectively allows them to buy their way around data caps the company says don't exist.
How does Comcast use data caps?
The company's data caps aren't universal. They're being tested in a number of markets, and the rules vary slightly in each. In a broad sense, Comcast offers users 250 to 300GB of data as part of their monthly plan. If they exceed that number, their access is either shut off or they can pay an additional fee for more data -- generally $10 for 50GB.
Comcast, to its credit, hasn't been aggressively enforcing the caps and has in most cases allowed customers to exceed the cap for three months before charging a penalty.
Still, the company did tell investors at a 2014 event that it had plans to expand its data caps (which it insists are not data caps) across its entire territory.
"I would predict that in five years, Comcast at least would have a usage-based billing model rolled out across its footprint," Cohen said.
At the time of that event, Cohen did tell ARS that the company may raise the not-a-cap number and that "98% of our customers nationally don't use 300GB a month."
So, why offer an unlimited option?
The new plan being quietly tested in Florida offers unlimited data for an extra $30 a month, but it's hard to see whom that make sense for. If most users don't exceed the threshold anyway, and extra data costs $10 for 50GB, are there really consumers using over 150GB beyond their 300 GB allotment on a regular basis?
The company laid out on an FAQ page a scenario in which the unlimited plan makes sense:
For example, if you enroll in the Unlimited Data Option and use 530 GB in a given month, you will only be charged $30 for choosing to enroll in the Unlimited Data Option. If you do not enroll in the Unlimited Data Option, you would be on the 300 GB plan and therefore would be charged $50 for the additional 250 GB (five blocks of additional 50 GB) provided on top of the 300 GB plan. Note that customers enrolled in the Unlimited Data Option who use less than 300 GB in a given month will still be charged $30 for that month.
That scenario makes sense if you regularly go over by 250GB (technically being over 150GB each month is the breaking point), but that has to apply to very few people.
It's a very niche clientele, and the company may have been better off not offering the unlimited "deal" rather than calling attention to its data limits (which, again, it insists are not caps) that few people will be affected by. Comcast has either solved a problem that doesn't exist or has found a new way to make money from people worried they will exceed limits they aren't even likely to approach.
Comcast should drop all of this
If most customers don't exceed their data allotments, then Comcast should drop the caps and consider a more consumer-friendly way to handle network abusers. Perhaps the company should simply target people who consistently use well more data than the average customer.
While consumers don't like the idea of data caps and mentioning them causes a public-relations nightmare, people are less likely to be outraged if people taking advantage of the system are being held in check. If less than 2% of users (and probably well less than that) regularly exceed the norm by a massive amount, people aren't likely to push back if the company takes some enforcement steps.
Comcast is being heavy-handed here, and it's drawing attention to the fact that no matter what terminology it uses, it has data caps. Just because you say Grandpa is "93 years young" doesn't change the fact that he has well exceeded his expected lifespan.
In this case, the cable and Internet giant is stumbling into a discussion it doesn't want to have with limited upside in the fees it can collect.
Daniel Kline has no position in any stocks mentioned. He knows a data cap when he sees one. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.