AT&T's Internet Overcharging Spells Trouble for Online Innovation

Contact Info: 

Jenn Ettinger, 202-265-1490 x 35

WASHINGTON -- AT&T, the nation's second largest broadband service provider, announced it will soon impose on its customers monthly usage caps and penalties for exceeding those caps.

AT&T is the first national wired broadband provider to adopt usage penalties. It will reportedly cap use at 150 gigabytes of data per month, and will charge $10 in overage fees per additional 50 gigabytes for some users. AT&T is implementing these new restrictions at a time when the company’s underlying operational costs continue to drop.

Free Press Research Director S. Derek Turner made the following statement:

"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.

"While AT&T's overcharging plan is not as punitive as those proposed in the past by other ISPs, it still bears no discernable relation to underlying costs, which are estimated to be mere pennies per gigabyte. AT&T’s actions are another troubling symptom of a broadband market that lacks meaningful competition, and this move may be the start of a race to the bottom among other providers to see who can squeeze its customers the most. At worst, this is a plan designed to discourage cord-cutting and pad profits; at best, this is another example of an antiquated phone-company business model being forced onto an otherwise vibrant and limitless marketplace.

"We urge Congress to investigate Internet overcharging schemes to ensure that they are not unreasonable or anti-competitive actions by large ISPs designed to abuse their dominant market power and pad their profits at the expense of American economic growth and innovation."

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