Broadband power users explode, making data caps more profitable for ISPs

The number of broadband “power users”—people who use 1TB or more per month—has doubled over the past year, ensuring that ISPs will be able to make more money from data caps.

In Q3 2020, 8.8 percent of broadband subscribers used at least 1TB per month, up from 4.2 percent in Q3 2019, according to a study released yesterday by OpenVault. OpenVault is a vendor that sells a data-usage tracking platform to cable, fiber, and wireless ISPs and has 150 operators as customers worldwide. The 8.8- and 4.2-percent figures refer to US customers only, an OpenVault spokesperson told Ars.

More customers exceeding their data caps will result in more overage charges paid to ISPs that impose monthly data caps. Higher usage can also boost ISP revenue because people using more data tend to subscribe to higher-speed packages.

“As traffic has exploded during the pandemic, data aggregated from our network management tools confirms the value of usage-based billing in prompting subscribers to self-align their speed plans with their consumption,” OpenVault CEO Mark Trudeau said in a press release. This helps ISPs boost their average revenue per user, he said.

For example, ISPs that impose data caps had 25-percent more gigabit-speed subscribers than ISPs that don’t impose data caps, possibly because ISPs that impose caps “often provide higher usage quotas for the gigabit tier than the slower bandwidth tiers,” OpenVault said. “This provides incentive to subscribers of UBB [usage-based billing] operators to upgrade to the faster speeds.” Overall, 5.6 percent of subscribers in OpenVault’s dataset paid for gigabit speeds, up from 2.5 percent a year ago.

Temporary break from data caps

Customers of Comcast and other ISPs got a break from data caps for a few months this year when operators pledged to suspend the limits during the pandemic. But Comcast reinstated its data cap for cable customers on July 1, and AT&T reinstated data caps on DSL and fixed-wireless customers. Currently, AT&T is scheduled to reimpose data caps on fiber-to-the-home and fiber-to-the-node customers on January 1.

Comcast did raise its monthly cap from 1TB to 1.2TB on July 1, so not all terabyte users have to pay overage charges. Comcast also lowered the price of unlimited data from $50 to $30 a month, or $25 for customers who lease an xFi Gateway. Without the unlimited-data upgrade, Comcast overage charges are $10 for each additional block of 50GB.

AT&T imposes monthly data caps of 150GB on DSL, 250GB on fixed wireless, and 1TB on its faster wireline services.

US broadband networks have performed pretty well during the pandemic, at least outside of areas where modern broadband simply isn’t available, demonstrating again that data caps are a business decision rather than a necessity for network management.

2TB users also on the rise

The number of “extreme power users,” those who use at least 2TB per month, was up to about 1 percent of broadband customers in OpenVault’s Q3 2020 data. That’s nearly a three-fold increase since Q3 2019 when it was 0.36 percent.

OpenVault said the average US broadband household uses 384GB a month, up from 275GB a year ago. The median figures were 229GB, up from 174GB a year ago. Usage increases happen every year, but OpenVault said this year’s boost was fueled partly by the pandemic.

“While bandwidth usage is remaining relatively flat quarter over quarter, it is not retreating to pre-pandemic levels, indicating that COVID-19-driven usage growth has established a new normal pattern for bandwidth usage,” OpenVault said. European usage also went up during the pandemic but remained below US levels, with an average of 225GB and median of 156GB in Q3 2020.

The number of customers who have to pay overage charges may be limited somewhat by people intentionally restricting data usage to avoid the cap. Among US customers with unlimited data plans, 9.4 percent exceeded 1TB and 1.2 percent exceeded 2TB, OpenVault said in yesterday’s report. For customers with data caps, 8.3 percent exceeded 1TB and 0.9 percent exceeded 2TB.

In potentially bad news for customers, OpenVault seems to be urging ISPs that haven’t imposed data caps to adopt them. “The goal for network operators is to ensure that subscribers who consume the most bandwidth are in faster, higher ARPU [average revenue per user] speed tiers,” OpenVault said. “Usage-based billing operators are achieving this goal more, on average, than network operators who utilize flat-rate unlimited billing.”