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Are Data Caps Prompting Consumers to Spend More Than Necessary?

A new GAO report suggests that consumers are largely confused about how much wireless data they use each month.


Consumers could be spending more on wireless and broadband bills than they need to because of concerns they’ll run over monthly data caps, according to a preliminary Government Accountability Office report released Tuesday (see below).

Government investigators found that consumers are largely confused about how much wireless data they use each month and worried about getting socked with overage charges if they (or a family member) goes over their monthly limit.

“Consumers may not be fully benefiting from lower-cost options under (usage-based pricing)” plans, the GAO said in its report. One wireless Internet provider told government investigators that only a small percentage of customers use 500 megabytes or lower plans even though the average wireless customer in the U.S. uses just 465MB of data monthly, according to a Sandvine survey.

Consumers expressed less concern about going over monthly wireline broadband data cap limits, government investigators said, partly because many people haven’t encountered them or haven’t exceeded their limits.

The preliminary report was released by Democratic Rep. Anna Eshoo of California, who has been critical of data caps in the past and is expected to forward the GAO findings to the Federal Communications Commission, which is currently considering how to craft new rules for Internet lines.

“As the FCC continues to seek comment on its proposed net neutrality rules, it’s more important than ever that policymakers understand data caps and how they might enable broadband providers to circumvent open Internet rules that ensure consumers have uninhibited access to the Internet,” Eshoo said in a statement. GAO is expected to release a final report in November.

Consumer confusion about data caps is nothing new, but it’s become more of an issue as more broadband providers have adopted the practice and more Americans have gone online.

Verizon and AT&T are among the carriers that have posted online calculators on their sites to help subscribers figure out how much wireless data to buy each month.

But it’s been slightly harder to figure out how much data is needed for home broadband connections, particularly as Americans have begun streaming more movies and TV shows. GAO officials cited Sandvine research suggesting that consumers who drop their cable* subscriptions and rely on streaming video services like Hulu or Netflix use significantly more data than other customers.

Another issue that Eshoo and consumer groups are concerned about is mobile carriers allowing companies to cover the costs of subscribers using their apps or services, such as AT&T’s “sponsored data” plan.

Few companies have signed up to use the service, although Amazon is thought to have been looking into it for its new phone.

Meanwhile, T-Mobile has launched a “set your music free” service that allows some subscribers to listen to streaming music services without having that data count against their data limits. T-Mobile cited research suggesting “37 percent of people say they avoid streaming on their phones — the majority out of fear that they’ll use up their data and run into overages” when announcing the plan.

The feature has been popular, even if a few customers complained earlier this year that their accounts were being incorrectly charged for using streaming service Spotify.

* Comcast’s NBCUniversal unit is an investor in Revere Digital, Re/code’s parent company.

7.29.14 Preliminary GAO Report Findings From Data Cap Study Copy

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