Data caps are a business decision—not a network necessity, Frontier says

Jon Brodkin

Fun fact: This is what a data transfer looks like when you're inside an Internet tube.

Getty Images | Yuri_Arcurs

Frontier Communications, newly expanded after purchasing Verizon wireline networks in three states, says it has no plans to impose Comcast-style data overage charges.

"We have not really started or have any intent about initiatives around usage-based pricing," CEO Daniel McCarthy told investors Wednesday at the Bernstein Strategic Decisions Conference. "We want to make sure our product meets the needs of customers for what they want to do, and it doesn't inhibit them or force them to make different decisions about how they're going to use the product."

FierceTelecom has a story about McCarthy's comments, and audio is available here.
McCarthy noted that networks are facing fewer capacity constraints as technology improves and data transport costs decline. Therefore, Frontier isn't necessarily making pricing decisions based upon its own costs per megabit. Instead, the company prices Internet service based on what's competitive in the market, generally charging less than cable companies, he said.
"There may be a time when usage-based pricing is absolutely the right solution for the market, but I don't see that as the path the market is taking at this point in time," he said.
With unlimited data, customers might be inclined to purchase standalone broadband service and "cut the cord with a cable company because we give them the right product to do that," McCarthy said.

Data caps have been a contentious issue with customers and regulators. Comcast has angered customers with its caps, but recently the company raised the limits from 300GB to 1TB per month and limited data overage fees to a maximum of $200 a month. Charter, which just purchased Time Warner Cable to become the nation's second largest broadband provider after Comcast, is barred from imposing data caps and overage fees for seven years as a result of conditions imposed on the merger by federal regulators.

Verizon hasn't officially imposed caps on its fiber-based FiOS home Internet service. Although it isn't charging data overage fees, Verizon has threatened to disconnect customers over "excessive usage." Verizon's unofficial caps are 10TB a month on FiOS and 1.5TB on DSL, according to a DSLReports story last year.

Frontier's recent purchase of Verizon networks in California, Florida, and Texas gave the company an additional 2.1 million Internet customers, nearly doubling its subscriber base. Frontier also gained 3.3 million phone customers and 1.2 million TV customers in the transition that happened April 1.

The transition did not go well, as about 30,000 customers may have lost service. Frontier told lawmakers in California that problems were caused by corruptions in data taken from Verizon. The missing data prevented Frontier's network from communicating properly with equipment at customers' homes, making it impossible to provision service to everyone.

McCarthy discussed the problems Wednesday, saying there were "22,000 potential gaps in the data" among 440 million lines of data extracted from Verizon. Frontier had to figure out what caused the problem, extract the entire data set again, and sync it properly with Frontier's systems, but McCarthy said the data problems are now resolved.