FCC to study data caps, and may raise broadband speed threshold

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With Comcast (Nasdaq: CMCSA), Verizon (NYSE: VZ) and other broadband providers beginning to offer broadband Internet services with download speeds of 300 Mbps and faster, the FCC says it may need to change the definition for what it considers broadband.

Since 2010, the FCC has said that Internet service providers had to offer download speeds of 4 Mbps and upload speeds of 1 Mbps for their products to be considered broadband. In a notice of inquiry issued on Tuesday, the FCC said that the threshold may need to be raised to reflect the demands required by consumers relying more on broadband services to download high-definition video and to access the Internet on multiple devices in their homes. The commission, which released its Eighth Annual Broadband Progress Report on Tuesday, said it is also considering whether to gauge the impact that broadband usage caps and tiered data plans in next year's report.

Comcast recently raised its monthly data cap from 250 GB to 300 GB, and began charging subscribers on its system in Nashville, Tenn., $10 for every 50 GB that exceeds the cap. Time Warner Cable (NYSE: TWC) recently began offering some Texas subscribers usage-based broadband packages where customers that take its "Essentials" cable modem service can receive $5 monthly discounts if they download less than 5 GB of data each month. Those are the types of broadband models that the FCC says it may study in its 2013 report.

"If we add a data capacity threshold for fixed broadband in the next report, what data capacity threshold or thresholds should we adopt," the commission asks in the notice of inquiry. "What data capacity limits do most fixed broadband providers offer today?  How often, and under what circumstances, do consumers exceed these limits?"

About 19 million Americans, or about 6 percent of the U.S. population, lack access to the Internet at speeds meeting the current broadband threshold of 4 Mbps, the FCC said the progress report it released Tuesday. The number of Americans who don't have access to broadband could increase in next year's report if the commission raises the threshold.

"There is evidence that consumers are accessing and generating video content over broadband to a greater degree than in previous years, and are increasingly using their broadband connections to view high-quality video and use advanced video applications," the FCC said in its notice of inquiry, pointing to a Cisco (Nasdaq: CSCO) report that predicts North American Internet video traffic will grow 20 percent annually from 2011 to 2016.

For more:
- see the FCC notice of inquiry
- see the news release

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