Comcast Corporation (NASDAQ:CMCSA) has introduced its plans to charge users a fee for unlimited data plans after they reach a 300 GB per month allocation. The America’s largest broadband provider is bringing its wireless style broadband plants to Atlanta, Georgia.
The Atlanta experiment is interesting as it costs users who opt to pay the unlimited surcharge $5 more compared to Florida. Hence, in both Atlanta as well as in Florida, if you are going to use any amount over 450 gigabytes a month; you need to pay the unlimited fee. This is because if you exceed the cap you need to dish out an additional $10 for the additional 50 Gigabyte upgrade.
Customers will have to pay $35 per month so they need to buy 50-gigabyte sizes of broadband for $10 each if they exceed their existing 300 gigabytes per month allocation.
Comcast had declared a similar scheme in Florida where users had to pay $30 a month for accessing unlimited broadband. This scheme is very much a part of a series of trials that Comcast is conducting across the nation as it tries to find out how it should charge for cable broadband as increasing number of customers let go pay TV bundles.
In Florida, a charge of $30 means the user spends for the fee at the precise point when it begins to make economic logic for him to upgrade to the unlimited scheme. However, for Comcast it means it’s not maximizing the revenue. Since Comcast is conducting these trials in pricing to help retain its income as more users prefer broadband Internet from Netflix, Inc.(NASDAQ:NFLX), Amazon.com, Inc.(NASDAQ:AMZN)and others over classic cable TV Comcast can’t afford to lose money. This is why in Atlanta the 5% increase is so intriguing.
In short, what Comcast is doing in Atlanta is to determine the optimal free structure. This way it can make sure as everybody shifts to broadband it can maintain healthy revenue and profits.
Sources: fortune.com
