BROADBAND 

INTERNET

FCC Should Track the 

Application of Fixed 

Internet Usage-Based 

Pricing and Help 

Improve Consumer 

Education

Report to the Ranking Member,

Subcommittee on Communications and 

Technology, Committee on Energy and 

Commerce, House of Representatives

November 2014

GAO-15-108

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-108, a report to the 

Ranking Member, Subcommittee on 

Communications and Technology, Committee 

on Energy and Commerce, House of 

Representatives

November 2014

BROADBAND INTERNET

FCC Should Track the Application of Fixed Internet 

Usage-Based Pricing and Help Improve Consumer 

Education

Why GAO Did This Study

Access to broadband Internet is seen 

as being crucial to improving access to 

information, quality of life, and 

economic growth. In recent years, 

some Internet providers have moved 

away from unlimited data plans to UBP 

with uncertain effects on consumers.

GAO was asked to review the use of 

UBP by Internet providers. This report 

examines: (1) information available 

about the application of UBP by 

Internet service providers; (2) issues 

related to UBP selected consumers 

report are important to them; and (3) 

the potential effects of UBP on 

consumers.

GAO collected data on Internet plans 

from the country’s 13 top fixed and 4 

top mobile providers; contracted with a 

market research firm to assist with 

conducting eight focus groups held

with consumers in four cities selected 

to reflect geographic diversity;

reviewed relevant studies; and 

interviewed officials from the top 

Internet providers, FCC and industry 

stakeholders, including researchers, 

policy, and industry organizations.

What GAO Recommends

GAO recommends FCC: (1) work with 

fixed providers to develop a voluntary 

code of conduct to improve consumer 

communication and (2) make use of 

existing data to track fixed Internet 

UBP and its effects on consumers

nationwide. FCC said it will monitor 

complaints and provider plans to 

determine if a more proactive approach 

is needed. GAO continues to believe 

that better communication is 

warranted. FCC agreed to use existing 

data to analyze UBP issues.

What GAO Found

Based on an analysis of consumer data plans of the top 13 fixed—in home—and 

4 mobile Internet providers, GAO found that mobile providers employ usagebased pricing (UBP) more commonly than fixed. Under UBP, providers can 

charge varying prices, change connection speeds, or take other actions based on 

Internet data consumed. The 4 largest mobile providers in the country all use 

UBP to some extent; 7 of the 13 largest fixed providers now use UBP to some 

extent. Because prices can vary based on usage, it may be important that 

consumers be informed about data. GAO found that some tools offered by fixed 

providers to educate consumers regarding data can be confusing. For example, 

some provider estimates vary on data consumed for the same type of content. 

While mobile providers follow a voluntary code of conduct, developed with the 

Federal Communications Commission (FCC), to encourage useful, consistent 

consumer education, no similar code exists among fixed providers potentially 

resulting in confusion and a lack of consumer awareness regarding data needs. 

Participants in all eight of GAO’s focus groups reported being subject to mobile 

UBP and expressed some concerns about it, such as difficulty tracking data 

usage among many devices. Yet participants accepted mobile UBP and adapted 

by, for example, limiting use of high-data content and by connecting to Wi-Fi. By 

contrast, only a few participants in three focus groups reported being subject to 

fixed Internet UBP. Participants expressed concerns about possible increases in 

prices for access caused by fixed-Internet UBP and the potential effect of limits 

on their fixed Internet, where they have not considered data usage. Participants 

exhibited confusion over data consumption—for example thinking that low-data 

activities like online shopping consumed large amounts of data. Participants also 

expressed concern about difficulty tracking the wide range of devices accessing 

their fixed data allowance and that fixed UBP may negatively affect students, 

people working from home, and those with lower socio-economic status. 

The potential effects of UBP are uncertain and could depend on competition 

among providers. Based on economics literature, UBP can address the usage of 

the heaviest data users and can benefit consumers by providing more options as 

opposed to a one-size-fits-all unlimited data plan. The literature also suggests 

that providers could implement UBP to benefit consumers—for example, by 

offering low-data, low-cost plans for those who do not want an unlimited data 

plan. While mobile providers GAO reviewed offer such plans, fixed providers—

generally facing less competition—do so to a lesser extent. According to the 

literature, providers facing limited competition could use UBP to increase profits, 

potentially resulting in negative effects, including increased prices, reductions in 

content accessed, and increased threats to network security. Several 

researchers and stakeholders GAO interviewed said that UBP could reduce 

innovation for applications and content if consumers ration their data. While FCC 

is collecting data regarding fixed UBP, it is not using this data to track UBP use 

because it only recently started collecting the data specifically to analyze prices. 

As a result, although FCC is charged with promoting the public interest, it may 

not know if UBP is being used in a way that is contrary to the public interest and, 

if so, take appropriate actions.

View GAO-15-108. For more information, 

contact Mark Goldstein at (202) 512-2834 or 

goldsteinm@gao.gov
Page i GAO-15-108 Broadband Internet

Letter 1 

Background 4

Mobile Providers Employ Usage-Based Pricing More Widely Than 

Fixed Providers and Agree to a Code of Conduct 9

Internet Consumers in Focus Groups Accepted Mobile UsageBased Pricing, but Had Concerns over Fixed 16

The Potential Effects of Usage-Based Pricing on Consumers Are 

Unclear and Could Depend on Competition 20

Conclusions 27

Recommendations 28

Agency Comments and Our Evaluation 28

Appendix I Objectives, Scope, and Methodology 30

Appendix II Comments from the Federal Communications Commission 33

Appendix III GAO Contact and Staff Acknowledgments 36

Figures

Figure 1: Examples of Devices Connected to Mobile Internet 

Network 5

Figure 2: Examples of Devices Connected to In-Home Fixed 

Internet Network 6

Figure 3: Examples of Data Usage by Selected Common Internet 

Applications 7

Figure 4: Examples of Variances in Estimates of Application Data 

Usage among Fixed Providers 13

Figure 5: Estimated Monthly Data Usage (Gigabytes) of Top 15 

percent of internet users, 2013, 2018, and 2020 22

Contents
Page ii GAO-15-108 Broadband Internet

Abbreviations List

ACSI American Customer Satisfaction Index 

FC Federal Communications Commission 

GB gigabytes 

MB megabytes 

UBP usage-based pricing

This is a work of the U.S. government and is not subject to copyright protection in the 

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without further permission from GAO. However, because this work may contain 

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Page 1 GAO-15-108 Broadband Internet

441 G St. N.W.

Washington, DC 20548

November 24, 2014

The Honorable Anna G. Eshoo

Ranking Member

Subcommittee on Communications and Technology

Committee on Energy and Commerce

House of Representatives

Dear Ms. Eshoo:

Access to affordable broadband Internet is increasingly seen as being 

crucial to improving access to information, quality of life, and commerce 

and as a driver for economic growth and innovation. Broadband allows 

people to share large amounts of information at increasingly faster 

speeds and provide access to information otherwise unavailable.1 For 

example, access to broadband allows individuals to take advantage of 

educational opportunities online that are otherwise unavailable in their 

local area. According to the Federal Communications Commission (FCC), 

the number of mobile and fixed (or in-home) broadband connections in 

the United States grew from 45.6 million in June 2010 to 163.7 million in 

June 2013.2

 

1

Broadband Internet throughput, typically referred to as “speed,” is described in download 

and upload capabilities and is measured by the number of bits of data transferred per 

second. Measures of data include megabits (MB) and gigabits (GB). Download speed 

refers to the rate at which data is transferred to the consumer. Upload speed refers to the 

rate at which data is transferred from the consumer to the Internet. FCC defined 

broadband as having download speeds of at least 4 megabits per second (Mb/s) and 

upload speeds of at least 1 Mb/s. See Inquiry Concerning the Deployment of Advanced 

Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, 

and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the 

Telecommunications Act of 1996, Amended by the Broadband Data Improvement Act, GN 

Docket No. 11-121, Eighth Broadband Progress Report, 27 FCC Rcd. 10342 (2012). 

The amount of data accessed over the Internet has also 

grown significantly in recent years and is expected to continue to grow 

significantly. For example, Cisco (a provider of network infrastructure) 

2

Includes connections of a download speed of at least 3 Mb/s and an upload speed of at 

least 768 kilobits per second. Federal Communications Commission, Internet Access 

Services: Status as of June 30, 2013 (Washington, D.C.: June 2014).
 

Page 2 GAO-15-108 Broadband Internet

projects that consumer Internet traffic in North America will grow at an 

average annual rate of 21.5 percent between 2013 and 2018.3

In recent years, some mobile and fixed Internet service providers 

(providers) have begun using a practice known as usage-based pricing 

(UBP).4

You asked us to review the use of usage-based pricing by mobile and 

fixed broadband-Internet providers. This report examines: (1) what 

information is available about the application of usage-based pricing by 

Internet service providers; (2) issues related to usage-based pricing that 

selected consumers report are important to them; and (3) the potential 

effects of usage-based pricing on consumers.

This involves the provider changing the price to customers, or 

otherwise adjusting their service, based on the volume of data they use. 

Such pricing strategies can take multiple forms, including offering specific 

levels of data usage to customers, also known as data allowances. 

Consumers who exceed their data allowance could face additional 

charges or reduced connection speeds. Given the growing importance of 

Internet access as well as growing data usage, it is important to 

understand how the use of UBP, as opposed to unlimited data access, 

may affect Internet consumers.

To review what information is available on the application of UBP by 

Internet providers, we collected data on current Internet plans5 from the 

top 4 mobile and 13 fixed providers6

 

3

Cisco Cisco Visual Networking Index: Forecast and Methodology, 2013-2018, (June 10, 

2014).

(to account for 98 percent of each 

4

For the purposes of this report we refer separately to fixed and mobile Internet providers.

5

Our scope was limited to consumer Internet service. In addition, we did not include 

mobile pre-paid Internet plans or satellite Internet providers as they are a small part of the 

market.

6

Mobile providers included AT&T Wireless, Sprint, T-Mobile, and Verizon Wireless. Fixed 

providers included AT&T, BrightHouse Networks, Cablevision, CenturyLink, Charter, 

Comcast, Cox, Frontier Communications, Mediacom, Suddenlink, Time Warner Cable, 

Verizon, and Windstream.
 

Page 3 GAO-15-108 Broadband Internet

market).7

We conducted this performance audit from November 2013 through 

November 2014, in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We 

We analyzed these data to determine use of UBP and UBP plan 

details. We collected plan information on providers’ public websites and 

validated it with each provider. Plan details—including any data 

allowances—were valid as of October 2014, but could change at any 

time. Because we obtained data online and confirmed the accuracy of the 

data with the providers, we determined that these data were sufficiently 

reliable for the purposes of our report. To determine issues related to 

UBP that selected consumers report are important to them, we conducted 

eight focus groups with Internet consumers (two each in: Baltimore, 

Maryland; Des Moines, Iowa; Las Vegas, Nevada; and New York, New 

York) to gather information on consumers’ experiences with and opinions 

of UBP. The cities were selected to ensure diversity in geographic 

location and population of metropolitan areas. We contracted with a 

market research firm to recruit and screen participants and assist in 

holding the focus groups. Participant characteristics included a mix of 

education levels, races, genders, and income levels. Each group had 9 to 

10 participants for a total of 77. Given the nature of the focus groups, 

findings from the groups represented the views of participants and are not 

generalizeable to all Internet consumers; however, we believe that the 

focus groups provided valuable insight into issues related to UBP that are 

important to consumers. To review the potential effects of UBP on 

consumers, we conducted a search and review of relevant literature and 

studies and interviewed officials from the Internet providers mentioned 

earlier. We also interviewed FCC officials as well as industry 

stakeholders, including academics and researchers, public interest 

groups, industry associations, and others based on the literature search 

and recommendations of other stakeholders. (For more information on 

our scope and methodology, see app. I.)

 

7

For mobile market shares, we used data from FCC. See FCC, Annual Report and 

Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including 

Commercial Mobile Services: 16th Report, 28 FCC Rcd. 3700 (2013) (hereinafter 16th

Mobile Competition Report). For fixed market shares, we used data reported by Leichtman 

Research Group, a private research firm specializing in the telecommunications industry. 

See http://www.leichtmanresearch.com/press/052014release.html. Accessed September 

19, 2014.
 

Page 4 GAO-15-108 Broadband Internet

believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

Consumers generally subscribe to broadband Internet in two ways:

• Mobile: Traditionally, mobile providers sold access to the Internet as 

an add-on to mobile telephone service plans that may or may not 

include a multiyear contract. Mobile service is provided through cell 

tower coverage with data sharing through radio spectrum.8 Because 

of a number of factors, including the number of users sharing certain 

parts of the network and the amount of data transmitted, mobile 

networks can experience congestion, or a slowdown in connection 

speeds. Subscribers can connect a variety of devices directly to 

mobile networks (see fig. 1).9

 

8

The radio frequency spectrum is the resource that makes possible wireless 

communications and supports a vast array of commercial and government services.

9

Many of these devices can also connect to fixed Internet via a Wi-Fi connection. In this 

case, mobile Internet is used when these devices connect directly to the Internet through a 

cellular tower.

Background
 

Page 5 GAO-15-108 Broadband Internet

Figure 1: Examples of Devices Connected to Mobile Internet Network

• Fixed: In-home fixed Internet plans are often sold as a monthly 

subscription by cable television or telephone companies. Service from 

cable television companies is generally provided through the same 

coaxial cables that deliver television programming. Service from 

telephone companies is generally provided through the telephone 

lines (digital subscriber line service) that provide telephone voice 

services or fiber-optic lines which convert electrical signals carrying 

data into light and send the light through glass fibers. These network 

technologies generally have higher data transfer rates than mobile 

networks. Consumers can connect a variety of devices to in-home 
 

Page 6 GAO-15-108 Broadband Internet

fixed networks through a wired connection or wireless Wi-Fi10

Figure 2: Examples of Devices Connected to In-Home Fixed Internet Network

connection (see fig. 2). Consumers are increasingly using the Internet 

to supplement or replace their use of traditional services, such as 

traditional telephone and cable TV service.

Different types of Internet applications use varying amounts of data. 

Figure 3 below shows selected examples of how much data certain 

applications use, as reported by fixed Internet providers on their websites. 

Internet applications that use small amounts of data can include e-mail. 

 

10Wi-Fi (wireless fidelity) signals are radio waves that provide Internet access to devices 

equipped with compatible wireless hardware. Each Wi-Fi access point is identified by a 

unique hardware address. Nearby compatible devices are able to receive this information 

and use it to request Internet access.
 

Page 7 GAO-15-108 Broadband Internet

Applications that can use large amounts of data include streaming 

video—more than a gigabyte per use of the application.

Figure 3: Examples of Data Usage by Selected Common Internet Applications

a

Estimates can vary by each provider.

b

Two hours streaming audio is based on an estimate of 4 megabytes per song and 15 songs per 

hour.

Mobile and fixed Internet data use is likely to grow significantly in the 

future. Cisco projects consumer fixed data usage to grow at an annual 

rate of 21.5 percent from 2013 to 2018.11 Cisco also projects that mobile 

data usage in North America will grow at an average of 50 percent 

annually from 2013 to 2018 while Ericsson— a provider of network 

infrastructure—projects North American mobile data growth of 38 percent 

per year between 2013 and 2019.12

 

11Cisco, Cisco Visual Networking Index: Forecast and Methodology, 2013-2018 (June 10, 

2014).

This trend is due to multiple factors 

including increased adoption of smartphones and tablets, growth in 

streaming video, innovation in services and applications, growth in 

subscriber numbers, and the development of faster networks. Although 

Internet providers have expanded their networks’ capacity, the potential 

for in-network congestion that could slow the transfer of data has 

12Cisco Visual Networking Index; Ericsson, Ericsson Mobility Report; On the Pulse Of the 

Networked Society (June 2014).
 

Page 8 GAO-15-108 Broadband Internet

increased due to a number of factors including the increase in streaming 

video and multiple broadband devices.13

Usage-based pricing (UBP) is the practice of pricing or otherwise 

adjusting service, such as connection speed, based on the volume of 

data transmitted. According to FCC’s Open Internet Advisory Committee, 

UBP by Internet providers can be used through data allowances 

(sometimes referred to as “caps”) in which a subscriber obtains a defined 

amount of data per month. 14

Under the Communications Act of 1934, as amended by the 

Telecommunications Act of 1996, FCC has statutory authority to regulate 

telecommunications for the purpose of making available rapid and 

efficient communications at reasonable charges

Subscribers who exceed their allowance 

could face a number of actions including additional charges for additional 

data or a reduction in connection speeds—known as “throttling.”

15, and fostering 

competition.16 Under the Telecommunications Act of 1996, FCC, in order 

to eliminate market barriers, was to promote policies favoring vigorous 

economic competition and the public interest in the provision of 

telecommunications services.17 One of FCC’s goals is to foster 

competition and maximize consumer benefits of broadband access.18

 

13Data transfer rates (speeds) and the potential for congestion, can vary depending on a 

number of factors including the number of users on shared networks and device 

capability. 

It 

14Members of the Open Internet Advisory Committee include consumer advocates, 

engineers, content providers, service providers, and equipment manufacturers. The 

Committee aids FCC in tracking developments related to the openness of the Internet. 

Federal Communications Committee, Open Internet Advisory Committee, Open Internet 

Advisory Committee 2013 Annual Report (Aug. 20, 2013).

15 Communications Act of 1934, Act of June 19, 1934, ch. 652, 48 Stat. 1064 (1934), as 

amended byTelecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996) 

(codified as amended at 47 U.S.C. § 151).. 

1647 U.S.C. § 257(b).

1747 U.S.C. § 257(b).

18Additionally, among other responsibilities, the FCC’s Consumer and Governmental 

Affairs Bureau conducts consumer outreach and education, promotes service provider 

transparency, and handles consumer complaints, its Wireline Competition Bureau’s

objectives include ensuring choice and fairness in the development of wireline 

telecommunications services, and its Enforcement Bureau handles consumer protection 

enforcement and local competition enforcement.
 

Page 9 GAO-15-108 Broadband Internet

seeks to accomplish that goal by collecting data, monitoring broadband 

availability, and establishing rules for transparency in internet service, 

among other things.

• Mobile: Based on our analysis of data plans, all four mobile providers 

we reviewed now offer some form of UBP Internet plans. Of these four 

providers:

• Two offer data allowances ranging from a low of 250 or 300 

megabytes (MB) to a high of 100 gigabytes (GB) a month whereby 

larger allowances cost more overall (though less on a per MB or 

GB basis) and customers can share one data allowance among 

multiple devices.19

• One offers a variety of data plan options, all of which feature 

unlimited data. Customers can select unlimited high-speed data or 

high-speed data allowances ranging from 1 GB to 21 GB. Once 

customers reach their high-speed data allowance, they may 

continue to access unlimited data, but at slower connection 

speeds of 128 kilobits per second or less, slower than speeds 

FCC recommends for browsing the web or downloading e-mail.

They impose overage charges (which can 

range from $20 for 300 MB on small data plans to $10 or $15 for 1 

GB of additional data on larger data plans) for customers who 

exceed their allowance.

• One offers unlimited data plans but also usage-based plans with 

allowances ranging from 1 GB to 120 GB per device. Customers 

 

19These providers generally charge a base fee for data, texting, and talking, as well as a 

fee for each device that accesses the account, known as device fees. Since the data can 

be shared among devices, one device could use up all of an account’s data allowance.

Mobile Providers 

Employ Usage-Based 

Pricing More Widely 

Than Fixed Providers 

and Agree to a Code 

of Conduct

UBP More Commonly 

Used by Mobile Than 

Fixed Providers
 

Page 10 GAO-15-108 Broadband Internet

who exceed their data allowance are subject to overage charges 

of 1.5 cents per MB.

• All four offer their data plans equally across their entire customer 

base in all markets they serve.

• Fixed: Based on our analysis of data plans, seven of the 13 fixed 

Internet providers we reviewed are now offering, to some extent, 

Internet plans that include elements of UBP. Of these seven 

providers:

• Three use data allowances (ranging from 150 GB to 4,000 GB) 

where higher allowances are generally tied to faster connection 

speeds and higher overall prices (though less on a per GB basis). 

They impose fees on customers who exceed their allowance 

(generally starting at $10 for an extra 50 GB).

• Two have data allowances, but do not impose fees or normally 

take other action when customers exceed their data allowance.20

• One offers a low-data allowance option (5 GB or 30 GB per 

month21

• One is testing multiple UBP approaches in 14 select markets of 

varying sizes around the country. This provider is testing plans 

including those with allowances and overage fees. Allowances are 

generally 300 GB regardless of the plan’s connection speeds (in 

one market allowances can increase to 600 GB, depending on 

plan speed) and overages are generally $10 for 50 GB of 

additional data. In some of these markets, this provider offers a 

low-data plan at a discount (a $5 discount off the regular price for 

unlimited data for a 5 GB data allowance with overage charges of 

$1 per GB).

) at a discounted rate ($8 or $5 off a month respectively) 

off the normal prices for some of its unlimited data plans.

Customers who exceed their data allowance are assessed 

overage fees of $1 per GB over the limit, with a maximum charge 

of $25 per month.

 

20However, most providers we interviewed have acceptable, or excessive, use policies, 

under which they can take further action, including customer termination, if they deem the 

user is in contravention of these policies which can include excessive data use. Most 

providers do not have a clear threshold of data usage that they deem to violate an 

excessive use policy and reported they rarely take actions against consumers for such 

violations.

21According to one fixed provider’s website, 5 GB of data is equal to about 3 hours of 

streaming high-definition video or streaming 1,250 songs.
 

Page 11 GAO-15-108 Broadband Internet

• Aside from the provider that is testing UBP in selected markets, all 

providers that use UBP do so in all markets they serve across their 

entire customer base or plan do to so in the future.

22

Both mobile and fixed Internet providers have increasingly been moving 

from unlimited data plans to usage-based plans.

• Mobile: Two mobile providers, which together have over 68 percent 

of the mobile market, first introduced UBP in 2010 and 2011 and no 

longer offer unlimited data plans.23

• Fixed: Most fixed Internet providers that have UBP introduced their 

current data plans in the past 4 years. However, unlike mobile 

providers, not all fixed providers that use UBP have increased their 

data allowances on existing plans since 2012. Some higher speed, 

higher priced plans introduced since 2012, however, have come with 

higher data allowances than previously existing plans.

Another provider still offers 

unlimited data but, according to officials we interviewed, first 

introduced UBP plans in 2013 to provide greater choice to consumers 

and to compete with other mobile provider plans. Since first 

introducing UBP-based plans, all four providers have increased both 

the variety of data plans and the levels of data allowances in these 

plans. For example, one provider recently offered a promotion that 

doubled data allowances for selected data plans without increasing 

prices.

The number of providers that utilize UBP and, therefore, the number of 

Internet customers that are affected by it, could grow in the future. While 

providers we interviewed that do not use UBP said they have no plans to 

introduce such plans in the future, they added that they will continue to 

track the market and would not rule out using UBP. 

 

22Some providers said that some segments of their customer base are not subject to data 

usage monitoring because the provider has not fully deployed the technology needed to 

do so yet. However, these providers intend to include all their customers in the future.

23Customers who previously had these unlimited plans before UBP was implemented 

have been able to continue to keep their unlimited data plans.

Mobile and Fixed 

Providers Moving Away 

from Unlimited Data to 

UBP Plans
 

Page 12 GAO-15-108 Broadband Internet

Given that, under UBP, the price consumers pay for Internet access can 

depend on how much data they use, it may be important for consumers to 

have a thorough understanding of their data needs and usage. Under 

unlimited data plans, consumers do not need to necessarily be aware of 

their data usage as the price they pay for service is unrelated to their data 

usage. But under UBP, for example, if consumers do not understand their 

data usage, they may choose plans that include allowances that are too 

large—and cost more—than needed. Alternatively, they may purchase 

too little data and potentially face overage charges.24 Furthermore, 

“hidden” data uses—such as automatic updates and applications that 

push content to devices that consumers are unaware of—could represent 

as much as 30 percent of data use, meaning consumers could use large 

amounts of data without their knowledge.25

Both mobile and fixed providers that use UBP offer a variety of tools to 

their customers to help them understand, and estimate, their data usage; 

however, fixed providers do so to a lesser extent. Tools that providers 

offer to customers include:

• tools to estimate data usage based on the consumer’s estimate of 

their usage, including monthly e-mails, web pages, and videos;

• discussions with customer service representatives on the appropriate 

data plan, given their estimated or prior usage;

• web-based tools and details on customer bills regarding actual current 

and historic usage; and

• alerts—such as through email or texts—when approaching or 

exceeding data allowances.

However, some of these efforts may have limited value for fixed Internet 

consumers due to a number of potential weaknesses. First, different 

providers may provide varying estimates of data usage for similar 

applications, as shown in figure 4. While these differences may be due to 

different technologies providers use, varying estimates could be 

confusing to consumers. Second, provider estimates of data usage of 

certain applications, and the large variation in such estimates such as 

 

24However, one researcher we interviewed said that some consumers may intentionally 

over-buy data to avoid having to pay overage charges and to avoid the mental strain of 

having to think about their data usage.

25Peter Sevick, Net Forecast, Empowering Internet Users to Manage Broadband 

Consumption (June 2012).

Tools to Help Understand 

Internet Data Use Have 

Limitations
 

Page 13 GAO-15-108 Broadband Internet

streaming video as seen below, could be a factor in consumers’ decisions 

regarding what data plan to subscribe to. Estimates provided by providers 

can differ from one customer support document to another; we found one 

provider that estimated 4 GB of data usage for a 1-hour movie in one 

document available to consumers, but in another document estimated 

only 1.5 GB. As discussed later in this report, participants in our focus 

groups expressed confusion regarding their data usage, including the 

amount of data that certain types of applications use. Third, data usage 

meters—which are used by providers to measure how much data their 

customers use—may be inaccurate. An official with a company that 

conducts internal audits of fixed-Internet-provider data meters and their 

integration into databases used for billing systems told us that while some 

of their audits have shown that meters are accurate, others have shown 

the need for improvements that those providers are in the process of 

making.

Figure 4: Examples of Variances in Estimates of Application Data Usage among 

Fixed Providers
 

Page 14 GAO-15-108 Broadband Internet

All four mobile providers we reviewed agreed to the voluntary Consumer 

Code for Wireless Service, which aims to help consumers make informed 

choices when selecting and managing their mobile services. This code, 

developed as a joint effort between FCC and CTIA—a group representing 

the mobile communications industry whose members cover the majority 

of mobile subscribers—gives providers guidelines for notifying consumers 

about data use through means such as text alerts, encouraging them to 

provide useful and consistent information to consumers.26

Although fixed providers make certain consumer education efforts 

regarding data use—such as providing alerts—there has not been a 

formal effort facilitated by FCC like with the Consumer Code for Wireless 

Service. According to FCC officials, FCC has focused its effort so far on 

mobile Internet as more mobile consumers are affected by usage-based 

pricing at this time. According to FCC officials, the volume of consumer 

complaints filed with FCC regarding fixed-Internet UBP is relatively low 

when compared with the overall number of complaints concerning 

broadband service. However, the low number of complaints does not 

necessarily mean that consumers are satisfied with the information 

provided by their fixed providers. We have previously found that 

consumers may not know that they can file complaints with FCC.

As mentioned 

earlier, one goal of FCC is to protect the public interest in the provision of 

telecommunications services. According to FCC officials, following the 

implementation of this code by providers, complaints to FCC by mobile 

customers regarding overage charges on bills dropped.

27

 

26CTIA, Consumer Code for Wireless Service, as of 2014. Originally developed in 2003, 

CTIA periodically reviews and updates the code. For example, CTIA updated the Code in 

October 2011 to provide details calling on providers to send postpaid customers free 

usage alerts to help them avoid unexpected overage charges. The code only applies to 

the signatories of the code, which cover about 97 percent of subscribers.

As a 

result of the lack of a fixed provider code of conduct, information provided 

to consumers is not always consistent or easy to understand. This could 

result in a lack of consumer education regarding data, a lack that, as 

mentioned earlier, could lead to consumers not purchasing their ideal 

data plan.

27We recommended that FCC should clearly inform consumers about its complaint 

process. FCC is currently in the process of reforming its consumer complaint process and 

expects this effort to be completed by the end of 2014. GAO, Telecommunications: FCC 

Needs to Improve Oversight of Wireless Phone Service, GAO-10-34, (Washington, D.C.: 

Nov. 10, 2009).

Mobile Provider 

Communications to 

Consumers Guided by a 

Code of Conduct Absent 

among Fixed Providers
 

Page 15 GAO-15-108 Broadband Internet

Under the Open Internet Transparency Rule,28 providers must be open 

and transparent about the terms and conditions of their Internet plans. 

FCC issued an FCC Enforcement Advisory to Internet providers in July 

201429 summarizing the general requirements of this rule. However, the 

advisory did not provide details regarding specific information that 

providers must disclose and at what level of detail.

30

Furthermore, fixed providers have received low levels of satisfaction in 

customer surveys. The American Customer Satisfaction Index (ACSI) 

notes that as the number of Internet users has grown and exceeded the 

number of households that have landline service, customer satisfaction 

with fixed providers has decreased.31 Concerns about Internet data 

aspects may also be reflected in consumers’ rating Internet providers the 

lowest among 43 household consumer industries in the ACSI. In 

particular, consumers report low levels of satisfaction with “ease of 

understanding their bill” and “variety of plans.”32

 

2847 C.F.R § 8.3. The Transparency Rule requires Internet providers to sufficiently publicly 

disclose accurate information regarding the network management practices, performance, 

and commercial terms of their services so that consumers can make informed decisions 

regarding their use of Internet services.

29FCC, Enforcement Advisory: Broadband Providers Must Disclose Accurate Information 

to Protect Consumers, Public Notice, 29 FCC Rcd. 8606 (2014).

30The advisory states that the Transparency Rule “prevents a broadband Internet access 

provider from making assertions about its service that contain errors, are inconsistent with 

the provider’s disclosure statement, or are misleading or deceptive.” The Advisory also 

states that “advertisements and other public statements that broadband Internet access 

service providers make about their services” must be “accurate and consistent with any 

official disclosures that providers post on their websites or make available in stores or over 

the phone.”

31The ACSI measures the satisfaction that U.S. consumers have with the quality of a 

number of different types of services, including Internet services. American Customer 

Satisfaction Index, ACSI Telecommunications and Information Report 2014, (Ann Arbor, 

MI: May 2014).

32Among other factors scoring low and dropping in the 2014 ratings are: service 

interruptions, understanding bills, reliability and consistency of service, performance of 

internet during peak hours, provider website satisfaction, and call center satisfaction. 

Factors that increased, but still scored low relative to other consumer-industry satisfaction 

scores were overall data transfer speed and quality of video streaming.
 

Page 16 GAO-15-108 Broadband Internet

A common sentiment expressed by focus group participants was that they 

had no idea how much data they use at home—likely in large part 

because they have never been subject to data allowances and, therefore, 

have not needed to consider their data usage at home. One participant, 

for example, said, “It’s unlimited... so we don’t really pay attention.” In all 

eight groups, participants said that they frequently connect their mobile 

devices to their in-home Wi-Fi without considering the amount of data 

these devices use on their in-home network. In seven of the eight groups 

we heard from, participants who said that they would face challenges in 

tracking the data usage of the multiple people and the multiple devices in 

their household. For example, having to tell other family members, such 

as children, to reduce their data usage was cited as a challenge.

In addition, focus group participants exhibited many instances of 

confusion and a lack of understanding of their fixed-Internet data usage. 

For example, some participants were concerned that fixed Internet UBP 

might require them to limit data-light activities such as online shopping in 

order to avoid exceeding their data allowance when in reality any normal 

level of those activities would not likely result in a user nearing even a low 

data allowance.33

Consumer surveys and studies also indicate that Internet users are not 

clear about the details of their Internet plans and data use. FCC reported 

Others classified themselves as heavy data users 

during our initial screening process, despite the fact that during group 

discussions they said that they primarily use low-data applications such 

as online shopping. Therefore, those participants could potentially benefit 

from a lower-priced low-data plan as opposed to an unlimited data plan.

 

33For example, based on one fixed provider’s online data estimates, a user visiting an 

average of 10 web pages a day would only consume about 96 MB of data from those 

visits. 

Internet Consumers 

in Focus Groups 

Accepted Mobile 

Usage-Based Pricing, 

but Had Concerns 

over Fixed

Focus Group Participants 

Said They Are Not Used to 

Thinking about Fixed Data 

Usage and Exhibited 

Confusion over Data 

Usage
 

Page 17 GAO-15-108 Broadband Internet

in 2010 that 80 percent of broadband users did not know their home 

connection speed.34 A June 2013 Canadian Consumer Union study on 

mobile consumer data use concluded that the majority of respondents did 

not know and were not able to easily calculate their data usage, and more 

than a third of respondents did not know how quickly their usage limits 

can be reached.35

Although participants in our focus groups were widely subject to UBP for 

their mobile Internet, when asked what factors were important when 

considering a mobile data plan, participants expressed a preference for 

unlimited mobile data access in seven of our eight focus groups. Across 

all eight focus groups, we found a mixture of participants who reported 

having mobile Internet service that included data allowances and those 

who identified their mobile data plan as having unlimited data. In three of 

the eight groups, we found participants who have held onto 

“grandfathered” unlimited plans by not upgrading their devices, potentially 

trading the loss of improved technology—both newer devices and faster 

networks that older devices may not be able to access36

Focus group participants expressed few broad concerns about mobile 

UBP; more focused concerns included avoiding overage fees and 

managing data plans shared by more than one person. For example, 

some participants discussed the difficulty of monitoring or controlling the 

data usage of family members—such as a child—with a device on a 

shared data account given the potential for data overages.

—for unlimited 

data.

Participants demonstrated that they have learned to adjust to mobile data 

allowances and throttling. They discussed the following strategies for 

limiting the amount of mobile data they use and otherwise adapting to 

mobile UBP, including:

 

34John Horrigan and Ellen Satterwhite, Americans’ Perspectives on Connection Speeds 

for Home and Mobile Devices, Summary of Finding, FCC (Washington, D.C.: June 2, 

2010).

35Union des Consommateurs, Limited Usage of Mobile Internet Access Services: 

Informing and Protecting Consumers (Montreal, Quebec, Canada; June 2013).

36For example, older devices may be unable to access 4G networks that allow for more 

advanced online experiences.

Focus Group Participants 

Generally Expressed Few 

Concerns Related to 

Mobile UBP
 

Page 18 GAO-15-108 Broadband Internet

• limiting use of data-heavy applications such as video;

• connecting devices to Wi-Fi at home and other places to avoid mobile 

data usage; and

• changing to data plans or providers that better meet their needs. (For 

example, we spoke with participants who reported having changed 

their data plans to increase their data allowance while others, after 

realizing that they subscribed to a data plan that had more data than 

needed, have changed their plans to reduce their data allowance as 

well as their price for service.)

Participants also said that they were aware of the tools that their mobile 

provider offers them, including online tools to estimate data usage and 

text alerts when they near their data allowance. In all eight groups we 

found participants who track their data use through tools from their 

provider, such as online data meters and information on their bills, and in 

seven groups, found participants who experienced receiving alerts when 

their usage approached their data allowance. Participants noted that such 

tools were helpful in choosing a plan or avoiding overage charges.

The more limited use of UBP by fixed providers was evident in our focus 

groups. In three of the eight groups, participants reported experience with 

fixed Internet UBP and in seven groups there were participants who said 

they were unaware that some fixed providers have implemented such 

plans.

While we found that some participants in each group voiced positive 

reactions to the concept of fixed Internet UBP, there was more discussion 

regarding negative reactions and concerns. In expressing positive 

reactions toward the concept of fixed Internet UBP, participants noted the 

potential benefit of more pricing options. Other reactions included liking 

the idea of paying less money for less data or stating that it was fairer to 

pay only for data used. Others noted that they should pay less for their 

access than people who use a lot of Internet data. However, participants 

in all eight groups expressed strong negative reactions to the concept of 

fixed Internet UBP, and these discussions overshadowed discussions 

about the potential benefits of UBP. Common issues discussed at our 

groups included:

• Concern of the potential effects of data allowances given the 

importance of the Internet in their lives. Participants cited the 

importance of the Internet for commerce, education, and employment 

and expressed concern that UBP could limit their access to the 

Internet.

Focus Group Participants 

Were More Concerned 

about Fixed UBP
 

Page 19 GAO-15-108 Broadband Internet

• Concern that providers would use UBP as a way of increasing the 

amount they charge everyone for Internet service, in part because in 

their view consumers—having become accustomed to unlimited data 

and reliant on Internet access—would have no choice but to pay 

more. Some were skeptical that UBP would be used to reduce prices 

for any customers.

• Fixed internet UBP negatively affecting certain populations, such as 

students and telecommuters who may use a lot of data at home and 

those with lower-socio-economic status who may have difficulty 

affording data plans with sufficient data allowance. In addition, in all 

eight groups there were participants who said they watch streaming 

video as a substitute for television, a group of consumers who may be 

more likely than others to be affected by UBP.

• Having to worry about monitoring and potentially limiting data usage 

at home if subject to UBP, given that participants were used to the 

freedom of unlimited home access. In six groups, at least one 

participant said that they would accept UBP if it was only used by 

providers to offer discounts on lower-data plans while unlimited data 

plans remained the standard.

While, as discussed earlier, participants have found ways to adapt to 

mobile UBP, such adoption may not be so easy for fixed access. For 

example, fixed Internet consumers may be less willing to reduce their use 

of streaming video or other data-heavy applications at home. And while 

participants said they connect their mobile devices to Wi-Fi, there is no 

similar option for avoiding in-home data usage; while we heard some 

comments where participants said they might leave their house to use the 

Internet—for example to connect to free Wi-Fi at coffee shops—that may 

not be possible for all in-home data uses such as teleworking and 

education.
 

Page 20 GAO-15-108 Broadband Internet

One economic rationale for UBP is to address situations where users take 

into account their own costs and benefits from Internet access, but ignore 

other costs—such as congestion—that they impose on other users—

referred to as “externalities.” In the presence of such externalities, 

economists often propose that consumers should be charged prices that 

reflect both of these types of costs in order to ensure that the consumers 

use the resource efficiently. All four mobile providers told us they use 

UBP to address the usage of heaviest users, manage their networks, or 

address congestion. All but one fixed providers we reviewed that enforce 

UBP said that they use UBP to address the usage of the heaviest data 

users. Most fixed providers said that their networks do not face 

widespread congestion. Most fixed providers we interviewed that use 

UBP said that they have set their allowances so that they currently affect 

only at most the three to five percent of users that use the most data, not 

average users. In addition, two fixed providers we interviewed told us that 

they are continually upgrading and expanding their networks to meet 

demand and UBP can be used to ensure that heavier users contribute 

more to those costs than lighter users.

However, some industry stakeholders we interviewed said that UBP may 

not be warranted to address the data usage of the heaviest users. Two 

public interest organizations claimed that because the marginal costs of 

data delivery are very low and falling, heavier users impose few additional 

costs to providers than lighter users do. According to FCC, however, 

prices set on marginal costs would generally not allow providers to 

recover their costs. In addition, according to one paper we reviewed, 

absent network congestion, one person’s use of the Internet does not 

interfere with other users, meaning that there is not a need to limit 

The Potential Effects 

of Usage-Based 

Pricing on 

Consumers Are 

Unclear and Could 

Depend on 

Competition

Usage-Based Pricing 

Could Increase Costs on 

Heaviest Users, but May 

Not Be Warranted
 

Page 21 GAO-15-108 Broadband Internet

activity.37 Officials with those organizations added that more targeted 

UBP approaches, such as peak pricing during congested times, could 

address predictable congestion when it exists and place less burden on 

consumers overall. However, according to FCC, there are problems with 

peak pricing as it may not be an efficient means, or even allow, for ISPs 

to recover their costs of providing Internet access.

Finally, to the extent that fixed Internet UBP is used to address the usage 

of the heaviest users, the number of customers affected could grow over 

time. According to Sandvine—a provider of networking solutions—fixed 

Internet customers who appear to use the Internet to replace traditional 

subscription-television service already use an average of 212 GB a 

month38, close to many existing data allowances.39 Furthermore, 

according to FCC, the top 15 percent of cable Internet subscribers use 

over 145 GB of data a month and fiber-optic Internet subscribers use over 

120 GB per month.40

 

37Andrew Odlyzko, Bill St. Arnaud, Erik Stallman, and Michael Weinberg, Know Your 

Limits: Considering the Role of Data Caps and Usage Based Billing in Internet Access 

Service, Public Knowledge (May 2012).

Based on Cisco’s estimate of data growth, noted 

previously, of 21.5 percent per year for fixed Internet data, their data 

usage could reach more than double common current data allowances of 

150 or 300 GB by 2020 (see fig. 5). In addition, more users could be 

affected by UBP in the future to the extent that average users begin using 

more data-heavy applications and content providers continue to develop 

more data-intensive content and applications.

38According to Sandvine, these users view about 100 hours of streaming video a month. 

Sandvine Global Internet Phenomena Report 1H 2014 (Waterloo, Ontario, Canada: May 

15, 2014).

39Some of the fixed data allowances we reviewed are as low as 150GB.

40Federal Communications Commission, Office of Engineering and Technology and 

Consumer and Governmental Affairs Bureau, 2014 Measuring Broadband America Fixed 

Broadband Report: A Report on Consumer Fixed Broadband Performance in the U.S.

(Washington, D.C.: June 2014).
 

Page 22 GAO-15-108 Broadband Internet

Figure 5: Estimated Monthly Data Usage (Gigabytes) of Top 15 percent of internet 

users, 2013, 2018, and 2020

Note: Cable is service from cable television companies which is generally provided through the same 

cables that deliver television programming. DSL is provided from telephone companies through the 

lines that provide telephone voice service. Fiber is provided on fiber-optic lines.

A second rationale for UBP is that it has the potential to increase 

consumer welfare. According to economics literature, UBP can be 

interpreted as a form of price discrimination, where sellers offer the same 

or similar goods at different prices and consumers choose among these 

versions. In a competitive market place, this practice may enhance 

consumer welfare because firms may compete to offer different versions 

of a product at competitively low prices. As a result, in a competitive 

marketplace, providers could use UBP to innovate on the types of plans 

they offer. For example, this scenario could allow low-data users to buy 

plans with low data allowances at competitively lower prices, and heavier 

data users could buy plans with higher data allowances that best meet 

their needs. In contrast, in markets that are not very competitive, this kind 

UBP Can Be Used to 

Provide More Options to 

Consumers, but Benefits 

Unclear When 

Competition is Limited
 

Page 23 GAO-15-108 Broadband Internet

of price discrimination may not be beneficial because limited competition 

gives the seller greater ability to make take-it-or-leave-it offers to 

consumers—who may face few choices to move to other providers—that 

may enhance providers’ profits at the expense of consumer welfare. FCC 

officials said that they believe economics literature is inconclusive on 

these matters.

There is generally more competition among mobile providers than among 

fixed providers. According to FCC, 54 percent of households are in 

census tracts that have more than two fixed providers with subscribers to 

services with a download speed of at least 6 Mb/second and upload 

speed of at least 1.5 Mb/s.

41 By contrast, according to FCC, almost 98 

percent of the U.S. population lives in census blocks with more than two 

mobile providers.42

All mobile providers and two fixed providers we interviewed told us that 

they in part use UBP to offer more Internet plan options to meet individual 

needs; as a result, providers don’t require all consumers to pay for 

unlimited data or high-speed data at a fixed price. Consequently, 

consumers who want to use low amounts of data can pay less than those 

who use more. For example, one mobile provider offers a 1 GB data plan 

for $40 a month compared to $80 for a 6 GB data plan.

Participants in six of our eight focus groups said they 

would look to switch providers if faced with fixed Internet UBP, but 

participants in all eight groups said that they faced limited choice in 

providers, which may limit their ability to select a data plan that best 

meets their needs.

43

 

41FCC, Internet Access Services: Status as of June 30, 2013 (Washington, DC: June, 

2014). FCC considers all households in a given census tract as being able to get service 

from a provider if that provider offers service anywhere in that tract to create the number 

from which these data are drawn. However, many households may not have service from 

every provider operating in the tract. In addition, to the extent providers do not have 

subscribers at speeds of 6 Mb/s download and 1.5 Mb/s upload they are not counted as 

offering service in the tract at all. As a result, the figures do not necessarily reflect the 

number of provider choices available to any particular household. 

The availability 

of low-price, low-data plans may also encourage some individuals or 

42Federal Communications Commission, 16th Annual Mobile Competition Report, 28 FCC 

Rcd. 3700 (2013).

43These prices are for shared data plans that allow customers to share the data allowance 

among up to 10 devices. They also include unlimited talking and texting for all devices and 

include device fees of $10 to $40 per device per month, depending on the device.
 

Page 24 GAO-15-108 Broadband Internet

households without Internet access to subscribe.44 However, according to 

a recent survey by Pew Research, only 9 percent of non-Internet users 

cited price as a reason for not accessing the Internet,45

The extent to which mobile and fixed Internet customers have benefitted 

from low-cost low-data plans is unclear at this time.

suggesting that 

the availability of low priced plans may not substantially increase the 

number of new Internet subscribers.

• While mobile customers can select a wide range of data plans, 

customers who may potentially benefit from the reduced prices of lowdata plans may not be taking advantage of them. For example, one 

mobile provider we interviewed said that a “small percentage” of its 

customers are on 500 MB or smaller data plans.46

• Fixed internet customers—who as mentioned generally face less 

choice in providers than mobile customers do—generally have fewer 

plan options than mobile customers, especially for low-cost, low-data 

plans. However, it appears that a small percentage of customers 

subscribe to such options even though, according to FCC data, 30 

percent of cable Internet customers use about 25 GB of data a month 

or less, meaning they could potentially take advantage of such plans.

Another reason why subscribers may not choose the low-data plan at 

a discount is because the cost per GB of data is high and the small 

discount (of at most 20 percent of the unlimited data plan price) may 

not be worth the significant restriction in data usage from unlimited 

data. Further, only two fixed providers we interviewed offer data plans 

Yet, according to 

Cisco, about 25 percent of mobile customers use less than 200 MB of 

data a month.

 

44Lyons, Daniel A. Internet Policy’s Next Frontier: Data Caps, Tiered Service Plans, and 

Usage-Based Broadband Pricing. Boston College Law School (March 26, 2013.)

45Pew Research, 2013.

46While the total price for such plans is lower than larger data plans, the price per GB of 

data is higher. For example, the price for one provider’s 500 MB plan equates to $60 per 

GB of data, while its 2 GB plan price equates to $25 per GB of data.
 

Page 25 GAO-15-108 Broadband Internet

near or below the levels of median household data usage reported by 

FCC47

FCC’s Open Internet Advisory Committee studied the issue of usagebased pricing and, believing that more fixed Internet customers could be 

affected by UBP in the future, recommended in August 2013 that FCC 

monitor fixed provider application of UBP.

. 

48 FCC collects some relevant 

data—such as on plan prices and data allowances used by selected fixed 

providers.49 While FCC officials said that they will consider how they can 

use these data in the future, at this time FCC only uses these data to set 

a benchmark to ensure that providers receiving universal service funding 

are providing broadband services in rural areas at prices comparable to 

those in urban areas. FCC does not track providers’ use of UBP as FCC 

only recently started collecting data for the specific purpose mentioned 

above. For example, FCC is not analyzing the data to determine how 

many providers utilize UBP, levels of data allowances, and how those 

allowances compare to average data consumption. As mentioned earlier, 

the Telecommunications Act of 1996 calls on FCC to promote the public 

interest in the provision of telecommunications services. Because FCC is 

not conducting any broader analysis with these data, it may not have a 

full understanding of how UBP is being used and its effects on 

consumers. This lack of understanding may limit FCC’s ability to act to 

protect the public interest if necessary.

 

47FCC reported median monthly usage of cable subscribers as 47.6 MB; median usage of 

subscribers to digital subscriber line service from phone companies as 21.9 MB; and 

median usage of subscribers to fiber optic service as 32.3 MB. FCC, 2014 Measuring 

Broadband America, Fixed Broadband Report (Washington, D.C.: June 2014). One 

provider does offer a low-cost low-speed (5 Mb/s download) option for qualifying lowincome consumers. However, subscribers to this option have to meet eligibility 

requirements.

48FCC, Open Internet Advisory Committee, FCC Open Internet Advisory Committee 2013 

Annual Report (August 20, 2013).

49FCC collects relevant data from providers in urban areas from its Urban Rate Survey. It 

collects relevant data from providers in rural areas through its Form 481 data collection 

(Carrier Annual Reporting).
 

Page 26 GAO-15-108 Broadband Internet

Two industry stakeholders we interviewed also suggested that fixed 

providers—many of whom also provide television video content—could 

use UBP as a means to raise the price for watching online streaming 

video services—a competitor to their video services—as households 

continue to substitute television with streaming video. Because UBP can 

make it more expensive to watch data-heavy content such as streaming 

video, it may discourage people from accessing such content and, 

therefore, discouraging them from eliminating their television service. This 

might adversely affect firms that provide online video streaming services 

and reduce competition and innovation in the market for providing 

streaming video content, thereby negatively affecting consumers.

In addition, two industry stakeholders we interviewed believe UBP could 

in general inhibit innovation that results from experimentation and 

unlimited access to the Internet. Greater innovation could result in the 

development of more content and applications that consumers demand 

and value. Some Internet users, such as heavy data users, may pay more 

for access under UBP. As a result, some of them may limit their Internet 

use—as mentioned earlier, some focus group participants said that they 

have reduced their mobile data usage as a result of UBP—particularly of 

data-heavy content and applications such as online learning and video. 

This could lead to reduced use of some beneficial Internet applications 

and innovation in such applications. For example, one public interest 

group said that the limits that UBP may impose on the market for 

innovative applications and content may limit the potential of new 

startups.

One of the mobile providers we reviewed has entered into agreements 

with selected content providers so that the content provider’s data does 

not count toward customers’ data allowances.50

 

50For example, a mobile provider may enter into an agreement with a streaming audio 

service so that when that provider’s customers access that streaming audio content, its 

data use does not count towards their data allowance. However, their use of streaming 

audio from other content providers may count.

When presented with 

such a hypothetical situation, while some focus group participants 

expressed confusion over how such an arrangement might work, we 

found participants in all eight groups who agreed that they would be more 

likely to access content that does not count toward their data limits than 

content that does. Two industry stakeholders we interviewed suggested 

Some Industry 

Stakeholders Believe UBP 

Could Have Adverse 

Effects on Innovation and 

Network Security
 

Page 27 GAO-15-108 Broadband Internet

that such agreements would favor large established companies and 

reduce innovation or competition. 

Furthermore, UBP could have negative effects on network security. 

According to a 2012 study, UBP may result in consumers—in an attempt 

to reduce data usage—foregoing automatic security updates to their 

computers, which could have negative implications for network security.51

Consumers who are subject to UBP need to understand their data usage 

and needs in order to make an informed decision about what is best for 

them. The confusion over data usage exhibited by consumers in our 

focus groups, as well as inconsistencies in estimates on the data certain 

applications use, and the fact that “hidden” data usage can result in 

consumers’ using more data than expected, can make it difficult for 

consumers to make informed decisions regarding their data plan and 

could result in consumers exceeding their data allowance and facing 

overage charges. Mobile customers benefit from a voluntary code of 

conduct that FCC helped facilitate to guide provider actions and 

consumer education. Such a code helps enable more consistent and 

transparent information provided to consumers. Because no code of 

conduct exists for fixed providers, there is less assurance that information 

provided to consumers is clear, consistent, and transparent, potentially 

leading to consumer confusion over data usage and poor decisions 

regarding data plans.

Although few fixed Internet customers are affected by UBP at this time, 

the number could grow to the extent that fixed Internet providers increase 

their use of UBP and data use grows. Providers could implement UBP in 

a way that benefits consumers—for example, by offering low-data, lowcost plans for customers who do not want to pay for an unlimited data 

plan they do not need. However, providers—especially those facing 

limited competition—could use UBP as a means to increase their profits 

which could result in UBP having negative effects, including increased 

prices paid by consumers, reductions in content and applications 

accessed by consumers, and increased threats to network security. 

 

51Marshini Chetty, Richard Banks, A.J. Bernheim Brush, Jonathan Donner, and Rebecca 

E. Grinter, “You’re Capped!” Understanding the Effects of Bandwidth Caps on Broadband 

Use in the Home. ACM Conference on Human Factors in Computing Systems (May

2012).

Conclusions
 

Page 28 GAO-15-108 Broadband Internet

Because fixed Internet customers generally have limited choice of 

providers, they may be unable to switch providers to select a data plan 

that best meets their needs. While focus group participants have adapted 

to mobile data plans, they and other consumers may have a harder time 

adapting to fixed-Internet UBP given the limited choice among providers 

and challenges in reducing data usage—as consumers have done for 

mobile Internet—at home if needed. While FCC has been collecting 

relevant data on the use of UBP, including information on data 

allowances, FCC is not using the data to gain an understanding of how 

UBP is being used and what its potential effects are on consumers. 

Without this market knowledge, FCC would not necessarily be able to 

take appropriate action if UBP is being used in a way that is harmful to 

consumers.

To ensure that application of UBP for fixed Internet access does not 

conflict with the public interest, we recommend that the FCC:

1. Collaborate with fixed Internet providers to develop a voluntary code 

of conduct, similar to the Wireless Code of Conduct, to improve 

communication and understanding of data use and pricing by Internet 

consumers.

2. Make use of existing data collection sources to track fixed-Internet

UBP implementation and its effects on consumers nationwide so that 

FCC can take actions, if necessary, to protect consumer interests.

We provided a draft of this report to FCC for review and comment. FCC 

provided a written response (see app. II) as well as technical comments 

that we incorporated as appropriate. In response to our recommendation 

that FCC collaborate with fixed Internet providers to develop a voluntary 

code of conduct for consumer communication, FCC said that because the 

number of consumer complaints regarding UBP by fixed providers 

appears to be small and that UBP plans are less common for fixed 

Internet customers than mobile customers, it is unclear that any action is 

needed at this time. FCC added it will continue to monitor its complaints 

and provider offerings for trends that might indicate that more action is 

needed. We recognize that UBP plans are less common for fixed Internet 

customers than mobile, but believe additional action is warranted as we 

recommended. Given the trend toward greater use of UBP by fixed 

providers, increased data usage, confusion by consumers regarding data 

usage, our previous findings that consumers may not know to file 

complaints with FCC, and the potential that limited competition among 

Recommendations

Agency Comments

and Our Evaluation
 

Page 29 GAO-15-108 Broadband Internet

fixed providers could result in their using UBP in ways that harm 

consumers, we continue to believe that it is important for FCC to be more 

proactive. For mobile Internet, FCC worked with providers to improve 

consumer education regarding data through the Consumer Code for 

Wireless Service only after many consumers faced significant problems 

with their data usage. We believe FCC has an opportunity to protect 

consumers before significant problems occur by collaborating with fixed 

Internet providers now to develop a code of conduct.

Secondly, in response to our recommendation that FCC use existing data 

sources to track UBP implementation, FCC agreed to do so but noted that 

its two data gathering efforts that collect some data relevant to UBP—the 

Urban Rates survey and Form 481—were both designed for other 

purposes. FCC added that as a result, while these efforts would allow it to 

conduct some analyses regarding UBP—such as plans offered by 

providers and the terms of those plans—it would not be able to conduct 

certain analyses, such as the number of subscribers subject to UBP. We 

agree that FCC should analyze the existing data as best as it can, taking 

into account such limitations. However, we also believe that in conducting 

such analyses, FCC, to the extent possible should consider using other

existing data as well—such as data on median data consumption—to 

make the analyses as meaningful as possible.

We are sending copies of this report to interested congressional 

committees and the Chairman of the FCC. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff that made significant contributions 

to this report are listed in appendix III.

Sincerely yours,

Mark Goldstein

Director, Physical Infrastructure Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-15-108 Broadband Internet

To review what information is available about the application of usagebased pricing by Internet service providers, we reviewed information on 

the current consumer Internet data plans1 of the largest 13 fixed and 4 

mobile providers2 in order to cover 98 percent of each market.3 To 

determine market shares among fixed providers, we used data from the 

first quarter of 2014 on subscribership levels reported by Leichtman 

Research Group, a private research firm specializing in the 

telecommunications industry. 4

To review issues related to usage-based pricing that selected consumers 

report are important to them, we contracted with a private market 

research firm to assist with screening, recruiting, and holding focus 

groups with Internet consumers. We held two focus groups in each of the 

following cities: Baltimore, MD; Des Moines, IA; Las Vegas, NV; and New 

York, NY. The cities were selected to ensure diversity in geographic 

To determine mobile provider market 

shares, we used data on 2012 subscribership numbers by provider as 

reported by the Federal Communications Commission (FCC) in its 16th

Mobile Competition Report. We collected plan information on each 

provider’s public website, validated it with each provider during an 

interview, and then confirmed the information with each provider again in 

October 2014. Information we collected included plan terms and 

conditions relevant to UBP as applicable, such as data allowances, 

connection speeds, and overage charges or other consequences for 

customers exceeding their allowances. Information on Internet plans, 

including data allowances, was valid as of October 2014, but could 

change at any time. We also interviewed these providers about the extent 

to which they use UBP and the specifics of their data plans. Finally, we 

interviewed the FCC regarding these issues, as well as FCC’s role 

regarding UBP.

 

1

We only reviewed consumer plans and did not include commercial Internet services for 

business customers. In addition, we did not include mobile pre-paid Internet plans or 

satellite Internet providers as they are a small part of the market.

2

The mobile providers were: AT&T Wireless, Sprint, T-Mobile, and Verizon Wireless. 

Fixed providers were AT&T, Bright House Networks, Cablevision, Century Link, Cox, 

Charter, Comcast, Frontier, Mediacom, Time Warner Cable, Suddenlink, Verizon, and 

Windstream. 

3

See 16th Mobile Competition Report, supra note 7.

4

See http://www.leichtmanresearch.com/press/052014release.html. Accessed September 

19, 2014.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-15-108 Broadband Internet

location and population of metropolitan areas. In each city, we held one 

group with self-identified “light” users and one group with self-identified 

“moderate” and “heavy” users, based on definitions from FCC.5

Focus group discussions were structured and guided by a moderator who 

used a standardized list of questions to encourage participants to share 

their thoughts and experiences with UBP. Specifically, question topics 

included participants’ use of fixed and mobile Internet, their experiences 

with fixed and mobile UBP, and their opinions of and experiences with 

fixed and mobile UBP. To ensure participants understood the terminology 

used in the group discussions, we began each session by presenting 

copies of figures 1 and 2 in this report and clarifying the differences 

between fixed and mobile Internet to the participants. During the 

sessions, we assured participants of the anonymity of their responses, 

promising that their names would not be used. We also conducted one 

pretest focus group at GAO and revised the moderator’s guide prior to 

beginning our focus groups sessions.

Potential 

participants were screened to ensure that they had both mobile Internet 

data plans as well as in-home broadband service. We also recruited 

participants in order to ensure a mix of age, race, sex, education level, 

and income level. Each of the eight groups contained 9 to 10 participants 

for a total of 77.

Each of the eight focus groups was transcribed, which served as the 

record for each group. Those transcripts were then evaluated using 

content analysis to develop our findings. Our analysis focused on 

categorizing the common themes and statements made across the focus 

groups and quantifying those categories to gain an understanding of the 

predominant viewpoints expressed by the participants. The analysis was 

conducted in two steps. In the first step, two analysts independently 

developed a codebook and then worked together to resolve any 

discrepancies. In the second step, an analyst coded each transcript and 

then a second analyst verified those codes. Any coding discrepancies 

were resolved by both analysts agreeing on what the codes should be.

 

5

FCC defines light use as basic functions such as e-mail, web surfing, and basic 

streaming video; moderate use as basic functions plus one high-demand application such 

as streaming high-definition video or online gaming; and heavy use as basic functions plus 

more than one high-demand application running at the same time. Because participants 

self-identified their use and may not have fully understood data usage, these 

identifications were imperfect, and we did not analyze results from the two types of groups 

separately.
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-15-108 Broadband Internet

Methodologically, focus groups are not designed to (1) demonstrate the 

extent of a problem or to generalize results to a larger population, (2) 

develop a consensus to arrive at an agreed-upon plan or make decisions 

about what actions to take, or (3) provide statistically representative 

samples or reliable quantitative estimates. Instead, focus groups are 

intended to generate in-depth information about the reasons for the focus 

group participants’ attitudes on specific topics and to offer insights into 

their concerns about and support for an issue. The projectability of the 

information produced by our focus groups is limited for several reasons. 

First, the information includes only the discussions from the Internet 

consumers in the eight groups. Second, while the composition of the 

groups was designed to ensure a range of age and education levels, the 

groups were not randomly sampled. Third, participants were asked 

questions about their experiences or opinions, and other Internet 

consumers not in the focus groups may have had other experiences or 

opinions.

In order to review the potential effects of UBP on consumers, we 

completed a literature search to obtain and review documentation, 

research papers and studies, and articles related to the use of UBP and 

its potential effects. Our search looked for relevant work, including 

economic literature, articles in scholarly journals, and industry 

publications, published in the past 5 years and used search terms 

including “data cap,” “throttling,” and “usage-based pricing.” We reviewed 

these papers and their methodologies to determine their reliability. We

interviewed the 4 mobile and 13 fixed providers mentioned above 

regarding the potential effects of UBP on consumers. We also interviewed 

FCC as well as industry stakeholders including academics and 

researchers, public interest organizations, industry associations, and 

others. We determined industry stakeholders to interview based on our 

review of published literature and studies, as well as based on 

recommendations from providers and other organizations we interviewed.

We conducted this performance audit from November 2013 to November 

2014 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.
Appendix II: Comments from the Federal 

Communications Commission

Page 33 GAO-15-108 Broadband Internet

Appendix II: Comments from the Federal 

Communications Commission
Appendix II: Comments from the Federal 

Communications Commission

Page 34 GAO-15-108 Broadband Internet
Appendix II: Comments from the Federal 

Communications Commission

Page 35 GAO-15-108 Broadband Internet
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 36 GAO-15-108 Broadband Internet

Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov. 

In addition to the contact above, Keith Cunningham (Assistant Director); 

Eli Albagli; Namita Bhatia-Sabharwal; Melissa Bodeau; Matthew Cook; 

Joshua Ormond; Cheryl Peterson; Matthew Rosenberg; Hai Tran; and 

Elizabeth Wood made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(543334)
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