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. 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). 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 fixed networks through a wired connection or wireless Wi-Ficonnection (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. Applications that can use large amounts of data include streaming video—more than a gigabyte per use of the application. 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. 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.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 This trend is due to multiple factors increased due to a number of factors including the increase in streaming video and multiple broadband devices. 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. could face a number of actions including additional charges for additional data or a reduction in connection speeds—known as “throttling.” Members 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). 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. 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 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. One offers unlimited data plans but also usage-based plans with allowances ranging from 1 GB to 120 GB per device. Customers 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. One offers a low-data allowance option (5 GB or 30 GB per month 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. ) at a discounted rate ($8 or $5 off a month respectively) 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). According 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. 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. 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.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. 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. 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. 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. 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. 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.