But at a point each month the 51-year-old, who lives in a downtown Memphis apartment, gets a text message from Comcast Corp. CMCSA -0.77 % saying he is approaching his data limit. He then turns to cable TV, where he has recorded shows such as “NCIS” and “The Good Wife” to keep him entertained until the calendar brings a new allotment of data.
“I wouldn’t have regular TV if not for the data cap,” he says. “Comcast has got me by the throat.”
Data limits once seemed like a problem confined to smartphones. But millions of Americans are facing them in their living rooms as their home Internet providers require them to ration Web usage or pay surcharges.
That is a threat to Netflix Inc. and video upstarts that depend on broadband to deliver their service. Many have complained about it to federal regulators.
Consumer complaints to the Federal Communications Commission about data caps rose to 7,904 in the second half of 2015 from 863 in the first half, according to records reviewed by The Wall Street Journal under the Freedom of Information Act. As of mid-April, this year’s total was 1,463.
Scott Jones, a 31-year-old Comcast customer in Fayetteville, Ga., says he dropped Netflix in March because his two young children’s streaming practices were putting him over his cap. “I love Netflix…but it makes no sense for me to pay for Netflix when I’m going to get charged by Comcast two or three times that as a result,” Mr. Jones says.
Comcast technically has a 250 gigabyte monthly limit on its 23 million Internet customers but stopped enforcing it in 2012. The company is running a series of trials with a data threshold of 300 gigabytes, and, in some areas, varying thresholds and an unlimited option for an extra fee. Those trials reach 14% of its broadband customers today, about 2.8 million homes, largely in Southern states.
Comcast is “now actively considering substantially increasing” its data usage thresholds, a company executive says.
It takes up to three gigabytes to stream an hour of high-definition video, so a household could stream roughly 50 movies a month before hitting 300 gigabytes.
A family with several members could be using many services at once—video and music streaming on tablets and phones, online gaming, surfing social media and downloading software updates—which could burn through many more gigabytes per hour.
Until recently, all of AT&T Inc. T -2.17 % ’s broadband offerings had limits ranging from 150 gigabytes to 1,000 gigabytes depending on a home’s connection speed. After being contacted by the Journal about this article, AT&T introduced options with unlimited data for U.S. customers.
For limited plans, AT&T charges $ 10 for every 50 gigabytes over the limit; Comcast charges the same. Some smaller providers like Suddenlink Communications and Cox Communications also have restrictions.
Others, including Cablevision Systems Corp. CVC 0.03 % , Charter Communications Inc. CHTR 0.66 % and smaller providers like Google Fiber, have no data usage limits. Time Warner Cable Inc. TWC 0.14 % has an option for users to pay less per month to consume less data, but its standard plans are unlimited.
The demand for bandwidth is surging, particularly as people watch more movies and live television streamed over the Internet. Time Warner Cable says the company’s average household usage in December was 141 gigabytes a month and has grown about 40% a year. More than two million Comcast broadband customers use more than 300 gigabytes a month, the company says.
“Literally the week you cut the cord, you increase your usage by more than 30%,” says University of North Carolina economics professor Jonathan Williams, who has been studying data from hundreds of North American Internet users. The broadband companies are “all of a sudden bearing all the costs associated with somebody else’s service.”
Comcast says its aim is to ensure the heaviest users are paying more than lighter ones, since 50% of its bandwidth is consumed by just 10% of its customers. Comcast set up the trials to show “people who are consuming the most should carry more of the bill rather than raise everybody’s bill by the same amount,” says Marcien Jenckes, executive vice president of consumer services at Comcast.
The number of people hitting data limits at Suddenlink in the first quarter increased more than 20% from a year ago, though the regional cable company says only about 5% of its 1.2 million residential broadband customers tend to go over and incur fees. The company, which operates in 16 states including Texas and West Virginia, was recently acquired by European telecom Altice ATC -2.49 % NV. After being contacted by the Journal for this article, the new owners this month started offering premium Suddenlink customers the option to pay extra for unlimited data.
A Suddenlink spokesman says the unlimited offering had been in the works for a while.
Until that change was made, Donald Gilroy was constantly thinking about his family’s usage. One night he awoke to find his teenage son sleeping on the couch while YouTube videos streamed on his tablet computer. The family’s precious Internet data was being squandered, he thought.
Mr. Gilroy, a 49-year-old engineer in Valley Bend, W.Va., says he will now pay extra for unlimited data. Before, he had tried lowering consumption by adjusting the quality of his Netflix stream. The result was a picture that looked terrible, he says, “just like the ’70s.”
Altice says it will continue to sell Suddenlink’s usage-based data plans but hopes customers will “see the value” in subscribing to the higher-priced, faster-speed Internet that comes with unlimited data. The company, which is seeking regulatory approval to buy New York operator Cablevision, says it isn’t likely to introduce data plans for those customers.
AT&T says it will raise its ceiling on most broadband plans in May. Spokesman Fletcher Cook says nearly 85% of high-speed Internet customers will see their cap more than double.
AT&T says the change will include offering unlimited data to people who pay an extra $ 30 a month or who subscribe to DirecTV, which it owns, or its U-verse television service. Even with the new limits, 4% of AT&T’s broadband customers would still exceed the cap, the company says. That is more than 500,000 households.
Shawn Sigler, a 28-year-old FedEx FDX -1.11 % worker in Memphis, switched from Comcast to AT&T because he didn’t think he would have a data cap. He recently got a notice from AT&T saying he could get unlimited data by paying the $ 30 or staying subscribed to one of AT&T’s television services. “I was planning to cut the cord when my DirecTV contract is up,” he says. “This is essentially a ploy to keep people from cutting cable in my opinion.”
AT&T’s Mr. Cook says the company has a “really compelling offer with unlimited home Internet data” and the “vast majority” of broadband customers already buy television service as well, making the unlimited option free for them.
Regulators have expressed concern about the lack of competition in the broadband market. Last year, the Justice Department noted that 70% of all homes in the U.S. have access to only one or no broadband provider that meets the FCC’s definition of high-speed service.
Sling TV executives say many former customers tell the company they dropped the $ 20-a-month streaming service because they were being charged so much in extra broadband fees that it was cheaper to simply go back to cable TV. The over-the-top service—meaning it is delivered over the Internet—offers a slim bundle of pay-TV channels, such as AMC and CNN.
Broadband companies’ “incentive is to sabotage over-the-top services, and data caps is a primary tool in order to accomplish that,” says Jeff Blum, deputy general counsel at Dish Network Corp. DISH 1.46 % , which owns Sling TV. “It’s competing with their bundle.”
Comcast denies its data caps are targeted at stifling online video rivals. “We everyday contribute to the use and the growth of the Internet,” Mr. Jenckes says. “There is absolutely no anticompetitive belief or objective.”
Sling TV Chief Executive Roger Lynch estimates that if a household watched 5½ hours of high-definition streaming a day—the average time American adults spend watching TV today—it would consume about 375 gigabytes a month. That is without counting other Internet use like Facebook FB 0.82 % or email, he notes.
Some companies like Netflix and Sling TV have options that let people lower the quality of streams to conserve data. But many are pushing for higher quality video, which gobbles up data faster. The Masters golf tournament, for example, streamed the famous “Amen Corner” in ultrahigh definition to Sony and Samsung SSNHZ 0.00 % smart TVs this year.
“The expectation for over the top has changed,” says John Bishop, an executive at Akamai Technologies Inc. AKAM 0.12 % who works with media companies to help them distribute their video across the broader Internet. “In many cases, people are expecting it to be better than television.”
For sports like the NCAA basketball tournament in March, which Akamai helped stream, “you could actually make out individual beads of sweat on the players,” Mr. Bishop says. Akamai is working with clients to make their video delivery more efficient, he says.
Blake Haas, a 25-year-old civil engineer, exceeded his monthly Comcast cap the first month he moved to Olive Branch, Miss. So he has stopped watching Netflix when he goes to sleep. Now, the baseball fan worries he won’t be able to watch all the St. Louis Cardinals games he wants through Major League Baseball’s streaming service. “I have to manage how much I use a product that I pay for,” he says.
Data caps haven’t inhibited the growth of online video substantially, and Netflix continues to add subscribers. But critics worry that as broadband companies look to offset their cord-cutting losses by charging for usage, it could curb customers’ use of data-heavy, Internet alternatives to cable TV.
Internet service hasn’t always been all-you-can-eat. America Online, now known as AOL and owned by Verizon Communications Inc., VZ -3.71 % and its early dial-up rivals charged consumers by the hour. The service went to a $ 20-a-month unlimited plan in 1996 as its faced pressure from services offering a flat fee, a model also adopted by cable and telecom providers.
Data consumption itself isn’t easy for people to track. Just like it is difficult to know how many gallons of water are being used by a shower or dishwasher, it isn’t intuitive or easy to gauge how many gigabytes are being downloaded by different Internet users or devices. Even the same product streamed over different devices can use different amounts of data.
Internet providers can give daily, or even hourly usage to subscribers through online meters, along with alerts when the limit is approached, but they don’t pinpoint the source of the data usage.
Todd Smalley, a 51-year-old living in a Memphis suburb with his wife and three grown children, consistently exceeds his Comcast cap, but he struggles to understand how it happens. Attempts to get the company to explain why he is using so much data have gone nowhere, he says. Knowing that streaming services likely hit the hardest, he has already cut off his daughter from using Netflix. “I just stay away from video.”
Comcast says it is working on a technical solution to show usage patterns by device to make its data metering more transparent.
The FCC has signaled concern about data caps, pushing for more consumer choice in Internet access and making sure that new, online video options aren’t disadvantaged by those that control Internet infrastructure.
At its monthly meeting in late March, Chairman Tom Wheeler said the agency has been looking at practices including data caps. “It’s not a new topic to us, that’s for damn sure,” he said.
Charter Communications is facing FCC conditions in its pending deal to buy Time Warner Cable that would ensure that online video isn’t disrupted. The company has pledged it won’t impose data caps or institute usage-based broadband pricing for three years after closing the deal, and the FCC has been pushing for several years more, according to people familiar with the negotiations.
A point of particular contention: Some cable operators exempt their own streaming video services in the home from data usage plans. Cox’s Contour app and Comcast’s $ 15-a-month Stream, which offers HBO and local broadcast stations, don’t count toward data consumption for their subscribers, while Netflix and YouTube do.
The cable companies argue their streaming apps in the home are akin to traditional cable-TV service, traveling over a private, managed network that is a separate portion of the cable pipe from public Internet traffic and shouldn’t count toward data usage.
The practice has raised the ire of consumer advocates and Netflix CEO Reed Hastings. “Restrictive data caps are an inefficient way to manage a network and have the potential to inhibit Internet innovation,” a Netflix spokeswoman says.
Nashville nurse Brittney Wilson says broadband fees were causing fights in her family, as she was having to police her husband’s videogame use and her 7-year-old son’s YouTube streaming.
So she started paying an extra $ 35 a month to Comcast for unlimited data. “I had no choice,” she says. “How am I gonna tell my 30-plus year-old husband he can’t do what he wants to do in his free time?”