By Alina Selyukh
WASHINGTON -- U.S. consumers often incorrectly estimate how much data they consume online and pay Internet providers for more downloading and uploading than they actually do, the Government Accountability Office said in findings released Tuesday.
The preliminary observations cover usage-based pricing, in which consumers pay Internet service providers for a specific amount of data they agree to consume instead of a flat fee for unlimited data. Users who go over data caps usually face extra charges or slower Internet speeds.
In a study requested by California Rep. Anna Eshoo, the GAO, the investigative arm of Congress, found consumers often were unclear about what online activities consumed the most data and paid ISPs too much either for data they did not use or through overage fees for exceeding data caps.
212 Gigabytes a Month
Most wireline ISPs told the GAO that usually only 1 to 2 percent of users exceeded their data caps. However, data from Canadian ISP research firm Sandvine showed that people relying on the Web to replace traditional TV services consumed an average of 212 gigabytes of data a month, which is close to many existing data allowances, the GAO said, and could mean more consumers may be exceeding their caps in the future.
All four top U.S. wireless carriers -- Verizon (VZ), AT&T (T), Sprint (S) and T-Mobile US (TMUS) - offer tiered pricing plans and so do seven of the top 13 wireline ISPs, though only three said they charged overage fees, GAO said.
ISPs say usage-based pricing allows consumers who use less data to pay accordingly and, in the case of wireless carriers, helps manage congested networks.
Focus Groups Dislike Pricing Structure
Consumers in eight focus groups the GAO conducted expressed few serious concerns about usage-based pricing of wireless Internet plans, but they had "strong negative reactions" to such pricing of wireline ISPs.
Those worries stemmed from the consumers' heavy reliance on Internet access at home, where they were not used to worrying about data limits, and concerns that ISPs would use data caps as a loophole to increase their bills.
However, the GAO said that the worries were in part based on misconceptions about how little data is consumed by activities such as online shopping or social media applications. At the same time, automatic updates of programs or applications could be a hidden source of data use, and ISPs themselves sometimes differently estimated data use of similar web apps.
Managing Traffic Online
The full GAO report is due in November. The preliminary findings come as the Federal Communications Commission is looking to set new rules for how ISPs should manage Web traffic on their networks.
Some consumer advocates have expressed worries that ISPs may hurt competition by exempting affiliated services from data caps.
The GAO's preliminary observations stated that usage-based pricing could limit innovation or creation of data-heavy apps because some consumers may restrict their Internet use to save money.
You're Probably Wrong on Your Data Use - and It Costs You
By Alina Selyukh
More from Reuters
•Wall Street Rallies on Fed Rate Hike
•Fed Raises Interest Rates, Cites Ongoing US Economic Recovery
•US Aerospace Sector Poised for 2015 Record Trade Surplus: Group