A long running con by Comcast is finally coming together.
First, Comcast introduced unnecessary data caps on their internet customers. Then, they started charging for “unlimited data” and raised that price until it was $50 a month. Now, they’re offering to waive the made up fee for the made up cap if you rent their new wildly-profitable $15 a month modem/router with “xFi Advantage.”
The devices have had serious privacy breaches and are otherwise much more expensive than owning your own modem. Comcast is required by law to allow customers to own their own equipment, but these new changes makes that much more expensive.
Comcast is now advertising the “xFi Advantage with xFi Advanced Gateway” as a $65 value because it includes unlimited data.
This offer is only available in test markets currently. This is a screenshot for a Nashville customer, who is also offered the older $11/mo standard modem price.
How did we get here?
Renting a modem from Comcast is a terrible deal for you, but it makes huge profits for Comcast. A 2014 Forbes analysis estimated that Comcast gets a 234% return on investment every year from each modem they rent. Since then, they’ve raised the price for rental modems more than 60%. The standard modem rental is now $13 a month. Modem rentals are big money for Comcast. Now, they’re trialing a program that essentially penalizes customers who choose not to rent modems.
With huge drops in TV subscribers, Comcast is increasing their profits by raising rates on internet subscribers. The modems are easy money. For savvy consumers, though, there’s always been an out: buy your own modem, save a lot of money. That is, until recently. Comcast is now piloting a program that charges certain customers $35 a month more if they own their own modem.
To understand the scheme, you have to understand the groundwork they’ve laid. Up until a few years ago, you paid for internet access and used as much or as little as you wanted. A few years ago, that changed. Comcast started rolling out data caps on their customers—use over your maximum data, get charged overage fees. Today, most customers have a 1TB data cap and have to pay $50 a month for unlimited data or face $10 overages for every additional 50GB.
For internet only subscribers that need unlimited data, their bill is often doubled by the fee. And data usage is on the rise—up 34% in the last year. The percentage of Comcast users exceeding the 1TB cap nearly doubled last year. The problem is only going to get worse as new platforms like Google Stadia can push users over 1TB in a matter of days. Oh, and there have been regular reports that Comcast’s usage meters are inaccurate. Comcast is reporting that consumers used more data than they really did. Enter the the xFi Advanced Gateway.
What is Comcast doing?
The xFi Advanced Gateway is shiny and fast and comes with a fancy new app that lets you control it to set parental controls, receive alerts, and more. It’s also $15 a month instead of the regular $13 a month for just a modem rental without “xFi Advantage.” But in test markets, Comcast is now offering “free” unlimited data with the rental. So, for the low, low price of a $15 rental, you can avoid the $50 a month unlimited data fee. What’s wrong with this picture?
For one thing, the fee is a fiction. Comcast admitted they aren’t facing bandwidth or congestion issues. The fee doesn’t address new challenges or costs; it exists to boost profits. A leaked Comcast customer service script advised reps that the data cap fees had nothing to do with congestion management. The unlimited fee is unpopular, so how do you still make money without people complaining? Now that you’ve jacked up a fictional fee, you offer to lower it; consumers are stuck paying for more than they were before, but they feel they’re getting a deal.
That’s the same basic model Comcast uses for all its pricing. Roll out constant cost increases—at double the rate of inflation—and then offer upset customers discounts to stay. But the unlimited-data-with-a-rental scheme is a little more insidious than even their standard practices.
Comcast has raised the rate of Unlimited Data to $50 a month for most customers.
The only ways out of this are to limit your usage, pay $10/50GB fees, or rent the $15 a month xFi Advantage modem.
What’s the problem?
Think about it like this: a standard rental modem/router is $13 a month. The xFi Advantage with unlimited data is $15 a month. So, the extra cost for unlimited data for rental customers is $2 a month. So, why do they charge 25 times more than that for customers who choose to rent their own modem?
The huge disconnect in that pricing means customers who have already gone out and purchased perfectly good modems now have to rent a completely superfluous modem they don’t want. The alternative is to spend an extra $35 a month extra just to use their own modem. This is something we’re now hearing about from Comcast customers who aren’t sure what to do. On top of that, there are considerable downsides to renting a modem.
Comcast uses rental routers as public Wi-Fi hotspots. They were sued for it in 2014, but have only accelerated. It’s now a hugely advertised feature of their wireless offering, Xfinity Mobile. One analysis found that hosting their “free” Xfinity hotspot could actually cost consumers $22.80 in electricity. The cost isn’t the only downside.