AT&T Tests Metered Internet Billing

The telecom company is conducting a trial that places caps on the amount of data downloaded by customers.
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AT&T

(T) - Get Report

is experimenting with a billing system for new Internet customers that sets caps on the amount of the data they download.

The telecom giant is using the trial, which started on Nov. 1 for new customers in Reno, Nev., to evaluate the possiblity of a full migration to a usage-based model.

Under the trial, customers, who sign up for AT&T's high speed Internet service, cap their data usage in a range between 20 gigabytes and 150 gigabytes per month, depending on their broadband speed tier. Customers will be charged $1 for every gigabyte over their determined usage amount.

AT&T said the trial was arranged to evaluate a usage-based model that could potentially help address the trend of rapidly increasing bandwidth usage.

"This trial will help us evaluate ways of dealing with surging usage trends while continuing to meet customer needs for a high quality broadband experience at an affordable price," the company said in a statement.

AT&T spokesman Michael Coe said the trial may be extended to one other market by the end of the year.

AT&T has said in the past that their analysis of broadband users shows that a small percentage of customers use a large percentage of total bandwidth. The top 5% of consumer DSL subscribers use 46% of the total bandwidth, while the top 1% of subscribers are using 21% of bandwidth. The shift to usage-based pricing is being made so that AT&T can better manage the bandwidth on its network.

AT&T said it will give customers in the trial will be given a one-month grace period the first time their usage cap is exceeded and will proactively inform customers when they reach 80% of their usage allowance.

It had been widely speculated that

AT&T

would make the transition to usage-based pricing after both

Comcast

(CMCSA) - Get Report

and

Time Warner Cable

(TWC)

unveiled plans for

metered billing

.

While a usage surcharge is not expected to affect users who simply browse Web pages or check email, as those functions use a tiny amount of bandwidth, Internet subscribers who download or stream high-definition movies from

Apple's

(AAPL) - Get Report

iTunes store or

Netflix's

(NFLX) - Get Report

service could be subject to extra fees if they go over their quota.

"It's a preliminary step to find the right model to address this bandwidth usage trend and our customers' needs," Coe said in an email to

TheStreet.com

. "It's also important to note that this is a trial."

Coe adds that it would customers with the maximum data cap of 150 gigabytes per month to download 88 online movies, which he pegs at 1.7 gigabytes each, or 32 DVD-quality movies, assuming the size of each is 4.7 gigabytes.