A recent Wall Street Journal (WSJ) article (requires subscription) chronicles the increasingly problematic effect of data caps on the quality of residential subscribers' Internet access experience.
Also known as a bandwidth cap, a data cap is a monthly bandwidth usage limit Internet Service Providers (ISPs) sometimes impose on subscribers at their standard monthly rates. While some ISPs charge customers more for exceeding their monthly bandwidth caps, in other cases ISPs may even cut off a customer’s service completely.
The problem is also harming companies like Netflix and Sling TV who are losing customers who can’t justify paying for a high capacity video streaming service that’s only available until they hit their data caps partway through the month. In response, Netflix lowered the video quality for users on ISP networks that use data caps as a way to help them avoid the limitations. The plan worked, but in the process Netflix angered customers, who blamed both the ISPs and the streaming service for the lowered video quality.
It's Not All About The Money
The problem goes beyond the extra fees charged to customers who use a lot of data. The WSJ article cites two Internet users who’d like to join the growing number of “cord cutters” who are dropping television service for Internet-based video. As one man put it:
“I wouldn’t have regular TV if not for the data cap,” he says. “Comcast has got me by the throat.”
“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.”
An increasing number of subscriber complaints and suspicions about the accuracy of measuring bandwidth usage heighten concerns.
Feds Take Notice
The Government Accountability Office released a report at the end of 2014 expressing their concern about ISPs abusing the use of data caps. At the time, the FCC said that they had not received enough complaints about the problem to merit action. In 2015, as this new WSJ article notes, the FCC received an unprecedented number of complaints about data caps. The problem is only getting worse as household bandwidth usage continues to grow.
To Cap Or Not To Cap? That Is The Question
Providers like Comcast will sometimes offer unlimited usage for an additional monthly fee. Recently, both Comcast and AT&T announced they will raise data caps; Comcast will also increase the price of unlimited usage to $50 per month. Experts speculate the move is a reaction to FCC limits imposed on the Time Warner Cable/Charter Communications merger. From a recent POTs and PANs article:
First, the FCC just required that one of the conditions for Charter’s purchase of Time Warner is that they impose no data caps on customers for seven years. In making that statement the FCC said that they had serious concerns about ISP data caps if those same ISPs also owned video programming, like Time Warner. In such cases, the ISP imposing data caps is favoring their own content over Netflix, Amazon Prime and Hulu delivered over the Internet.
Seventy percent of all homes in the U.S. have access to one or fewer ISPs offering service that meets the FCC's definition of high-speed Internet access - 25 Megabits per second (Mbps) download and 3 Mbps upload. Data caps are a natural result of the control incumbent ISPs have in markets with insufficient competition.
"Inconsistent With Its Mission"
Limits on bandwidth usage are generally not a problem for municipal network users as publicly owned networks are known to reject the use of data caps. A statement from Vermont's EC Fiber reflected a common philosophy:
An uncapped internet environment encourages entrepreneurs and economic growth. Despite the trend toward instituting data caps among commercial internet providers, ECFiber believes that caps are inconsistent with its mission as a community network. An unconstrained online environment frees businesses and individuals to be creative and innovative.