Monopolistic U.S. ISPs Take Full Advantage Of The Covid Crisis

from the empty-promises dept

We've noted for years that broadband usage caps are bullshit. Leaked ISP documents and public executive statements have repeatedly made it clear that usage caps and overage fees are just glorified price hikes on the backs of captive customers, only made possible due to industry monopolization (and the regulatory capture and Congressional corruption that lets them get away with it).

This was a problem for decades, made worse during a crisis in which broadband is essential for survival (health care, work, remote learning). The Trump FCC made some performative, empty gestures toward this problem earlier this year when it announced an entirely voluntary pledge with ISPs, who agreed they'd temporarily stop charging late fees or imposing usage caps. Many ISPs not only ignored their promise, but it was only a few months before most ISPs returned to business as usual, namely ripping off captive customers with spurious fees and surcharges thanks to the accountability vacuum its net neutrality repeal created.

Apparently trying to "help" shed some light on the problem, the Wall Street Journal this week penned a piece discussing usage caps and how they impact ordinary people. Unfortunately, half the story is filled with bullshit industry claims that simply aren't true. Like here, where the Journal amplifies a purported expert who tries to claim that usage caps are necessary to recoup network investment costs:

"Data caps also help keep the prices of internet packages stable by shifting the extra cost to heavy users, according to Mark Trudeau, chief executive of broadband-data firm OpenVault, which tracks more than a million U.S. subscribers. “It protects the majority of subscribers from having rates raised every year,” he said."

This is nonsense. For one, U.S. consumers already pay some of the highest prices in the developed world for broadband due to monopolization, regulatory capture, and obvious Congressional corruption. That's before you even get to arbitrary usage caps, overage fees, or the ocean of misleading below the line surcharges big ISPs use to covertly jack up the advertised price post-sale. Caps don't "protect the majority of subscribers from having rates raised," they're entirely artificial constructs that make high prices, even higher. Worse, they are abused anti-competitively by incumbent ISPs.

Undaunted, the Journal also parrots the false claim that such restrictions are necessary to help "manage network congestion":

"On top of helping internet providers generate more revenue, data limits are a way to alleviate congestion and strain on the network. The internet’s backbone held up pretty well during the early days of the pandemic, despite significant pressure."

The U.S. internet held up pretty well because our core network infrastructure was solid (it's the "last mile" that sucks due to limited competition) and network engineers are smart. But as executives like Sonic CEO Dane Jasper have noted, static caps applied on all users don't actually help manage congestion. Leaked Comcast documents and independent research have repeatedly confirmed this, forcing the industry to back away from the justification entirely a few years back. Extremely heavy users certainly exist, but ISPs already have an option for driving those users to more costly plans: migrating them to business-grade service.

While it's nice the Journal could cover the problems created during Covid thanks to entrenched monopolies U.S. lawmakers refuse to do anything about, peppering the piece with bullshit justifications for price gouging (without once even mentioning a lack of competition or sky high flat-rate prices in the sector) only helps perpetuate bullshit business practices in the first place.

Filed Under: broadband, captive market, covid-19, data caps