Senator Wyden Proposes Bill That Would Protect Users From Bogus Data Caps

from the would-be-useful dept

We've argued for years that broadband data caps are not -- as the industry would have you believe -- about stopping "data hogs" or making sure that people "pay their fair share," but rather about protecting provider revenue (or, really, secretly increasing fees without "increasing" fees). A recent study from the New America Foundation has now made it clear that broadband data caps are not at all about dealing with data hogs, but almost entirely about increasing revenue for the providers.

As this paper documents, data caps, especially on wireline networks, are hardly a necessity. Rather, they are motivated by a desire to further increase revenues from existing subscribers and protect legacy services such as cable television from competing Internet services. Although traffic on U.S. broadband networks is increasing at a steady rate, the costs to provide broadband service are also declining, including the cost of Internet connectivity or IP transit as well as equipment and other operational costs. The result is that broadband is an incredibly profitable business, particularly for cable ISPs. Tiered pricing and data caps have also become a cash cow for the two largest mobile providers, Verizon and AT&T, who already were making impressive margins on their mobile data service before abandoning unlimited plans.

The paper goes on to debunk the usual arguments in favor of broadband caps. Beyond noting that the cost to providing broadband by the big guys has gone down significantly (while cost to consumers has stayed steady or gone up), they also point out that the "congestion" argument doesn't make sense. They note that even if there was congestion, a data cap would not be the best way to deal with it.

An analogy to rush hour traffic is useful here. Rush hour delays are generally caused by a spike in simultaneous demand for road access. Local governments often respond to this traffic congestion by instituting carpool lanes during certain hours, or introducing variable peak pricing for tolls, where prices are higher during the traditional workday commute than at other times. Both of these examples are methods to reduce demand during the time it is highest. It would make little sense to try and limit the total miles residents drive in a month as a means to solve rush hour congestion. Such monthly mile limits would needlessly impact residents who drive when the road is empty late at night and do not contribute to traffic congestion. Yet this is logic being employed when instituting monthly data caps.Monthly data caps are a tool that decreases consumption at all hours of the day.

In fact, the report even points out that Comcast has quietly admitted to the FCC that it's caps have nothing to do with network congestion... even as it has argued in favor of them publicly by using the "congestion" argument. As we've pointed out over and over again, if you talk to the tech people at broadband companies, they admit that the best way to deal with congestion is to simply upgrade capacity, not try to choke off usage. And this report shows that, rather than do that, telcos have been going in the other direction:

The best way to resolve chronic network congestion in the long term is to invest and expand capacity. Yet, a review of the publicly available financial document for some of the largest ISPs in the country shows a decline in capital expenditures—the costs associated with building, upgrading and maintaining a network, such as construction, repairs, and equipment purchases—for their wireline networks.Many ISPs are spending less money on capital expenditures now, both as a ratio to revenue but also even in raw dollars,than they have in years past.

Given all that, it's great to see that Senator Ron Wyden is introducing a new bill to protect consumers against data cap abuse. One of the many issues we've raised with data caps is that users have no idea how much broadband traffic they use, and related to that, broadband providers are notorious for either not providing meters for usage, or providing ones that just don't work very well (or give you some sort of arbitrary number when you check). The new bill, the Data Cap Integrity Act, would do two key things:

1. Require tools be available for users to really measure and manage their broadband usage
2. Have the FCC establish standards for ISPs to make sure that they only use data caps to manage network congestion, rather than as a way to "monetize data in ways that undermine innovation."

The bill literally has a section entitled: "SMART DATA CAPS INSTEAD OF DUMB ONES" which reads:

SMART DATA CAPS INSTEAD OF DUMB ONES.—The Commission shall evaluate a data cap proposed by an Internet service provider to determine whether the data cap functions to reasonably limit network congestion in a manner that does not unnecessarily discourage use of the Internet.

If we had a real competitive market for broadband, of course, this wouldn't matter. I'm still hesitant to support legislation telling companies how they can implement a business model. But, as we've been arguing for many, many years, there isn't real competition in the broadband space for most users, which is what allows broadband providers to get away with crap like using data caps to limit internet usage and increase revenue. Furthermore, given how much the industry has relied on government subsidies and rights of way, it seems only reasonable to think that some level of requirement to actually, you know, not screw over users, might be appropriate.

That said, the bill also has the following tidbit, which almost certainly dooms it from the start:

DISCRIMINATION OF CONTENT.—A covered Internet service provider may not, for purposes of measuring data usage or otherwise, provide preferential treatment of data that is based on the source or the content of the data.

That's going to be interpreted as a backdoor attempt to put in place a net neutrality rule, which is more or less guaranteed to freak out the wing of Congress who insists that net neutrality is an attempt to take over the internet.

Filed Under: broadband, data caps, meters, net neutrality, protection, ron wyden