A growing number of Americans are being forced to cap the amount of data they use — both on their cell phones and even at home — or face expensive overage charges. A report from the New America Foundation’s Open Technology Institute (OTI) claims that these increasingly costly and restrictive data caps are serving little purpose other than to raise the already high profit margins of broadband providers.
Internet service providers argue data caps are necessary to manage growing traffic and maintain quality of service on their networks. But OTI’s report, “Capping the Nation’s Broadband Future?” concludes that the monthly caps rarely serve that purpose — instead, they’re a product of a noncompetitive broadband marketplace where providers use data restrictions to increase revenues and protect legacy services such as cable television from online competition.
More services are moving online and into mobile applications, but Americans who are worried about their data usage might hesitate to use them, OTI warns. Broadband data caps affect not only activities such as streaming TV shows or making video calls, but also limit the use of an increasing number of online education courses for both adults and children.
“Data caps may be good for the short-term profits of broadband providers and please investors, but they are not benefiting innovation or access to the Internet,” says OTI Policy Director Benjamin Lennett. “Costs for providing broadband connectivity are continuing to decline, while Americans continue to face higher prices for a service that is no longer a luxury.”
The technical rationale for imposing monthly limits on all subscribers makes little sense when network congestion tends to occur at limited times of the day and in certain locations. In addition, maintaining quality of service does not require Internet service providers to charge users exorbitant overage fees rather than pursuing less costly and punitive measures, particularly as the costs for operating broadband networks continues to decline.
“Even as Internet service providers complain to regulators they need caps to manage the flood of new data traffic, many boast to Wall Street of their rapidly declining costs for equipment and transporting data, despite adding more and more subscribers to their network,” says Lennett. “Repeated calls from public interest groups urging the Federal Communications Commission to investigate the issue and require service providers to provide data that justify caps have been largely ignored.”
You can read the full report, “Capping the Nation’s Broadband Future” here.
