Data caps may create an uncompetitive broadband market

19 Dec
Calling monthly broadband bandwidth usage caps “the product of an uncompetitive broadband marketplace,” the Open Technology Institute questioned the value of data caps and lambasted the FCC for ignoring the issue.

In a new study released Monday, OTI concluded that limiting bandwidth is unnecessary and could harm the unprecedented growth and innovation that has occurred on the Internet.

“As this paper documents, data caps, especially on wireline networks, are hardly a necessity,” the report reads. “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.”

Open Technology Institute data caps report

Internet service providers argue that growing broadband traffic and the need to maintain quality service are two important factors in capping usage. However, OTI said that network congestion occurs in different locations at limited times of the day.

Further, the Institute is worried about overage fees having a chilling effect on broadband growth in the United States, and it feels that regulators are not doing enough to address the issue.

“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,” said Benjamin Lennett, OTI policy director, in a news release. “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.”

From the FCC’s side of it, the ongoing challenge to its net neutrality rules is part of the reason that usage-based billing has not yet been addressed in depth. Earlier this month, Commissioner Ajit Pai said that the FCC may attempt to regulate the pricing of usage-based broadband in 2013 if a legal challenge brought by Verizon (NYSE: VZ) and MetroPCS regarding net neutrality is decided in the commission’s favor.

Source: http://stratcommservices.wordpress.com/2012/12/19/data-caps-may-create-an-uncompetitive-broadband-market/

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