3 Comments

Summary:

The Senate is investigating video competition during a hearing on Tuesday and public interest groups are using it as an opportunity to ask tough questions on broadband caps. I would love the Senate to demand answers on how caps can thwart the burgeoning industry.

Making Smart Meters the Must-Have Gadget of the Year

The Senate is investigating video competition during a hearing on Tuesday and public interest groups are using it as an opportunity to ask tough questions on broadband caps. Such caps, which are in place on over half of the wireline broadband connections in this country, are justified by the idea that they prevent folks from overusing shared broadband networks. However, most outsiders view such caps as a way for broadband providers to protect their existing pay TV products.

So as the Senate gets ready to meet, Public Knowledge, Free Press, the New America Foundation and Consumers Union sent a letter to the Senate Commerce Committee asking it to quiz ISPs about their caps. The letters essentially ask why such caps are necessary given that caps are a bad way to deal with network congestion (rate limiting during times of peak demand is a better option). They also asked what I think of as the Comcast question. From the letter:

Recently, Comcast began offering an Internet-enabled streaming service through Microsoft’s Xbox device, for customers that subscribe to both Comcast’s monthly cable television package and its monthly broadband service. This online video offering will not count against consumers’ monthly broadband data caps, even though the service is provisioned over the very same networks that Comcast claims are so prone to congestion.

This development casts additional doubt on the justification for data caps. That two identically sized data streams traveling over the same infrastructure could produce such disparate outcomes for the consumer provides an indication of the true motivation for these caps: discouraging consumers from using the online video services that compete with Comcast’s monthly cable package.

We’ve written a lot about the implementation of caps here and here. Despite the fact that some ISPs have decided not to implement caps and Comcast’s exceptions to its own capping rules, there’s a simple rationale behind the data cap: it can be used to create a walled garden. I hope the staffers and legislators at tomorrow’s hearing will take a look at the letters, as well as our coverage, and ask ISPs the hard questions.

And for anyone else interested in this topic, check out the 56-page white paper released Monday on caps from Public Knowledge. What’s notable here is that the report also takes on the question of wireless data caps. And while the report concludes that usage-based broadband on wireless networks makes more sense, it also offers ways to make such caps less onerous for the consumer. Of course, suggestions such as “preventing artificial scarcity” and implementing a more granular approach to caps, such as only using them during times when the network is congested, requires a sophisticated level of governmental oversight and scrutiny. I’m not sure the wireless guys would be willing to give into such overnight; nor would the government really want to regulate carriers that closely.

You’re subscribed! If you like, you can update your settings

  1. If Capex and Opex are well-documented for telcos and cable companies, it seems like regulators should have no trouble at all setting guidelines for reasonable service pricing tiers.

    Prices should encourage network investment to more than match growth in use, while eliminating all walled gardens.

    The airwaves and cable right-of-ways are public, so there’s really no question about our right to impose such regulations.

    Why is this so hard to understand?

  2. Richard Bennett Monday, April 23, 2012

    Most simple explanations for complex problems are wrong. The idea that ISPs implement caps to create walled gardens is so completely wrong it’s tantamount to libel.

    Caps are attractive to ISPs because they’re simple to implement on existing network equipment. All the installed gear counts bytes, but not all of it can do user-by-user rate limiting in high congestion conditions. When Comcast initially attempted to deal with BitTorrent users killing Vonage users, for example, their equipment didn’t support dynamic rate limiting.

    Public Knowledge is upset that Judge Green’s breakup of AT&T made their expertise on regulated monopolies irrelevant. They’re trying to turn back the clock to those simpler times when they understood what was going on.

  3. Scott Hollander Tuesday, April 24, 2012

    it’s real simple, as a consumer your role inm life is to be taken advangtage by those companies which have been granted essential monopolies when trying to convincce you that there is a free market out there,

Comments have been disabled for this post