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Is There Such a Thing As a Better Broadband Cap?

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istock_000004000555xsmallWe know many of our readers have strong opinions about the idea of consumption-based broadband, and we’ve come out against plans that constrain folks’ access to broadband, especially by way of metered packages that consist of low ceilings and high overage fees. But Rob Pegoraro over at The Washington Post is making a case for consumption-based broadband that many consumers could get behind.

His argument consists of these four essential points, although I also suggest you read the article in its entirety:

  1. Implement a reasonable cap that’s higher than 1 GB per month. A really low cap can be maxed out downloading security patches and updates that folks need to keep their computers safe.
  2. Provide a meter so folks can see if they’re close to maxing out their service.
  3. Don’t treat excessive use as a money-making opportunity. He singles out Comcast’s (s CMCSA) 250-GB-per-month cap as a good example of a provider implementing a cap for reasons other than revenue-enhancement.
  4. A capped plan should cost less than an unlimited plan (I would add that every provider should offer an unlimited plan).

His argument may win over consumers, but any sort of cap or metering plan encourages them to think of bandwidth as a scarce resource. For most providers, it’s not. ISPs want to price broadband like a precious metal, but few seem willing to accept their arguments. Readers, what do you think? Is there such thing as a good broadband cap?

17 Responses to “Is There Such a Thing As a Better Broadband Cap?”

  1. I read the article in it’s entirety. It’s full of the same blather that the cable companies have been putting out, and frankly I’m surprised you even reposted it – I see nothing new here, except the size of the caps. It ignores the many articles that show that providing additional bandwidth is a relatively inexpensive investment (recent estimates show it to be as little as 6% of revenue, while current bandwidth provision is as little as 2% of revenue based on 10-K and industry estimates). The “shortage” is an illusion.

    The ability to have unlimited broadband caps is a basic competitive advantage. In order for this country to remain both competitive and innovative, the ability for individuals to grow their usage of the internet without undue fear of compulsory charges or cut-offs allows us to remain competitive in the world-wide marketplace. The fact is that price to provide bandwidth is continuing to shrink at the same rate as bandwidth growth is continuing to increase.

    Finally, none of this would even be an issue in a marketplace with real open competition. There is no REAL problem. If there were, you’d see Verizon Fiber capping rates – they have the highest per-household install and improvements percentage in the industry. They also have the vision to see that creating the next information highway is an important competitive advantage, rather than just something that you milk for all it’s worth without making any significant infrastructure improvements for 10 years (like Cable). If you have more open cable, internet and broadband wireless markets available this all turns into a no-brainer discussion.

  2. I’d accept a “cap” that was related to true scarcity. That is, PEAK CONTINUOUS USAGE. Don’t limit my gigabytes per month, but offer plans that might throttle my speed during peak usage of the provider’s network. In other words, if I’m getting 6MBS download from my cable company – they can make it subject to “throttle back” to, say, 200KBPS during congestion periods unless I pay for “un-throttled service”.

    The electric companies try this approach – though I’d hate to have my air conditioning throttled back during heat waves. However, I’d certainly accept an ISP throttling my downloads during peak network usage times.

  3. The telcos and cable companies are legacy companies due to their world view. Telco’s think of themselves as telephone companies and internet is an add-on sweetener. Likewise for cable companies, they want to sell you their tv packages, internet is a secondary product. Their failure is in realizing that it’s all about the network and nothing but the network. They need to view themselves as network providers and nothing else.

    The telco’s price naked DSL high enough to negate any cost savings from say Vonage, they want you to use their telephone service. Cable cos are a bit better but suffer the same syndrome.

    These industries are not unique in this. When automobiles first came out there were many vestiges of horse-drawn wagons carried over.

    I just want the best pipe available. I don’t want any stinking tv packages with dozens of channels I don’t want in order to get the two or three I do want. I don’t need my ISP to have this portal page, or email, or any other chrome nonsense. Just a pipe. I can live with tiered pricing as long as it’s transparent. Tiered by overall usage, or as someone suggested, off hour rates. Then there’s the QOS question. VOIP is more resource intensive than surfing.

  4. Pedro

    There is no such thing as a good broadband cap. It is only a matter of greed and the intention, mainly of cable operators, of protect their traditional TV services from the coming Internet ones.

    In any case both cable operators and ISPs should better be careful to press caps too much because the interest of people on Internet access services depends very much, in my opinion, on having free and unmettered access to any service / web site. Before ADSL, internet access (using POTS) have been mettered and, at the end, that scheme has been demonstrated as non acceptable to consumers and all the ISPs have introduced flat access tariffs. Now we have more bandwidth but the situation is the same: Internet mettered access is something that consumers will not accept.

    Perhaps all this is simply an intent of some companies to “kill” or limit the “risky” (for them) growth of Internet.

  5. We need consumer protection laws to prevent the big broadband providers from engaging in this deceptive and predatory pricing behavior. If a company offers a 10 megabit that’s capped at 1GB per day, they should have to describe it exactly that way. They should not be able to get away with burying the bandwidth cap in the fine print or establishing the cap after the customer has already installed the service and paid a setup fee.

  6. I think it is malarkey. In Tokyo and Seoul they have had 100 megabits for years. Why don’t we? Our goverment has not gotten behind the idea but rather let it move to monopoly. The cable companies buy up competition, the phone company consolidates. We are facing a swing in the other direction. I hope that we see the Democrats move it towards competition. In Greensboro NC there is AT&T and Time Warner which is to say Time Warner. I have read where the white space may be opened to broadband usage. I hope so. The wireless spectrum that was auctioned was bought mostly by AT&T and Verizon (I think), locking up resources. We need competition.

  7. Metered bandwidth is coming. And it’s going to take out “free” content along with it. I would add that one other things ISPs can and WILL do to make this palatable is exclude bandwidth from select partners – such as iTunes, Hulu and others that cut ISPs in on revenue. I just wrote a post on this myself on the blog linked here.

    • @Ben – This could never happen. Most sites do not have the revenue to be paying the bandwidth and hosting bills, make some back on advertising, and turn around and dish it out again to allow free reign on the last-mile pipes. Besides, for the big companies (AT&T, Verizon, etc.) the company’s bandwidth bills are probably already going, in some part, to them. This would actually be charging twice for bandwidth. Not to mention, how many ISPs are out there? They would have to pay each one a cut for last-mile access? That is business suicide and anyone left out would surely be POed. I listen to Pandora a lot, but my ISP is smaller and if they metered and Pandora didn’t pay them I would surely be charged a lot just for the streaming music. Not to mention some of these companies (just like AT&T & Apple) would cut “exclusivity” deals that lets them operate freely on one network, and what if that network is not even available in your area? I just don’t see this working at all. The free market (at least in internet) is slowly becoming no so free even as the ISPs’ costs drop. That sounds like greed to me.

  8. @tom – That is my favorite as well, but unfortunately there is also a problem there: What stops companies from saying $0.02/GB up to 50GB then $2/GB after? The problem circles back around and still exists.

  9. any metered plan should be exactly that. METERED; as in you pay for exactly what you use start from the first byte. this would be attractive to many users who do not use a lot every month. this is how electric and other utilities are sold and would make some sense for broadband as well.

    • Antony

      I agree with you. There is really no such things. More of the same. Well actually you cannot really compare this to utility services. Companies supporting metering are trying to use this argument. Broadbands are more like real traffic networks. You can stop by these companies for video, shop, and every other opportunities just like the real world. Utilities are just that, utilities. Companies don’t get chance to pop out from the water hoses.

  10. Here’s a cap that makes sense: a (relatively high) monthly limit for traffic sent or received during peak hours only. Off-peak traffic is not counted against the cap. Result: penny pinching college students building p-to-p libraries do so in the wee hours of the morning thereby reducing network congestion at no cost to the ISP.

  11. That plan is certainly better than what some companies are offering, but I doubt that any of it is needed. It seems like a way to prevent people from using their internet service. In some ways it probably is since most ISPs also offer cable TV service as well and are looking to lock you into their video plans while preventing you from watching youTube or Hulu… Seems anti-competitive, possibly a conflict of interest, and also possibly a violation of free speech and consumers rights (we seem to get very little these days) to me. If bandwidth were a limited resource then I would agree, but internet is near constantly being upgraded with new products and technologies that make it faster and cheaper to send data… yet consumer prices and speeds seem to have gone stagnant almost a decade ago in most places.

    Also, even if companies move to caps… are most even going to provide a reasonably priced (actual) unlimited service? If I had to guess, I would say most would not, some would provide a wildly overpriced unlimited plan, and very few would have a fair price for it.

    Also, there seems to be little thinking in the way of increasing caps over time. Sure they could set a 250GB cap now which is fine for most people but what about 5, 10 years down the road? Will companies increase with the times. This seems like it would ultimately be more restrictive to the consumer in the long run as they increase their usage but are forced to continually monitor so as not to bump over that cap. It may also prevent other companies from offering next-gen internet services that may require more bandwidth.

    Overall, I am willing to say ‘NO!’ to caps. Too many variables, too many unknowns, too few reasons to support it.