Public Interest Groups and ISPs Disagree on Benefits of Data Caps

The proceeding may lack much of a future. Republican Commissioners Brendan Carr and Nathan Simington dissented when commissioners approved the NOI 3-2 in October (see 2410150069).

“The record clearly demonstrates the negative impact that data caps have on consumer households, shows that data caps serve no technical purpose, and that they do not have a positive impact on competition,” the consumer and public interest groups said. Consumers are sometimes forced to choose between “moving into a more expensive tier or risk[ing] overage fees,” said Public Knowledge, the Open Technology Institute at New America, the Benton Institute for Broadband & Society and the National Consumer Law Center. The groups noted usage-based billing has a particularly negative effect on lower-income users and small businesses.

“Commenters have shown that data caps are not a technical necessity to reduce network traffic but are rather an economic tool to drive profits,” the groups said: “The argument that providers use data caps to prevent ‘congestion on their networks at peak hours’ has been debunked by research analysts and in ISP’s own statements.”

Numerous individual consumers filed brief comments warning of data caps' dangers. Please don’t “allow cable companies to place a cap on the data people use while using their internet service,” said Jason and Laura Hofmann: “Our internet … is expensive enough where we live compared to the competition.” Jeremiah Shifflet said data caps represent “a self-serving rent-seeking and greedy practice” by ISPs.

NCTA countered that the FCC should refrain from regulating data caps. “There is no basis for the implication that the use of usage-based pricing somehow demonstrates a market failure that requires regulation (much less rate regulation) by the Commission,” NCTA said. Moreover, cablers disagree that caps hurt low-income consumers. Usage-based pricing offers “more options for consumers, including lower-priced ones, which helps consumers stay connected.”

Meanwhile, NTCA said most of its members haven’t imposed usage caps. Still, the FCC “should refrain from further exploring regulation in this area,” NTCA said: “Broadband consumer labels are adequate to inform consumers about data limits at the point of sale and anything beyond disclosure is rate regulation.” NTCA also questioned FCC authority to regulate caps.

Like NTCA, the National Rural Electric Cooperative Association (NRECA) said none of its members has instituted caps. “Cooperatives are owned by and ultimately answer to their member/consumers; if data caps were in fact good for these subscribers, electric cooperatives would employ them,” NRECA said. The co-ops said wireless and non-fiber ISPs may need caps to avoid capacity issues: “More cynically, ISPs using all types of networks might seek to impose data caps simply to extract additional revenue from heavy users, even when the marginal cost of accommodating such users may be minimal or nonexistent.”

The Free State Foundation argued that the FCC “lacks statutory authority to interfere with rate-setting decisions in the competitive marketplace for broadband Internet access services” and should end the proceeding. Usage-based options “are a boon to cost-conscious consumers,” FSF said: The offerings “tailored as they are to those unwilling or unable to pay the premium associated with unlimited data packages, further the key policy objective of expanding the broadband subscriber base.”