Sneaky broadband data caps imperil the Internet's future

A GAO report warns that ISPs' move to usage-based pricing could have a chilling effect on online innovation

Is anyone surprised by the new government report that found most people don't want data caps on their home Internet service? What you might not have been aware of, however, is that ISPs admit usage-based pricing has little to do with managing network congestion -- so stop blaming capless users binging on "Breaking Bad" for your slow Internet speeds. Data caps, it seems, are a part of ISPs' plans to increase the cost of Internet access. Now there's a shocker.

The GAO (Government Accountability Office) this week released a preliminary report on Internet data caps based on findings from focus groups and interviews with experts. The study was requested by Rep. Anna Eshoo (D-Calif.), a ranking member of the House Communications Subcommittee, who represents a district in Silicon Valley. Eshoo said she asked for the report based on concerns that "discriminatory or arbitrary applications" of usage-based broadband pricing could "discourage innovation, competition, and consumer choice" on the Internet.

"In the midst of the Net neutrality debate, the topic of usage-based pricing is more relevant than ever," Eshoo said. "While much of the talk has focused on the anti-competitive impact of fast and slow lanes, data caps, particularly when applied discriminatorily, could have the same damaging impact on the free and open Internet as we know it."

According to the GAO, "some wireless ISPs told us they use [usage-based pricing] to manage congestion, [however] wireline ISPs said that congestion is not currently a problem." And in general, people polled in the GAO focus groups understood and accepted data caps on mobile plans, but most did not want limits on their home Internet. "Participants were accustomed to unlimited wireline Internet access at home and prefer not having to maintain awareness about data consumption," the GAO wrote. "Some participants said that multi-person households, each with multiple devices, would pose challenges to them in tracking Internet data consumption."

The report concluded that consumers are also confused about how much data they use each month -- with good reason. Many ISPs that have already implemented data caps have been less than forthright about usage. AT&T, for one, has been criticized for not providing access to an online data meter, all the while hitting users with overage charges. For those who have meters, audits have shown that readings are often inaccurate.

The FCC last week reminded ISPs of their obligation under the Open Internet Transparency Rule to disclose accurate information about the performance and cost of their services. The warning was at least in part due to complaints about ISPs not being upfront about their data caps.

"While broadband providers are experimenting with these new business models ... consumers are left wondering if they're going to have to foot the bill, and how much more it will be," Eshoo said.

Most ISPs with data caps said less than 10 percent of users exceed their limits in any given month. However, as data usage continues to grow, more users could exceed their allowances -- especially as "hidden" data uses, such as automatic updates, could represent as much as 30 percent of data use and growing, the GAO report said.

The GAO also raised concerns that usage-based pricing could increase prices for consumers and cause them to limit their Internet use -- particularly for data-heavy content and applications. Limiting heavy users could in turn "limit innovation and development of data-heavy applications," the GAO wrote.

Before you start in on "Breaking Bad" bingers again and say they deserve to pay more, bear in mind that "the future [of the Internet] is not just about streaming movies or TV shows, but also access to online education or telehealth services that are just starting to take off. Capping their future may mean capping the nation's future as well," a New America Foundation report noted.

Policymakers need to "implement reforms to promote competition in the broadband marketplace. Data caps may offer an effective means for incumbents to generate more revenue from subscribers and satisfy investors, but ...[they are] bad for consumers and innovation," that report concluded.

Indeed, GAO focus group participants said they would look to switch providers if faced with data caps, but cited a lack of choice. "According to some experts we interviewed, this limited choice among wireline ISPs could provide less incentive for ISPs to offer more options in data plans to consumers," the GAO said.

The GAO's final report will be issued in November, although probably not in time to influence the decision about the Comcast and Time Warner Cable merger.

This story, "Sneaky broadband data caps imperil the Internet's future," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.


Copyright © 2014 IDG Communications, Inc.

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