Democrat Warns Data Caps Could Undermine Net Neutrality

A government study finds that data caps discourage people from streaming online videos.

General view during a press conference with Reed Hastings, CEO of Netflix, to announce the Netflix service in Mexico at the St. Regis Hotel on September 12, 2011 in Mexico City, Mexico. 
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Brendan Sasso
July 29, 2014, 10:50 a.m.

Data caps may be the next fron­ti­er in the battle over net neut­ral­ity.

Rep. Anna Eshoo, the top Demo­crat on the House Com­mu­nic­a­tions and Tech­no­logy Sub­com­mit­tee, warned Tues­day that cell-phone car­ri­ers and home In­ter­net pro­viders could use caps to re­strict ac­cess to cer­tain on­line ser­vices.

When sub­scribers reach their monthly data al­low­ances, some In­ter­net pro­viders im­pose over­age charges, while oth­ers throttle speeds or tem­por­ar­ily sus­pend ser­vice.

The Cali­for­nia Demo­crat noted that much of the de­bate over net neut­ral­ity has been fo­cused on the pos­sib­il­ity that In­ter­net pro­viders could charge web­sites for ac­cess to spe­cial “fast lanes.”

“Data caps, par­tic­u­larly when they’re ap­plied dis­crim­in­at­or­ily, could have the same dam­aging ef­fect on the free and open In­ter­net as we know it,” Eshoo said.

She wor­ried that broad­band pro­viders could use caps to dis­cour­age people from watch­ing on­line video ser­vices such as Net­flix and Amazon Prime. The In­ter­net pro­viders may want to en­sure that people keep sub­scrib­ing to pricey cable-TV pack­ages.

In fact, a Gov­ern­ment Ac­count­ab­il­ity Of­fice study found that some people stream less on­line video to en­sure they don’t go over their monthly lim­its.

The agency un­veiled the pre­lim­in­ary find­ings of its in­vest­ig­a­tion in­to data caps at a Cap­it­ol Hill brief­ing Tues­day with Eshoo. GAO plans to re­lease a fi­nal re­port in Novem­ber.

All four cell-phone car­ri­ers and sev­en of the 13 home broad­band pro­viders in the GAO study use some type of us­age-based pri­cing.

Ac­cord­ing to GAO’s fo­cus-group study, most con­sumers ac­cept caps on their smart­phone us­age. But con­sumers are con­cerned about how caps on their home con­nec­tions could lim­it their abil­ity to use the In­ter­net.

Con­sumers feared that broad­band pro­viders could use caps to ex­tort more money from them, es­pe­cially in areas with lim­ited com­pet­i­tion.

Data caps for fixed home con­nec­tions are usu­ally much less re­strict­ive than those for cell-phone ser­vice. Con­sumers who have dropped their cable-TV pack­age in fa­vor of on­line video op­tions such as Net­flix are most likely to get near their home data caps, GAO dis­covered.

The re­search­ers also found wide­spread con­sumer con­fu­sion about data caps. Some par­ti­cipants thought they were heavy data users, even though they used the In­ter­net mostly for email and on­line shop­ping.

Some cell-phone car­ri­ers are ex­per­i­ment­ing with “sponsored” data plans, in which cer­tain ser­vices are ex­empt from data caps. Mark Gold­stein, the head GAO re­search­er on the re­port, said con­sumers were “pro­foundly con­fused” about how sponsored data plans would work.

Eshoo plans to provide a copy of the GAO study to the Fed­er­al Com­mu­nic­a­tions Com­mis­sion as part of its pro­cess of writ­ing new net-neut­ral­ity reg­u­la­tions.

She isn’t ar­guing against all caps on data us­age. But she ex­plained that she asked GAO to con­duct the study so law­makers and reg­u­lat­ors can bet­ter un­der­stand how broad­band pro­viders are us­ing caps and how they can be ab­used.

Broad­band pro­viders ar­gue that data caps help man­age net­work con­ges­tion and en­sure that people who don’t use much data can pay less.

Some par­ti­cipants in the GAO study liked the idea of pay­ing less for less data. And some said it seemed fair to pay only for the data they use — sim­il­ar to the pri­cing schemes for wa­ter and elec­tri­city.


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