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. 
National Journal
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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