Click here to download a PDF copy of the full report: “Capping The Nation’s Broadband Future?”
Summary
The past few years have been
marked by unprecedented innovation and growth on the Internet.
New digital platforms
and rich content from voice-over-IP
and video conferencing
connect family and friends around the world at little or no cost, high
quality video streams facilitate
online learning and
digital education along with new
ways to view movies and TV shows, and a host of platforms and applications allow for the creation and sharing of
original content and ideas
through cloud based computing.
These examples are just a few of many innovations made possible by a relatively uncapped and unmetered Internet environment.
Unfortunately that is rapidly
changing. Even as new applications and content require increasing amounts
of data, Internet service
providers (ISPs) are clamping
down on Internet use through putting in place more stringent and costly data limits on their subscribers. ISPs claim that these measures are necessary to manage the growth of Internet traffic on their networks and maintain quality of service. Yet, the technical or engineering rational for relying on
monthly data caps to address network congestion is questionable, when
congestion is often limited to certain peak hours and locations.
As this paper documents, data caps, especially on wireline
networks, are hardly a necessity. Rather, they are motivated by a desire to
further increase revenues from existing subscribers and protect legacy services
such as cable television from competing Internet services. Although traffic on
U.S. broadband networks is increasing at a steady rate, the costs to provide
broadband service are also declining, including the cost of Internet
connectivity or IP transit as well as equipment and other operational costs.
The result is that broadband is an incredibly profitable business, particularly
for cable ISPs. Tiered pricing and data caps have also become a cash cow for the
two largest mobile providers, Verizon and AT&T, who already were making
impressive margins on their mobile data service before abandoning unlimited
plans.
The increasing prevalence of data caps both on the
nation’s wireline and mobile networks underscore a critical need for
policymakers 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 making bandwidth an unnecessarily scarce commodity is bad for
consumers and innovation. The future 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.
Click here to download a PDF copy of the full report: “Capping The Nation’s Broadband Future?”
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