How Data Caps Hurt the Internet

10 January 2017

Data Caps (also called Bandwidth Caps) are a limit on how much you can upload and download through your Internet provider, often on a monthly basis. Most of us are familiar with data caps from cell phone data plans, although data caps on home Internet also exist. Usually, they’re sold as a quality and fairness measure, so that no one person can hog the service provider’s network. Whether or not that’s widely believed is questionable, since customer protest usually causes ISPs to roll out data caps as a voluntary way to reduce bills or as “tests” in a certain area. In modern networks, data caps are not necessary to ensure quality of service for everyone on the network and actually have little to nothing to do with actual usage. It turns out that data caps are more profit driven and actually influence consumers to spend more for their Internet than they need to.

One thing that data caps are effective at is lowering data usage. Generally, people are good at keeping track of how much data they use and managing it over the course of a month, and use less towards the beginning of the month. Towards the end of the month, they’ll use more in order to get all the data they feel they’re paying for. This isn’t terribly surprising since intuitively most people want to make sure they’re not spending more data than they have, but then don’t want to “lose” the rest of it. Data caps do sometimes come with higher speeds, which is a great way to sell them since they are otherwise extremely unpopular. At a glance, this can sound like a good thing, but cable companies have admitted that caps have nothing to do with network congestion, which would be the suspect cause for lower speeds.

More recently, as streaming services such as Netflix and online gaming have become more popular, data caps tend to limit choices. Most cable companies provide their own on-demand services for access to movies and TV shows. In some cases, they even offer their own online gaming platforms. With both, usage usually does not count against data caps. This means that users who require data for different things - working from home, for example - are less able to make use of other services. Caps tie users to their provider’s services more - which can become a problem since many providers also own their own news outlets which they can easily decide not to count against your data. With bias in news a real issue and data caps that limit the amount of other information users can access, that spells bad news for staying informed. If nothing else, limiting choices can also limit competition, as it’s difficult to start another streaming service or news network when accessing it is too expensive to people with limited data.

It turns out that data caps actually make Internet access more expensive. People are so afraid of going over their caps and getting charged overage fees (or having their access cut off) that they often buy more expensive Internet service than they need for higher caps. Few people are fully aware of how much data they use over the course of a month for their home Internet, so when data caps are introduced, they pay more for data they don’t need. What’s more, is that people on plans that did not limit data paid almost 80% less per gigabyte of data, which is a huge difference. That statistic alone shows that claims that metered (limited) plans are less expensive are not true.

Data caps are not about fairness or improving network technologies, as has been claimed in the past. Not only have service providers admitted they have nothing to do with congestion, they’ve even told their call centers to stop claiming that it does. If data caps were about fair pricing and paying only for what you use, then there would be lower level packages - there isn’t anything fair about someone who only needs Internet to check their email once a day paying $50/month for access to do so.

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