Wednesday, January 23, 2013

Cable Industry Admits That Data Caps Have Nothing To Do With Congestion

For years the key reason that cable companies and broadband providers have given for implementing data caps is that it was the only way they could deal with "congestion." Of course for years independent researchers showed that this was a bogus claim. The reality, as one might expect, is that "data crunching" is all about providing broadband providers with increased revenue. This amid growing cries of outrage by consumers coupled with skepticism by leading tech blogs has led some lobbyists of federal regulators to drop their claim that data crunching is imminent. Former FCC boss Michael Powell has been on record saying they aren't necessary.
Michael Powell told a Minority Media and Telecommunications Association audience that cable's interest in usage-based pricing was not principally about network congestion, but instead about pricing fairness...Asked by MMTC president David Honig to weigh in on data caps, Powell said that while a lot of people had tried to label the cable industry's interest in the issue as about congestion management. "That's wrong," he said. "Our principal purpose is how to fairly monetize a high fixed cost." 
Note that Powell is jumping from one myth (congestion) to another (fairness). It would make sense if that were true that some pricing would be going down rather than up.
If usage caps were about "fairness," carriers would offer the nation's grandmothers a $5-$15 a month tier that accurately reflected her twice weekly, several megabyte browsing of the Weather Channel website. Instead, what we most often see are low caps and high overages layered on top of already high existing flat rate pricing, raising rates for all users. Does raising rates on a product that already sees 90% profit margins sound like "fairness" to you? http://www.dslreports.com/shownews/The-Bandwidth-Hog-is-a-Myth-117230
Data caps are about one thing only: increasing profits for the broadband providers, who already have massive control over the market with limited competition. It's nice to see them give up on one myth (even if we still see pundits repeating it without criticism), but it would be nice if we could get past the others as well. 

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