The Reality of Usage Caps for Broadband Users

Posted under: AT&T, Blog, Internet and Xfinity

High speed Internet users everywhere are facing the reality of usage caps for their broadband use. Comcast is rapidly adding usage caps to its service on a "trial" basis. AT&T has also implemented data caps on service. Not surprisingly, these caps are most prevalent in uncompetitive markets and the reasoning behind the implementation is sketchy at best.

What the Big Players Are Saying

Industry leading companies used to talk about the "exaflood", the impending inundation of Internet data demand that is sure to come in the near future. While the number of uploads, downloads, and sharing are ever-increasing, many of the big name ISPs have used this exaflood and online congestion as the justification for usage caps. However, today they are often giving no explanation for the usage caps, leaving users to come to their own conclusions. The best we are hearing from Internet Service Providers is that they are looking out for our best interests and offering increased flexibility and choice in exchange for usage caps. Occasionally the reason is given that caps are necessary because of the cost of providing broadband service. However, that is untrue and has been proven by many industry experts.

Dane Jasper, the CEO of ISP Sonic has shared publicly that the cost of providing broadband service is dropping more quickly than the increase of online traffic. Just a few short years ago, the company spent about 20% of its revenue on necessary infrastructure for providing service. Now it spends about 1.5% of revenue on infrastructure. Because of this, his company is not planning to impose data caps. They just can't be justified.
Dan McCarthy, CEO of Frontier Communications agrees; his company also has no plans to implement unnecessary data caps. Yet, it's not just those ISPs without data caps who are admitting to the fact that there's no financial need for caps.

Those who have data caps as a part of their service like Suddenlink also admit that they are not tied to financial demands. Usage caps are likely here for the long term. While they may not be justified, as long as they are legal, there is nothing preventing ISPs from making them standard on plans. The disappointing part is that it is the uncompetitive markets that are being most targeted for these caps, creating less than fair options for those living in such areas. Hopefully as users become more aware of the facts around data usage caps and competition increases, the big name companies will have to get more competitive or they will lose a serious percentage of their business.