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Should The Government Regulate ISP Bandwidth Caps?

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Should The Government Regulate ISP Bandwidth Caps?
[ Technology]

Some of the major ISPs in the U.S. implement bandwidth caps in the name of controlling network congestion, but most caps are just a backhanded way of making more money. One senator is targeting the practice to bring better Internet availability and speed to users across the U.S.

TechDirt reported Thursday that Sen. Ron Wyden, Internet freedom fighter, has introduced a new bill called the Data Cap Integrity Act. The bill would “give consumers the tools they need to manager their own data usage, institute industry-wide data measurement accuracy standards for ISPs, and impose disciplines to ensure that ISP data caps are truly designed to manage network congestion.”

Do you think bandwidth caps are really used to address network congestion? Or are they just used to reap more revenue? Let us know in the comments.

Wyden’s proposed bill follows a report from the New America Foundation that found ISPs were not using data caps to manage congestion, but further increase revenues off of existing subscribers. These fraudulent data caps lead to less competition and innovation in a utility where both are key to its continued evolution.

From the New America Foundation report:

ISPs often claim that caps are necessary to curb “excessive use” and only affect a small fraction of users. Although some providers are reexamining their data caps policies, many of the limits imposed several years ago have largely remained static, even as typical household bandwidth consumption has substantially increased. In 2008, Comcast reported that its median residential broadband user consumed 2.5 GB of data monthly. In 2012, Comcast reports that this number has quadrupled to a median monthly usage of 8-10 GB per consumer. Other sources report even higher usage numbers. According to the Federal Communications Commission’s (FCC) Measuring Broadband America report, the median cable broadband user in the United States consumed about 28 GB a month in mid-2012. As new Internet applications and devices continue to be created, yesterdays so called “bandwidth hogs” are today’s typical users.

Data caps encourage a climate of scarcity in an increasingly data-driven world. Broadband appears to be one of few industries that seek to discourage their customers from consuming more of their product. Thus, even as the economic and engineering rationale for data caps on wireline broadband does not hold up given the declining costs of providing service and rapid technological advancement,the proliferation of data caps is increasing. The trend is driven in large part by a woefully uncompetitive market that allows the nation’s largest providers to generate enormous profits as well as protect legacy business models from new services and innovators.

So, what’s the excuse used by ISPs to keep charging more while instituting data caps? The companies claim the cost of moving data and expanding their networks would put undue cost on the consumer. The New America Foundation’s report respectfully disagrees:

Across the board, the price for this kind of access is decreasing. TeleGeography’s IP Transit Pricing Service,a database of wholesale Internet access price quotes from 50 carriers in 70 cities globally, reports lower charges.According to its 2012 report, “Transit in major Western cities remains competitive, so the reduced costs are passed on to the broadband carriers.” As a result,“Internet traffic has been expanding at what would seem ferocious rates, but the carrier’s net cost has been generally flat to down.” In New York, for example, the median monthly lease price for a gigabit ethernet port dropped 50 percent over the last year, now costing around $3.50 per megabit.

Similarly, network equipment—the industrial routers and switches that make up broadband networks—is declining in price and increasing in processing capacity at a rate similar to personal computers. Dane Jasper, the CEO of Sonic.net, an independent ISP based in California, notes that although broadband consumption has increased, “the cost to deliver those bits, transport them, transit them, peer them off, and deliver them to the edge, has decreased at a greater pace than consumption.”

So, as you can see, there’s really no reason to still be charging high prices nor instituting data caps. In fact, the only real solution to the data consumption problem would be to just increase capacity. It would be cheap to build out networks and it would increase bandwidth for all without having to limit anybody’s bandwidth.

The best way to resolve chronic network congestion in the long term is to invest and expand capacity. Yet, a review of the publicly available financial document for some of the largest ISPs in the country shows a decline in capital expenditures—the costs associated with building, upgrading and maintaining a network, such as construction, repairs, and equipment purchases—for their wireline networks.Many ISPs are spending less money on capital expenditures now, both as a ratio to revenue but also even in raw dollars,than they have in years past.

While some cost decreases can be explained by declines in hardware and equipment costs, these trends suggest that broadband providers are content to maintain the status quo and reap these efficiencies as a bonus rather than an opportunity to increase investment.

Cable companies like Time Warner and Comcast, whose networks were originally built for television services and have now been repurposed for broadband as well, are enjoying lucrative profits on networks that have long been paid off. Some estimate that cable broadband providers enjoy gross margins as high as 95 percent, an exceptionally high rate of revenue relative to the supposed costs associated with offering the service. For these companies, selling broadband packages even to the heaviest users is still quite profitable.

Do you agree with the New America Foundation’s report? Should ISPs start building out their networks to address network congestion? Let us know in the comments.

All of this points to one problem – bandwidth caps are limiting innovation and competitiveness on the Internet. The costs are low enough to start building out the future of the Internet in the U.S. Speed and access would increase around the country while innovation, and jobs, would flock to the Internet like never before. Sen. Wyden said much the same thing when announcing his new bill:

“Internet use is central to our lives and to our economy. Future innovation will undoubtedly require consumers to use more and more data — data caps should not impede this innovation and the jobs it creates. This bill is intended to help consumers manage their data more effectively and ensure that data caps are used only to serve the legitimate purpose of addressing congestion.”

Obviously, telecoms and ISPs won’t like this bill. They’ll come crying to Congress once again with a sob story of how network congestion is a serious threat to their customers, and how bandwidth caps are the only solution. In reality, the only threat to customers comes from ISPs unwillingness to change.

It’s this unwillingness to change that is leading to the U.S. trailing behind pretty much every other developed nation in Internet accessibility and speeds. It’s kind of embarrassing, but some companies, and cities, are starting to solve the problem. Now we just need to get the major ISPs on board before more businesses that rely on the Internet start to leave the U.S. for the greener pastures of South Korea, Japan and France.

Should bandwidth caps be regulated by the government? Or do you think another solution is possible? Let us know in the comments.

Should The Government Regulate ISP Bandwidth Caps?


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  • http://LinkiesContestLinkies.com Kevin Linkie

    The government should nose out of our lives altogether. Government is no longer what it used to be. They do not govern. They are crooks out to run a force that exploits humans, steals from the poor, stuffs their pockets and lies through their teeth to get a place in the seat they govern from.

    ISP’s are also in the same seat. This situation is really a lose lose situation as far as I can see.

  • PayTheUpfrontPrice

    Absolutely. Regulate them. Also, my 1/2 burrito at Taco Bell has not been measuring up lately…I think they are cheating me a few ounces. We need burrito laws as well. Just yesterday, I had to go to the bathroom at Walmart and had to wait while some guy took his sweet time with his paperwork. We need timing laws on toilet time.

    Seriously. When does the government beast stop? When will it’s insatiable appetite for power and size ever be enough? If you don’t like your provider, use your free market vote…SWITCH!

    People like Senator Wyden are the new pimps of the left offering handouts and promises for votes, power and control. LIFs (Low Information Voters) are their easy prey.

    Which side are you on? The side willing to give up their freedom for free stuff and relief of personal responsibility…i.e., the takers. Or the other, willing to give up everything to protect the freedom that thousands of men and women have died for…i.e., the makers.

    • chuck

      Most people only have 1 ISP in their area. That’s the problem. ISPs have oligopoly’s and can charge whatever they want.

  • http://incomefromhometips.org WAHM

    Yes, they should be regulated. Even better, let’s enforce the regulations once they’re put in place.

    The telecom and cable companies, most of which are part of larger media conglomerates, are, in most locations, a monopoly or duopoly with people not having much choice to switch if their current provider doesn’t provide good service and overcharges for current service.

    Other countries have much better competition due to Local Loop Unbundling regulation, which is a fabulous idea that started here in the US, but was chiselled apart piece by piece by the telecoms. Other countries took that idea and ran with it and now enjoy much more competitive, faster, and cheaper service than we do. We are woefully behind in this area.

    The ISPs are not like “Walmart” and “Taco Belle” since they’re selling a product that depends on use of spectrum that is a Public Domain property, so some arguments here in the comments are specious. These particular corporate entities, which have been granted use of spectrum in markets limited by the governments both local and federal are, in exchange for use of a public domain property, supposed to give back some public service, which they rarely do. If people are going to argue about whether the government should be regulating, they should at least read up on the real issues involved from all sides and not just channel Fox News Talking Points.

  • Paul

    In South Africa caps have nothing to do with service or bandwidth control, it is pure monopolistic extortion.
    That is the bottom line.
    If it was really about bandwidth control then there would be bandwidth limits as in Kb / second.
    Instead we have both.

  • http://MayaZacPetenJungleLodge LYNNE M. CAPUTO

    I LIVE AND WORK IN GUATEMALA AND THE ONLY INTERNET COMPANY I CAN GET IS A SATELLITE INTERNET COMPANY BECAUSE WE LIVE IN THE PETEN AND THERE IS NO CABLE SERVICE AVAILABLE WHERE I LIVE AND WORK. WHEN MY DAILY F.A.P. RUNS OUT I HAVE NO USE OF THE INTERNET AND NO WAY TO GET MY EMAILS OR SEND ANY EMAILS – NOTHING FUNCTIONS. THE COMPANY WILL NOT STATE TO ME WHAT MY F.A.P. IS DAILY OR MONTHLY. WHEN IT RUNS OUT I HAVE TO CALL THEM AND IT CAN TAKE FROM ANY WHERE TO ONE OR MORE HOURS TO GET MY F.A.P. UP AND RUNNING AGAIN. I THINK THIS IS NO WAY TO RUN A BUSINESS. THE COMPANY GETS THEIR SUPPLY OF SATELLITE FROM HUGHES NET IN THE UNITED STATES. I WAS BORN AND RAISED THERE AND I THINK THE COMPANY IN GUATEMALA CITY SHOULD BE CHECKED OUT. THANKS

  • http://MayaZacPetenJungleLodge LYNNE M. CAPUTO

    MY SATELLITE INTERNET COMPANY IN GUATEMALA CITY CHARGES ME OUTRAGES PRICES, $143.00 A MONTH AND FOR WHAT, LOUSY SERVICE AND NOT MUCH DATA FUNCTION. WHEN MY F.A.P. IS USED UP FOR THE DAY I HAVE TO CALL THEM TO GET MORE DATE USUAGE AND THEY WILL NOT EVEN TELL ME WHAT DATA LIMIT I HAVE. WHEN WE STARTED WITH THIS COMPANY WE HAD NO DATA LIMITED, NOW SUPPOSEDLY WE DO. I THINK IT IS TIME THAT COMPANIES WERE CHECK OUT FOR CHARGING OUTRAGEOUS PRICES AND DATA LIMITS WITHOUT TELLING PEOPLE ANYTHING AND THEY CAN RAISE PRICES WHEN THEY FEEL LIKE IT.

  • http://Plurks.com Plurks

    Here in The Netherlands that kind of regulation is seen as a violation of privacy.
    The whole community would react to it.
    Bits of Freedom is fighting overhere to keep the internet a sanctuary of free speech.
    And it should stay that way.
    There is already to much controle on the net.

  • http://www.youtube.com/watch?v=61zF9aZgUxY Reverse Mobile

    It is nothing more than another way to squeeze a few more dollars out of consumers and make the company more money.

  • http://www.globalbusinesscafe.com Cheryl McCann

    I am encouraged by this bill. It is very positive toward the consumer and is much needed. It is one of the few positive bills from Congress that I have seen or heard of recently.

  • http://www.theprayerpeople.org how to become a Christian

    whihc side are you on? The side willing to give up their freedom for free stuff and relief of personal responsibility…i.e., the takers. Or the other, willing to give up everything to protect the freedom that thousands of men and women have died for…i.e., the makers.

  • http://webdesignjustforyou.com Eileen Forte

    It’s politicians and big business trying to get more money in their pockets. I haven’t noticed that internet congestion is so bad either.

  • Jess T

    caps is generally a bad idea, while expansion, alterenatives, and efficient management resolve most scarity.

  • John

    Every other service industry has to do things to keep up with demand and insure their service level does not suffer. ISP’s seem to think they should not have to do this. I am in a small town now and at the mercy of Suddenlink or Suddenlynolink as I call them. They let their small service areas become over saturated and we get nothing close to the service level we pay for unless you are on at 3 AM and there is no recourse for us. How about a reduction on my bill for the hours I can’t get what I pay for?

  • http://www.theSEONewsBlog.com Pat Marcello

    Data caps… Really? I haven’t had any outages, ever. Plus, I’m probably more active online than most individuals. It’s just another way for big companies to suck more money from us by charging us more for over-usage when they set a low cap.

    Verizon just started doing this for mobile. My plan was $29.99 a month for unlimited bandwidth, and I recently got a letter saying that my plan was no longer available. When it’s up, I’ll have to pay more than double to get less service and even more when I exceed the plan. Sucks!

    Big business and government want to control the Internet, which they haven’t really been able to do up to this point. But there will come a day when all purchases require sales tax, when they regulate our usage, and when we’re not able to speak openly or freely. I feel it coming.

    And as someone who’s been online since almost the beginning, I’m really, really unhappy about that. The Internet was the ONE place where you didn’t have to be regulated, and it’s almost over. Watch it happen.

  • http://www.onyxsafaris.com Gorilla Trekking Safari

    It is so sad to know that government no longer consider about local people, i thought that that was happening in my country alone.
    BUT ANY WAY A COUNTRY HAS TO BE dedicated to THE LORD.

  • http://www.proudtobekiwi.co.nz Digmen1

    Yes bring on the legislation.

    We have data caps here in New Zealand, due to a monopoly on our one and only incoming data undersea cable (they say).

    But I kind of laugh when people say more data will create jobs.

    How much data do most people need?
    How does downloading movies and porn create jobs?

  • Pam

    Dec 22 2012 . HOw could it? If you have DSL service at home,and not in the office, corrupt persons can TRUNK OUT YOUR PAID SERVICE , and take over the server access and use it ,not allowing you to use it yourself. It doesnt matter if you KNOW THAT GOING ON. The issue is WHAT IS GOING TO BE THE PENALTY FOR PERSONS THAT STEAL YOUR ACCESS SPEED AND SERVICE?
    Local police do not help the victim and its hard to prove. If it gets to that point the ISP or phone company has some corrupt persons taking PAY OFFS to add or TRUNK Others onto your line, and making complaints isnt going to work, if the company doesnt acknowledge its an insider job, fix it and fire and arrest the perpetrating employee. The Police and FBI have their hands tyed cause INTERNET laws are vague unless you are doing child sexual predator acts or direct financial fraud . You have no protection from loss of service, aggravation, harrrassment, denial of service, hacking damages hacking losses, damage to your hard drive repair costs or anything related to that. I even have HACKERS soliciting persons OFF MY EMAIL AND CHAT Accounts to my neighborhood and some have been murdered. NOBODY IS STOPPING THIS ACTIVITY , I believe is generated from THE STOLEN ISP ACCESS AND SERVICE.
    YOU SEE, legislate that criminal element first before you give persons control. They cant understand whats making it slow if you cant see who IS STEALING YOUR ACCESS and +DO something proactive about it.

  • http://www.captaincyberzone.com Cap’n Cyberzone

    Whenever the Government gets involved in areas that it shouldn’t be it makes a costly mess.
    Let the free market have free rein and you’ll see that some enterprising start-up will have figured out that it’s better to make a fast nickel than a slow dime and either offer no bandwidth caps or caps that will force the greedy ISPs back to Earth.
    The only time that the Gov. should get involved is if there’s a monopoly or price fixing afoot.

  • https://www.facebook.com/ArtSempai Arthur Williams

    If your rich you get more, if your poor back to 14.4.

  • http://www.johnmichaelchristian.com John

    I live in a small community in Northern Arizona and Comcast regularly caps bandwidth. When I was trying to upload my sites after changing web hosts I kept getting timed out and after having a tech check it out he told me it was a bandwidth cap. Needless to say I changed providers and now my internet is screaming fast.. no more timing out and no more caps. So what do I think? I think we need more competition in that area and it would end. Legislation? Maybe. Sometimes people need to be more or less forced into having integrity and caring for other’s needs more than their own profits.

  • cj

    Before calling for more regulation – which is but another step to loss of Internet freedom, we should take a look at what existing regulation can be used (or removed) to reduce monopoly (or duopoly) of ISP’s. Only economic freedom with real competition will create a better service for the end user (higher quality at a lower price).

  • Damo

    Business operating with a mandate to profit cannot be trusted to simultaneously operate in the best interests of the customer.

  • http://brofarops.0lx.net Dr. Robert

    Dont we have enough “Big Brothers” without the addition of yet another. The Family Caveat Community, Treasury Department, Funny Boys Incorporated, and Cant Identify AnyOne, under the hospice of HLS already spend billions watching over us. We buy our domains, and our various hosting plans. We pay for our website construction. We pay someone to fine tune and align our websites into traffic … Google, Yahoo, Bing, and others work various government contracts too in exchange to quote unquote keep cost down and keep their budgets inline. Speaking ofwhich they work on inhansments to our new age phones 3G / 4G which goes towards “Telephone and Telegraph tariffs” and other FCC politics. “ISP tariffs”

  • Bob

    Senator Ron Wyden Freedom fighter, funny line yet! Check his voting record for government control and government monopoly building. He thinks Obamacare was weak because it’s not government single payor. The bigger the government, the smaller the individual. The bigger the Company, the smaller the individual. If FCC controls this, they’ll tax usage. FCC needs and other government agencies need to focus on keeping down the monopolies, not creating government monopolies.

  • Larry S. Jackson

    Since when has it been in our best interest for monopolies to self-regulate? The only thing standing between corporate greed and the consumer is government. Where I live Comcast is the only broadband provider available and I’m forced to pay everytime it hikes its rates. Government is us. We elect the people who run it. Without government we have no say on how Comcast chooses to manipulate the Internet.

  • Rush Limbaugh

    Its time for Americans to wake up to the facts.
    Telco’s control your lives you just need to shut up and take it for what it is and that its always going to be this way. So sorry but you people need to stop complaining. You’re not getting faster internet or unlimited access ever again because I and others like me believe you don’t need it period. We control what you see and hear so just shut up already and listen to what we feed you. You dont like it? Then leave my country. I bought it with my own money that I stole from simple minded idiots like you so just shut up and do my will.
    Second fact, we own all media and control what congress is allowed to do and say. You gave up that right when you elected the 43 president. It was on the ballot.
    Your leader,
    Rushbobo..

  • Mark

    For those of us who are stuck with satellite companies for internet this is a real problem, especially since more and more companies are going with digital delivery of programs, not to mention updates of software. Dish, for example, gives a basic service of 5gb anytime and 5gb off hours (2am – 8am). When you’ve used the 5gb the sell you 1gb for $10. If you don’t pay, they slow your internet speed down to .09mb/s or less. You can’t initialize many internet programs at this speed as they will cause a server timeout. They should be required to at least provide a larger download quantity or only cap your connection to .5mb/s.

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