Yes, Of Course The Broadband Companies Are Gouging You With Data Caps
There’s a certain amount of shock in response to this report from the New America Foundation. What, you mean the broadband companies are actually gouging us with these data caps? They’re not about network congestion like they tell us?
Well, yes, of course the companies are doing their darndest to get as much money out of you as they can. They are, after all, capitalist and supposedly profit maximising enterprises. There isn’t even in theory supposed to be a link between their cost of providing a service and the price they can charge you for it. That’s set by the price they wish to provide it at and the price you’re willing to pay: that old supply and demand thing.
Internet users have been complaining about data caps — and the costly penalties for going over said caps — for years, while both wireless and fixed broadband providers claimed these caps were an absolute necessity to curb runaway use. But a new report attempts to debunk many of the ISP industry’s claims.
At the heart of the NAF’s argument is that the costs associated with delivering data to consumers has dropped while the number of consumers subscribing to broadband services has increased.
The way to deal with a producer trying to gouge the consumer is to increase the competition to supply that the producer faces. Get enough suppliers into the market and costs will indeed decline.
While internet service providers and wireless carriers have argued that data caps are necessary for network management purposes, consumers and advocates have raised eyebrows at the now-industry standard practice. Some, including our own Chris Ziegler, have argued that we should forget the promise of unlimited data and "fight a smarter fight." But a new report from the New America Foundation's Open Technology Institute pokes big holes into the practice of implementing data caps, and concludes that broadband providers are creating unnecessary scarcity not for technically sound reasons, but for profit motives. "Broadband appears to be one of the few industries that seek to discourage their customers from consuming more of their product," the report states. It's not the first time this has been argued — advocates have been fighting data caps for years — but the institute's report is a pointed summary of the challenges to the practice.
So, this means while bandwidth caps are present in the marketplace, they don't really need to be. We need competition to get rid of the caps. And it will all allow us to inexpensively receive the kind of services that Intel will provide. But because the competition is not already ubiquitous is no reason to assume that Intel's service is not a good one and won't be successful.