New Report Bashes Data Caps

In 2008, Comcast began imposing a monthly limit on the amount of data that broadband subscribers could consume. Since then, a number of other Internet service providers -- both wireline and wireless -- followed suit.

But as cable companies and telecoms are embracing data caps, more and more industry observers are criticizing the restrictions.

One rationale often floated to justify data caps is that they can help ISPs to manage congestion. But critics say that makes no sense -- especially in the case of wireline providers. After all, watchdogs argue, congestion only occurs sporadically, but data caps can prevent people from using the Web even when it's not clogged with traffic.

Critics -- as well as streaming video companies like Netflix, which rely on people's ability to access the Web -- also question whether ISPs are imposing data caps in order to discourage people from cutting the cord in favor of watching video online.

This week, a report from the New America Foundation gives more ammunition to those critics. The paper argues that data caps not only lack justification, but are harmful to consumers and hinder innovation. "Data caps encourage a climate of scarcity in an increasingly data-driven world," states the report. "The evidence suggests that the imposition of costly or punitive data caps are largely a business decision by ISPs to boost revenues per subscriber or protect legacy services in a market where consumer have few choices and where consumers only switch services on a very limited basis."



Already, the report is drawing some high-profile attention -- including comment from former Federal Communications Commissioner Michael Copps, who praised the report on Twitter. "Great work on how broadband Data Caps hurt consumers and restrain innovation," he tweeted.

Sen. Ron Wyden (D-Ore.) also seems to agree with the report's conclusions. Today, he introduced a bill that would regulate the circumstances under which ISPs can impose data caps.

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