Feast Or Famine? Data Caps Guide Web Use

Lest there was any doubt, broadband subscribers who are subject to data caps often respond to them by adjusting their Internet use throughout the month.

That's among the key findings of new research from the Cambridge-based nonprofit National Bureau of Economic Research.

Its new report, “Usage-Based Pricing and Demand for Residential Broadband,” examines the Web use of around 55,000 home broadband subscribers. Around 42,000 of those people had data caps of approximately 100 GB per month; after exceeding the cap, they were subject to overage fees.

Those people tended to cut back on their Internet use as they approached their monthly limits, researchers found. At the same time, people who weren't in danger of maxing out consumed more data as they neared the end of the monthly billing cycle.



In June of 2012, when the data was collected, most people stayed well within their data caps, but 10% of subscribers with usage-based pricing went beyond their caps, the report says.

The study comes as policy makers are increasingly focused on how Internet service providers set data caps. Some consumer advocates have urged the Federal Communications Commission to prohibit ISPs from exempting certain services from consumers' data caps (or pay-per-byte billing plans).

Advocates argue that if a company like AT&T or Comcast says that Web streams offered by the ISPs (or one of their affiliates) don't count against consumers' monthly caps, subscribers will have an incentive to eschew ISPs' competitors -- like Netflix, Amazon or HBO Now.

These arguments have surfaced in FCC filings regarding AT&T's proposed merger with DirecTV. Consumer advocacy group Public Knowledge recently urged the FCC to prohibit AT&T from playing favorites when exempting content from data caps.

“A tailored (and time-limited) prohibition on exempting video services from data caps or metering would alleviate a merger-specific harm and help maintain the competitive status quo with respect to online video,” the organization said in a recent filing.

AT&T has countered that those exemptions, also called “zero ratings,” will benefit consumers. The company added that it already has forged deals that “make it easier” for its broadband customers to access streaming video.  

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