Mediacom Defends Data Caps, Blasts Netflix

Netflix recently asked the Federal Communications Commission to declare broadband caps and pay-per-byte billing unreasonable.

The Internet service provider Mediacom is now responding by presenting a sweeping defense of pay-per-byte billing -- and taking a dig at Netflix in the process.

"Ironically, those who think ISPs are greedy pigs or evil villains because they charge based on consumption through caps or usage-based pricing do not direct the same moral outrage toward edge providers who price their services in basically the same way," the company writes in a new FCC filing. "Netflix, for example, charges $7.99 a month for its “basic” subscription. A basic subscriber does not get unlimited usage of Netflix’s library for that price but, instead, is limited to videos in standard definition format and on only one screen at a time."

Netflix argues to the FCC that data caps discourage people from watching Internet television. Watching 3.4 hours of its streams in high definition can use 10 GB of data, while watching the same amount in Ultra HD quality would consume almost 24 GB, according to Netflix. The online video distributor argues that data caps (and pay-per-byte billing) don't have any apparent purpose -- other than making online video more expensive for consumers.



Mediacom, which says on its site that its caps range from 150 GB to 2,000 GB per month, counters that people should pay for bandwidth the same way they pay for everything else -- based on quantity consumed.

The filing begins by asking readers to imagine they have a "sudden, irresistible craving" for Oreos. "You only want to spend two dollars, which means that you will be able to buy a two-pack or maybe even a four-pack but for sure you cannot get the family size of over 40 cookies," the company writes.

"Of course, it would be nice if your two dollars bought you the right to eat an unlimited number of cookies, but you know that is not the way our economy works. It is the same for the Starbucks latte you might want to drink with your cookies and for socks, gasoline and just about every single one of the thousands of other products and services that are for sale in the United States, including essentials like water and electricity."

Comcast CEO Brian Roberts recently put forward a similar argument, comparing bandwidth to gasoline and air conditioning.

But consumer advocates rightly point out that bandwidth, unlike Oreos or gasoline, isn't a consumable resource. Advocates also note that data caps can't be justified on the grounds that they help ISPs manage congestion, given that the caps are in place at all hours of the day -- whether the networks are congested or not.

"The broadband provider’s expense comes from installing the wire in the first place, not from customers merely using the internet access service for which they’ve already paid," Free Press Policy Director Matt Wood says in an email to MediaPost.

"It makes perfect economic sense for Mediacom and other cable companies to soak up monopoly profits where they’re available," he adds. "But that doesn’t make it good for internet users struggling to find affordable options and alternatives."

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