Comcast's data-cap flap

Part of the “Net Neutrality” argument concerns finding the best way to distribute limited bandwidth to Internet subscribers.  At the moment, customers are generally accustomed to getting just about all the bandwidth they want, for a standard fee.  The avid Netflix or Amazon movie viewer pays the same as the casual user who checks email a few times a day, and gets the same Internet experience.

Cable giant Comcast, which will get even bigger if they absorb Time-Warner, caused a bit of a stir by floating the idea of imposing “data caps” on users across the country over the next decade.  The idea is that if you use less than a certain amount of data each month, you get a small discount, while if you use too much data, you pay a fairly hefty surcharge.  The system is currently being field-tested in a few places, and according to DSLReports, it’s not going terribly well:

In Comcast trial markets, users pay the same price users in unlimited markets pay, except they get a 300 GB cap, and have to pay $10 for every 50 GB beyond that they travel. Comcast also copied a Time Warner Cable offer that provides a $5 monthly discount off a user’s bill — if they agree to a 5 GB per month usage cap with $1 per GB overages.

Time Warner Cable is on record saying the 5 GB cap offer isn’t very popular. That goes without saying, as the value of a $5 discount evaporates immediately upon any meaningful usage of the line. [Comcast lobbyist David] Cohen admits that “not a lot of customers” are taking the 5 GB option, but he insists that “having the choice is something that is attractive to them.” It should be noted that customers in capped Comcast markets don’t have the choice of an unlimited tier.

Cohen also made it clear that Comcast is very aware of the negative public sentiment that surrounds usage caps, which is why the company is proceeding so cautiously with their cap and overage ambitions.

“We are trying to go slowly here because we have no desire to blow up our high-speed data business,” stated Cohen. “And notwithstanding what some people say, we feel competition in our high-speed data business across our entire footprint.”

It should be noted that some critics believe the problem of network congestion is greatly exaggerated by Internet Service Providers, and there is currently no reason for them to enforce data caps, because there is presently no real shortage of bandwidth.  The more gracious version of this argument holds that ISPs are field-testing data cap systems in anticipation of a fast-approaching day when excessive reliance on the Internet for bandwidth-hogging audio and video creates a usage crisis.  The less gracious version says they’re just looking for ways to rip off their customers – and perhaps high-bandwidth providers like Netflix – now that competition has largely vanished from many markets.  Cable modems are king, DSL isn’t that much competition, and if Comcast completes that huge merger deal with Time-Warner, things are going to start looking pretty monopolistic in some markets.

If there really is a bandwidth crunch, then Comcast’s multi-tier model looks more reasonable – why not offer cheaper options for users who place very little stress on the system?  But the fear is that all of this will become a price-gouging scheme, justified by a phantom menace.  Karl Bode at DSLReports asserts that “usage caps on modern, well-run networks simply aren’t necessary, full stop” and the only reasons cable operators are field-testing the idea are “to cash in on hinder the single, biggest future threat to their TV revenues: Internet video.”  

If those arguments are accepted, then it’s an encouraging sign for consumers to reject attempts to move away from the simple and convenient flat-rate model they currently enjoy – nobody wants to start pulling the plug in the middle of movies because they’re approaching an expensive monthly usage cap.  If Internet service becomes effectively monopolistic, however, consumer resistance won’t matter all that much.  I’m not a big fan of intrusive government regulation, but regulation has its place in a monopoly, at least to this extent: it sounds reasonable to expect cable companies to prove they’re experiencing a bandwidth crisis before they’re allowed to impose usage caps.  Such proof should be easy to compile with a few reports.  Whatever else may become of the various ideas collectively known as Net Neutrality, let’s not have any phony “solutions” for problems that don’t exist, imposed on customers who have no realistic option to walk away from the deal.