ISP Data Caps Just a 'Cash Cow' 353
An anonymous reader writes "Ars summarizes a new report into the common practice of ISPs implementing data caps, ostensibly to keep their network traffic under control. The report found a much simpler reason: money. Quoting: 'The truly curious thing about the entire debate has been the way in which caps have mostly remained steady for years, even as the price of delivering data has plunged. For example, paying for transit capacity at a New York Internet exchange costs 50 percent less now than it did just one year ago, and many major ISPs aren't paying at all to exchange data thanks to peering. So why don't prices seem to fall? ... The authors of the new paper contend that all explanations are more or less hand-waving designed to disguise the fact that Internet providers are now raking in huge—in some cases, record—profit margins, without even the expense of building new networks. ...While Internet users have to endure a ceaseless litany of complaints about a "spectrum crunch" and an "exaflood" of data from which ISPs are suffering, most wireline ISPs are actually investing less money in their network as a percentage of revenue, and wireless operators like AT&T and Verizon are seeing huge growth in their average revenue per user numbers after phasing out unlimited data plans—which means money out of your pocket. In the view of the New America authors, this revenue growth is precisely the point of data caps.'"
Surprising? (Score:4, Informative)
I doubt anyone here is really surprised by this. On the one hand, the arguments made by the ISPs make some sense: as more and more people go online and download more and more multimedia and apps alongside simple web browsing (which also uses more data than it used to), then of course bandwidth usage is also going to go up. However, that argument ignores the other side of the coin--namely that the technology the ISPs use continues to improve, becoming more and more capable of meeting (or exceeding) that demand. The caps also ignore usage patterns, peak hours, etc.
If the ISPs cut you off entirely when you exceed your cap, then their argument might have some weight. But they don't do that. They let you keep going, at the same speed you were before. Only they charge you extra money.
What borders on criminal is that they're so bad about informing you of when you approach the cap. Though she claims never to use the Internet on her phone, my mother always goes over cap. She has only twice received a notification from AT&T that she was approaching the cap--both of which came two days(!) after she had already gone over her allotted amount.
I'm still on a grandfathered unlimited AT&T account. I come nowhere near 3GB of usage each month (I'm almost always on WiFi), but I have no intention of dropping down to a cheaper account. It's maddening that I can't get tethering (officially...) without going to one of their crap capped plans.
Re:Capitalism (Score:4, Informative)
1) Creating barriers to entry on behalf of corporate lobbyists that make competition illegal (as only government can do) except for the existing major players who coincidentally* are the only entities with the infrastructure to meet the arbitrary legal (government) requirements.
2) Looking the other way while corporations bribe government agents to allow criminal acts including intimidation and violence to prevent competition in an extrajudicial way.
Telecom is not a free market because even if I bought a ton of equipment and hired a bunch of people, I could not enter the market as an ISP, because the market is regulated. These regulations make competition illegal for any entity other than the players that "helped" draft the regulations in the first place.
*Sarcasm
Re:This is Market failure in action... (Score:2, Informative)
I disagree, the reasons the ISP's can continue to charge outrageous rates is because they have a government sanctioned monopoly on last mile delivery. Even if I wanted to setup a cable ISP I couldn't as I have no access. I could setup a telco based one using DSL, but I would be limited to the transit charges the owner (Centurylink in my case) wants to charge my customers.
Exactly. Instead of allowing competion, they fight it. DSL is required to allow competition because of the old regulations on the telephone lines that carry it. But Verizon and AT&T are changing the game by going to fiber instead, and letting DSL languish. Meanwhile, the Cable companies get contracts from the counties/municpalities to be the sole providers for the region so there is no competition in the same technology, and they're not required to share like the telcos are.
Even then, when communities have gotten together to setup their own provider the telcos (via shared fiber) and cable companies have filed lawsuits to prevent them from actually using it.
Short of moving, there's no way you can simply change your providers.
Re:Using Credit Cards as Debit Cards (Score:4, Informative)
...and why do they allow you to do that?
It's simple. They know that otherwise you'd be too smart for their scheme and wouldn't even have a credit card come the day that you happen to need more cash than is in your checking account.
Blah blah blah blah then you never actually state the actual reason why they permit that, which tells me you don't know what you're talking about. Store credit cards encourage people to shop with a given store. On other cards, the processor takes a cut of every transaction. There's money to be made even if you don't carry a balance, which is the reason credit card companies don't cancel cards that never have one.