Netflix Urges FCC To Crack Down On Broadband Usage Caps

Broadband

from the pay-more,-get-less dept

We’ve long pointed how how broadband usage caps (especially on fixed-line networks) are arbitrary, punitive and confusing. In addition to being totally unnecessary, broadband caps open the door to anti-competitive behavior (like zero rating a company’s own content but not a competitor’s). The idea that caps are necessary to manage the network has long been debunked, and even the ISPs themselves have admitted that caps have nothing to do with congestion. Broadband caps are little more than glorified price hikes on captive markets, useful to protect legacy TV revenues from streaming video.

Despite the profoundly negative impact of usage caps, most Silicon Valley companies remain mute on the subject. One of the few exceptions is Netflix, which not only has been a vocal opponent of caps, but has often taken steps to try and help consumers navigate them. Now the company is once again pushing the FCC to take action in a new filing (pdf), urging the agency to use its authority under Section 706 of the Communications Act to crack down on caps and overage fees:

Data caps (especially low data caps) and usage based pricing (“UBP”) discourage a consumer’s consumption of broadband, and may impede the ability of some households to watch Internet television in a manner and amount that they would like. For this reason, the Commission should hold that data caps on fixed line networks and low data caps on mobile networks may unreasonably limit television viewing and are inconsistent with Section 706.

From there, Netflix is quick to reiterate that even ISPs have admitted that caps have no actual technical purpose when it comes to managing the network:

“Data?caps?on?fixed line networks do not appear to serve a legitimate purpose: they are an ineffective network management tool. Fixed line BIAS providers have stated that data caps on fixed line networks to not serve a traffic management function. They have been described alternatively as a way to align customers’ use of the network with what they pay. As a method of price discrimination however, data caps and UBP are redundant to the speed tiers that consumers are used to. Data caps and UBP raise the cost of using the connections that consumers have paid for, making it more expensive to watch Internet television. The Commission should recognize that data caps and UBP on fixed line networks are an unnecessary constraint on advanced telecommunications capability.

Netflix (now technically the world’s biggest pay TV company) notes that in addition to being unnecessary, punitive, and potentially anti-competitive, usage caps are simply confusing. The majority of consumers don’t know what a gigabyte even is, and by nature will tend to pay for higher tiers of service they don’t need just to avoid being penalized (something that’s quite easy by ISP design). Netflix is also quick to note that even higher caps may not be sufficient as consumers slowly shift to 4K streaming (not to mention other bandwidth-intensive applications we haven’t even invented yet).

The problem for Netflix (and any consumer who cares about usage caps) is that the FCC’s enforcement or interest in this subject has historically been inconsistent at best. While the agency did manage to prevent Charter from imposing caps for seven years as a recent merger condition, the agency has consistently turned a blind eye while companies like AT&T and Comcast expand their own usage restrictions and overage fees. And while Comcast and AT&T may have recently raised their own caps to 1 terabyte to fend off possible regulatory action, there’s no real indication that any broader FCC action is forthcoming.

While the FCC has hinted that it may include usage caps as part of a voluntary push for broadband “nutrition labels”, it’s not likely the commission will do much more than that (even though nobody is confirming meter accuracy). Whether it’s the FCC’s $300 million broadband availability map that intentionally omits price data, or the agency’s failure to even mention the ISP practice of using bogus fees to covertly jack up advertised broadband rates, punishing or even highlighting the price gouging that goes on in the broadband industry on a daily basis has never been the FCC’s strong suit.

Filed Under: broadband, fcc, net neutrality, usage caps
Companies: netflix