Bullshit Broadband Usage Caps Are Hugely Profitable During A Pandemic
from the fancy-that dept
We’ve noted for years how broadband providers have increasingly imposed arbitrary, confusing, and punitive usage caps and overage fees to cash in on the lack of competition in US broadband. Not only have industry executives admitted these limits aren’t technically necessary, they’ve increasingly been abused to hamstring competitors. AT&T, for example, doesn’t impose the limits on its broadband customers who use its streaming video service (AT&T Now), but will impose the added charges if you use a competitor like Netflix.
For more than a decade ISPs have slowly but surely imposed such limits hoping that consumers wouldn’t notice (think of the frog in the pot of boiling water metaphor with you as the frog). But with most folks stuck at home during an historic health and economic crisis, bandwidth usage (and thereby profits gleaned by usage caps) has grown significantly. In fact, data from OpenVault indicates that the number of broadband “power users,” or users who consume more than a terabyte per month, has doubled over the past year:
“In Q3 2020, 8.8 percent of broadband subscribers used at least 1TB per month, up from 4.2 percent in Q3 2019, according to a study released yesterday by OpenVault. OpenVault is a vendor that sells a data-usage tracking platform to cable, fiber, and wireless ISPs and has 150 operators as customers worldwide. The 8.8- and 4.2-percent figures refer to US customers only, an OpenVault spokesperson told Ars.”
Cross this phony threshold and you wind up owing your ISP even more money, despite Americans already paying some of the highest prices for broadband in the developed world — a notorious metric that doesn’t even include the additional costs incurred by usage caps, overage fees, and other nonsensical surcharges the industry uses to falsely advertise a lower rate. If you’re a telecom monopoly, this is all great. If you’re an American struggling to pay your broadband bill, suddenly higher due to household video streaming, gaming, school work, regular work, and video conferencing, it’s decidedly less so.
OpenVault of course advises ISPs to embrace caps because it means more users will be paying more money over time than ISPs that don’t:
“In potentially bad news for customers, OpenVault seems to be urging ISPs that haven’t imposed data caps to adopt them. “The goal for network operators is to ensure that subscribers who consume the most bandwidth are in faster, higher ARPU [average revenue per user] speed tiers,” OpenVault said. “Usage-based billing operators are achieving this goal more, on average, than network operators who utilize flat-rate unlimited billing.”
But again, the problem is that such restrictions are bullshit. They do not manage congestion. They aren’t required for network management because they don’t really help network strain. They’re glorified price hikes by natural monopolies on captive customers who can’t vote with their wallets. They’re not even necessary as a product differentiator, as the heaviest users can already be shoved toward business-class tiers. They exist solely to extract an additional pound of flesh from uncompetitive U.S. broadband markets. And now they’re being exploited during a national crisis.
The Trump FCC made some performative, empty gestures toward this problem earlier this year when it announced an entirely voluntary pledge with ISPs, who agreed they’d temporarily stop charging late fees or imposing usage caps. Many ISPs not only ignored their promise, but it was only a few months before most ISPs returned to business as usual, hitting struggling Americans with all manner of spurious additional charges.
Of course you’d never realize such limits are bullshit reading outlets like the Wall Street Journal, which recently parroted industry claims like caps are necessary to “keep the prices of internet packages stable by shifting the extra cost to heavy users,” (nonsense, everybody pays more under such a model as the average usage rate creeps skyward), or “protect the majority of subscribers from having rates raised every year” (also nonsense, given U.S. broadband flat rate prices and other fees routinely increase your costs either way).
It’s just monopolies being monopolies, and there’s a sizeable industry of think tankers, consultants, academics, and lobbying firms funded by the U.S. telecom sector whose entire job is to pretend that’s not actually a problem.