Monopolistic U.S. ISPs Take Full Advantage Of The Covid Crisis

from the empty-promises dept

We've noted for years that broadband usage caps are bullshit. Leaked ISP documents and public executive statements have repeatedly made it clear that usage caps and overage fees are just glorified price hikes on the backs of captive customers, only made possible due to industry monopolization (and the regulatory capture and Congressional corruption that lets them get away with it).

This was a problem for decades, made worse during a crisis in which broadband is essential for survival (health care, work, remote learning). 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, namely ripping off captive customers with spurious fees and surcharges thanks to the accountability vacuum its net neutrality repeal created.

Apparently trying to "help" shed some light on the problem, the Wall Street Journal this week penned a piece discussing usage caps and how they impact ordinary people. Unfortunately, half the story is filled with bullshit industry claims that simply aren't true. Like here, where the Journal amplifies a purported expert who tries to claim that usage caps are necessary to recoup network investment costs:

"Data caps also help keep the prices of internet packages stable by shifting the extra cost to heavy users, according to Mark Trudeau, chief executive of broadband-data firm OpenVault, which tracks more than a million U.S. subscribers. “It protects the majority of subscribers from having rates raised every year,” he said."

This is nonsense. For one, U.S. consumers already pay some of the highest prices in the developed world for broadband due to monopolization, regulatory capture, and obvious Congressional corruption. That's before you even get to arbitrary usage caps, overage fees, or the ocean of misleading below the line surcharges big ISPs use to covertly jack up the advertised price post-sale. Caps don't "protect the majority of subscribers from having rates raised," they're entirely artificial constructs that make high prices, even higher. Worse, they are abused anti-competitively by incumbent ISPs.

Undaunted, the Journal also parrots the false claim that such restrictions are necessary to help "manage network congestion":

"On top of helping internet providers generate more revenue, data limits are a way to alleviate congestion and strain on the network. The internet’s backbone held up pretty well during the early days of the pandemic, despite significant pressure."

The U.S. internet held up pretty well because our core network infrastructure was solid (it's the "last mile" that sucks due to limited competition) and network engineers are smart. But as executives like Sonic CEO Dane Jasper have noted, static caps applied on all users don't actually help manage congestion. Leaked Comcast documents and independent research have repeatedly confirmed this, forcing the industry to back away from the justification entirely a few years back. Extremely heavy users certainly exist, but ISPs already have an option for driving those users to more costly plans: migrating them to business-grade service.

While it's nice the Journal could cover the problems created during Covid thanks to entrenched monopolies U.S. lawmakers refuse to do anything about, peppering the piece with bullshit justifications for price gouging (without once even mentioning a lack of competition or sky high flat-rate prices in the sector) only helps perpetuate bullshit business practices in the first place.

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Filed Under: broadband, captive market, covid-19, data caps

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  1. identicon
    Anonymous Coward, 29 Oct 2020 @ 11:04am

    Congestion has always been a crap reason

    Back in the days or yore when dial up was still a thing and everyone had a land line the phone rate structure was such that a call after 9 or 10 pm was cheaper than a call during the day. This was how congestion was managed.

    It is never explained how data caps manage congestion. In order to manage congestion you need to give customers an incentive to use their connection during off hours. Ie: From 12-8 am only half the usage will count toward the cap.

    This still would not work for most people since if you are working from home you are using data during business hours and then in the evening you are going to stream whatever you are watching.

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, 29 Oct 2020 @ 11:50am

    Re: Congestion has always been a crap reason

    The phone system has a hard limit on the number of phone call each exchange could carry, and congestion meant that new calls failed to connect. The switches were tied up until a call was dropped. Also, there was no retry mechanism, other than the use redialling until they got through. Encouraging people to make some calls outside the congestion period helped.

    The Internet, at an ISP level, is a packet witched network, and congestion is a short period, in the millisecond, phenomenon, where too many packets arrive a a switch, or server, for it to handle. Retries are automatic, and the result is a slower than normal page load. Also, it can happen anywhere in the network. If an ISP is suffering from congestion for periods of more than a few minutes, then they are under-provisioned, for normal Internet usage. But note, unlike the phone system, congestion only slows things down a bit, rather than blocking new calls from connecting.

    Note also, that if any service is placed outside of data caps, or caps are tied to cable subscriptions, they you can be sure you have identified the reason for the caps, and it not dealing with Internet congestion, but rather trying to stem the loss of cable and streaming subscriptions.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, 29 Oct 2020 @ 2:12pm

    The same left wingers who complain "but mah private company" when it comes to social media censorship, are whining about a private company.

    reply to this | link to this | view in thread ]

  4. identicon
    Dave, 29 Oct 2020 @ 2:44pm

    Broadband usage caps are bullshit.

    But they are still way too lucrative for big ISPs and their shareholders, so they are unfortunately here to stay.

    reply to this | link to this | view in thread ]

  5. identicon
    Annonymouse, 29 Oct 2020 @ 3:27pm


    They will stay until such time they are escaping the mobs with tar and feathers. I hear the interest in build your own guillotine has skyrocketed .

    reply to this | link to this | view in thread ]

  6. identicon
    Anonymous Coward, 29 Oct 2020 @ 9:41pm

    Calling it

    Internet service in the us will only get better when the majors die off due to lack of monetary gain. Not that they won’t let try to stop it.

    reply to this | link to this | view in thread ]

  7. icon
    Toom1275 (profile), 29 Oct 2020 @ 10:05pm


    Yeah, how dare left-wingers be for free speech and against fraud! How hippocritical!"

    reply to this | link to this | view in thread ]

  8. icon
    PaulT (profile), 30 Oct 2020 @ 12:42am


    Yes, we have 2 different opinions when dealing with 2 totally different subjects.

    Meanwhile, the same right-wingers who demand that the government seize control of private companies when they moderate their platform in a way they don't like, in a highly competitive market with trivial effort needed for a customer to switch, are demanding that other private companies in an actual monopoly position face no consequences for outright fraud. That seems rather more problematic.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, 30 Oct 2020 @ 6:43am


    When it comes to private property rights, it is the conservative types who scream the loudest about their rights being violated.

    Why not just call them hypocrites and avoid the left/right crapola.

    reply to this | link to this | view in thread ]

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