A think tank called the New America Foundation has completed a pretty cogent report on the imposition and consequences of bandwidth caps in the US: it shows that they're not designed to what they're supposed to do, and it calls for more broadband competition - good luck with that! By I.D. Scales.
Just as the first generation of innovative Internet-based apps and services get off the ground (or perhaps because they're getting off the ground), US Internet access providers are starting to 'clamp down' on Internet use by putting stringent and costly data limits on subscribers, claims the New America Foundation, in 'Capping the Nation's Broadband Future'.
The problem is, of course, that the caps are not designed to alleviate 'congestion' and 'manage growth', as the ISPs constantly claim (since they don't address the first although they might partially affect the second).
They are designed to make video downloads expensive and less able to compete with telcos' and cable companies' own video services.
Congestion on wireline - if it occurs at all - only occurs at peak times, so data caps (measured by the month) have little or no impact.
The report points out that although traffic is increasing at a steady rate (not at a tsunami rate as constantly claimed), the underlying costs for providing service are actually declining even faster - including the cost of Internet connectivity or IP transit, as well as equipment and other operational costs.
Far from telco/ISPs being squeezed by increasing costs and lowering revenues they are enjoying bumper profits from their ISP businesses and - in the US at least - are untroubled by significant broadband competition. Mobile services are likewise highly profitable. "Tiered pricing and data caps," claims the report, "have become a cash cow for the two largest mobile providers, Verizon and AT&T, who already were making impressive margins on their mobile data service before abandoning unlimited plans."
The increasing prevalence of data caps both on the nation’s wireline and mobile networks underscore a critical need for policymakers to implement reforms to promote competition in the broadband marketplace.
There is nothing new here, but if you want to better understand the compelling case against the constant noise of the co-called "scissors effect" and the non-existent "data tsunami", then read this report [download]
We'll be making a big noise on this issue in the new year. Keep watching.
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