Broadband caps are spreading across the U.S., and even if Comcast did recently raise its cap of four years from 250 GB a month to 300 GB, the growth of usage based broadband is a negative and insidious trend that could hurt our ability to innovate. So I’ve documented which ISPs have caps, and how they have structured them in this chart, as a way to help people understand who is capping their service and why. The chart contains the top ISPs, and covers more than 80 percent of actual subscribers.
The rise in caps has let ISPs influence the internet in subtle ways — most of which seem harmful to innovation. The first is to take away the idea that wireline broadband is an unlimited service, despite the ability of smaller ISPs to build out networks that don’t come equipped with caps. As you can see from the chart, most of the ISPs are implementing overage charges associated with their caps. This isn’t really about managing their networks for congestion. If it were, they’d implement a different type of pricing model that cost users more to surf at peak times. No, this is about protecting their entrenched TV businesses as well as keeping the price for service high, despite the decreasing costs to send traffic over the network.
It’s also about grabbing more of the profits from the growth in internet services such as Netflix and Google, although caps take out those frustrations on users as opposed to the over-the-top providers. Instead of providing faster speeds for users and encouraging the growth of services that would require users to upgrade to those speeds, ISPs have taken their control of the last mile and are charging for bytes. So instead of paying more for better service, customers will pay more for what they use. This is a model that works for certain industries (think gasoline and electricity) but when it comes to encouraging more usage and innovation on the internet, the utility model seems short-sighted. Other ISPs may be thinking this same way.
For example, what if Intel had told game developers or Microsoft not to write software that would stress its chips — or penalized programmers for every megahertz of performance they used over a certain threshold? We’d end up with crappy software running on slower machines. Instead Intel encouraged people to write software for its chips and invested billions in making them faster so people would upgrade. Along the way it opened up market after market for the PC. Utility industries aren’t typically hotbeds of innovation.
The Federal Communications Commission, which is charged with tracking the spread and quality of U.S. broadband, has so far been quiet on this issue, not even collecting data to track how the shift to capped broadband has affected users, much less the industry. That may be changing. But it’s time that we ask if we want the internet to look like the utility or a source of continued innovation.
(c) 2012, GigaOM.com.