Cable industry admits that data caps (bandwidth limits) are all about the money, not network congestion


If you didn’t need any more reasons to dislike internet service providers for charging too much for their services, this isn’t going to help very much. Michael Powell, who is the former chairman of the FCC but now president of the National Cable and Telecommunications Association, told an audience the cold hard truth about data caps. “Our principal purpose is how to fairly monetize a high fixed cost,” he said.

Last month, a report from the Open Technology Institute accused ISPs of doing just this — saying that data caps were to prevent congestion, when they were looking for more profit. After these comments made by Powell at the Minority Media and Telecom Council’s Broadband and Social Justice Summit, it looks like the report was right all along. According to Powell, data congestion was not a factor at all, and that it was really due to the “enormously high” costs of installing the wiring in the streets, as well as the operational expenses.

He goes on to compare the situation with a hot tub, and that users are actually used to this concept. “If you buy a hot tub and string it up with a whole bunch of inefficient lighting and run it all night long,” he said, “you are going to pay more than your neighbor who puts his thermostat at 68 percent and tries to conserve energy. It’s only right.”

While his analogy makes sense, this is the internet we’re talking about, not a hot tub. If using more data doesn’t actually drive up their operational expenses, then how does it justify them charging more through data caps?

What do you think of all this? Let us know in the comments!

[via The Verge, image via The Cable Show]

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  • JMJ

    @sl0j0n @Mike : I agree with you both, more with the latter than the former, especially regarding the Obama’s. But then, I may be biased.— JMJ, yada-yada-yada + J.D. ;-)

  • Mike

    @sl0j0n: @sl0j0n: Really, dude, is it necessary to freely insult a whole lot of people, including Pres. and First Lady Obama, each of whom is a lawyer as well?

  • sl0j0n

    Hello, all.
    @ “JMJ”.
    Good on you!
    Part of the problem is that the courts and the politicians are all on the wrong side, but what can you expect from the bottom-feeding human scum we affectionately call “lawyers”. Here in Georgia, the legislature passed a bill that removed the local cable company from local oversight by the franchising authority, and gave oversight to the “Public Service Commission”, which shares authority with the FCC.
    So, try to get a “reasonable response” from the no-longer ‘local’ cable company.

    Have a GREAT day, neighbors!

  • JMJ

    These monopolies and quasi-monopolies have us all by the …. scruff of the neck. Granted there is a huge capital expense in building out these systems, with early adopters picking up the lion’s share of that cost. As the technology improves and penetration reaches a high degree or saturation point, the companies have a choice: Expend more capital and build-out to meet current demand or save money by providing the increased number of users with a degraded experience. We know what the choice will be, especially in an under-regulated, quarterly-return-driven environment: Shaft the user.

    Ironically, last evening, after a lengthy customer-service session with Level I and Level II Tech Support of one of my ISP’s, they actually cut my monthly bill in half for the next three months when I proved that they were shaping my throughput, and demanded it stop OR they issue a refund OR they cancel my account. Unlike most users, I had access to privvy information because a personal friend is a sub-contractor for this particular company and confirmed that my particular area was intentionally being under-provisioned by a diversion of traffic from the towers of a more densely populated area to mine. So, I could quote numbers back to them based on their own, internal info. They were nice throughout the conversations but simply lied and double-talked until I could box them into admitting the facts. The tipping point came, when I informed them that, like they do, I had recorded the entire set of conversation wherein one lower-level Techie quoted my bandwidth for the prior month and offered her (polite but ill-informed) opinion that that bandwidth was high and was the reason for the slow speeds/throughputs that I was experiencing. When I played back that portion of the recording for the Level II (Manager Level) Support Person and informed him that I have the time and expertise and directions to travel the four miles to a local Court and instigate what I would later try to turn into a class-action, he offered the discount (bribe?).

    So, anyone reading this and experiencing what I did, do not be cowed by your ISP’s quoting the Terms of Service or the Fair Usage provisions you agreed to when signing up. Since the Fair Usage numbers are never specified and usually, as in my case, no warning of one’s approaching or exceeding that number is given (They officially denied that any such threshhold exists.), you have a good chance of prevailing should you have to explain your position to a judge. Individually, you will be creamed due to the careful wording of your contract which was written to disadvantage you in any legal proceeding. IF, as they fear, you succeed in gathering a cohort of customers who are being treated similarly, THEN the advantage shifts and they may/will be put in the position of demonstrating that those terms were fair, reasonable, equitably applied, etc. Like for me, it may be better “customer service” for them to ‘throw you a bone’ than lose a customer and/or have some little knucklehead (like me) spend a few bucks and have them in Court.

    Or, they may simply have decided to get me off the damned phone. :-)