Why cord cutters shouldn’t live in fear of broadband data caps
An optimistic outlook on data limits, overage charges, and the potential threat to streaming video.
For as long as I’ve been writing this column, some readers have argued that cutting the cable-TV cord is futile.
After all, ditching an expensive pay-TV package for streaming video doesn’t liberate you from the cable company or telco provider for Internet service. And once those companies feel the effects of cord cutting, the argument goes, they’ll start capping broadband data usage and charging overage fees to recoup the revenue losses from the TV operations. Comcast, the nation’s largest cable provider, has already been laying the groundwork, expanding 300GB caps—with additional 50GB blocks costing $10 each—to more U.S. markets last November.
Despite these concerns, I’ve remained optimistic. Although data caps have become an unfortunate reality in a small number of markets, my hope is that they’ll get stomped out before they have a chance to become the norm.
Home Internet data caps: A little perspective
Data caps might seem like an imminent threat, but they are not a widespread phenomenon at this time. Comcast’s data caps currently only cover about 12 percent of the cable giant’s footprint, according to MoffetNathanson analyst Craig Moffett. The company intends to roll them out everywhere, but not for another few years.
Meanwhile, Time Warner Cable, the second-largest U.S. cable company, does not enforce data caps, nor does fourth-place Charter Communications. (The two companies have also promised not to enforce caps for at least three years if they’re allowed to merge.) Cox Communications technically has data caps that correspond to speed tiers, but they are not strictly enforced according to some subscribers. On the telco side, Verizon FiOS does not enforce data caps, though AT&T does.
All told, most Internet subscribers aren’t facing any immediate danger of data caps. You can cut cable TV today and potentially save a lot of money before caps even become a concern.
The clock is ticking
As for what might happen in the future, Internet providers are in a tough position. They surely realize that data caps are deeply unpopular, with every new trial bringing a wave of criticism and scrutiny, which means they have to move slowly to avoid political blowback. (Karl Bode at DSLReports likens this strategy to the anecdote about boiling a frog.)
Indeed, Comcast’s latest data cap expansion produced a miniature outrage. Advocacy groups immediately began calling for the government to investigate, and the company’s weak justifications were criticized by tech industry observers. (Comcast likens data to resources such as gasoline or electricity and says the caps are about “fairness,” even though broadband doesn’t work that way.) So far, the Federal Communications Commission has received more than 13,000 complaints about data caps, according to Cut Cable Today. A nationwide rollout could push complaints into the hundreds of thousands.
Criticisms of data caps might not amount to much in a country where Internet providers wield considerable lobbying power, but lately we’ve seen that these companies aren’t immune to consumer backlash. Last year, amid overwhelming consumer feedback, the FCC enacted new net neutrality rules that prohibit Internet providers from discriminating against certain types of traffic. And a few years ago, mass outrage helped kill SOPA and PIPA, two overly broad anti-piracy bills that were backed by media companies and the cable industry, and had widespread support in Congress before the consumer backlash.
The risk with implementing data caps on a large scale is that the outrage will lead to regulation. Already, the FCC has begun questioning Comcast over its latest streaming-video plan, which exempts its subscribers from the company’s data caps. Comcast argues that its service is exempt because it isn’t delivered over the public Internet, but if the FCC disagrees, it could put a major dent in the company’s plans.
Moving too slowly has risks for Internet service providers as well. Streaming services such as Netflix and Amazon Prime are exploding in popularity, making it harder for ISPs to enforce strict caps without major pushback.
Help for the afflicted
None of these hopes will be of much comfort to people whose consumption is already capped. But even for these beleaguered few, relief may be on the way.
For one thing, the tech industry is now figuring out better ways to compress streaming video, so that it requires less bandwidth. Next-generation formats such as H.265/HEVC promises to be 50-percent more efficient than current formats, and with some recent patent issues out of the way, the road is clear to wide adoption. Netflix is working on its own encoding scheme to reduce data use even further.
Data caps also become less of an issue if users can switch to another provider that doesn’t put limits on usage. While the U.S. broadband market is woefully short on competition, we’re slowly starting to see some progress on this front.
Last year, for instance, the FCC ruled that a pair of municipalities should be allowed to expand their own broadband to neighboring towns, over the objection of state lawmakers. One of those municipalities is Chattanooga, Tennessee, a market where Comcast now enforces data caps. For local cord cutters, switching to municipal broadband should be a no-brainer.
Google’s Fiber Internet service could also get more serious now that it’s been spun off under parent company Alphabet. You can imagine markets with data caps being prime targets for these new broadband efforts down the line.
Just because I’m optimistic doesn’t mean I’m ignorant. Data caps will likely become a major tech policy issue in the years ahead, and it’ll be up to consumers to speak out for better protections and more competition. In the meantime, cutting the cord is hardly a futile effort; if anything, it’s a way to align yourself with the right side of entertainment history.