How Companies Are Using Data Caps to Harm Would-Be Cord Cutters

Broadband data caps are like cockroaches: One minute there’s just one lonely roach, and then the next minute they’re everywhere.

Last week the Wall Street Journal published a deep dive on this infestation. The piece examines the impact of data caps on Internet users and would-be cord cutters. As the article notes, data caps are increasingly common and are prevalent not just for mobile connections but wired ones too — and the damage they do is very real.

“I wouldn’t have regular TV if not for the data cap,” Memphis resident Rodger Rice told the WSJ. “Comcast has got me by the throat.”

Since 2015, more than 10,000 people have submitted complaints about data caps to the Federal Communications Commission. But companies like Comcast and AT&T are forging ahead, hoping these trumped-up limits and steep penalties become the industry standard.

These data caps aren’t technologically or economically necessary. Connecting your home to a cable network can be expensive for your broadband provider, but the marginal cost of providing another gigabyte of data once you’re already connected is negligible. And cable providers already charge more for plans that offer faster speeds, which makes sense because speed is all about how much of the “pipe” a customer is using at a particular time.

In light of all this, monthly caps are a joke. Comcast claims that its 300GB data caps ensure “fairness.” Marcien Jenckes, the company’s executive VP of consumer services, told the WSJ that “people who are consuming the most should carry more of the bill rather than raise everybody’s bill by the same amount.”

But that makes sense only if the people consuming the most cost Comcast more than everyone else. Since the marginal cost of data use is so low, the company is under no real pressure to raise anyone’s bill. For Comcast, fairness actually means unlimited power to raise your prices.

In reality, these data caps are completely arbitrary. That’s why it’s so easy for companies like Cox and Comcast to exempt their own content from caps, or for AT&T to give you unlimited data as long as you also buy its pay-TV service.

Jonathan Williams, a professor at the University of North Carolina, attempts to defend these indefensible practices in the Wall Street Journal piece. He claims that when someone cuts the cord, their online streaming usage jumps by more than 30 percent. According to Williams, that means broadband providers are “all of a sudden bearing all the costs associated with somebody else’s service.”

Now that’s just plain silly. Of course broadband providers bear the costs of delivering data to users. That’s what broadband providers do. They carry Internet content from point A to point B, regardless of who owns it. It’s no special burden for Comcast to deliver Netflix content instead of HBO GO (or its own online video, for that matter).

But Williams is right about one thing: Your broadband provider doesn’t want you to cut the cord, and they’re using data caps to stop you. Cable providers like Comcast have every incentive to stifle competition from online video services, and they own the pipes these competitors need to reach viewers. By raising the price of data consumption, cable companies effectively punish viewers for watching online video, and make their own pay-TV bundles look more attractive in comparison.

This practice doesn’t just hurt online video services. It also hurts viewers. Families trying to monitor their data consumption and avoid hitting company caps are forced to cancel subscriptions to online video platforms they enjoy, downgrade their video quality or avoid video entirely.

“I love Netflix,” one Comcast customer told the WSJ, “but it makes no sense for me to pay for Netflix when I’m going to get charged by Comcast two or three times that as a result.”

If customers fail to cut back on their video consumption, then data caps force them to pay more for an unlimited data plan, fork over more money in overage charges, or purchase a cable subscription so they can keep watching video even after they reach the cap. And this isn’t just about video, because killing off competition and driving up prices makes every Internet user suffer — no matter how they use their connections.

Broadband prices are already too damn high, and data caps are twisting the knife. At a time when Blacks and Latinos lag behind whites in broadband adoption by 16 percentage points, when families making less than $25,000 a year are only half as likely to have Internet access as those earning $100,000 or more, and when 65 percent of disconnected Americans cite high prices as the primary barrier, wired broadband data caps are an insult to all those stranded on the wrong side of the digital divide.

Communities working to overcome decades of racial and economic oppression shouldn’t be forced to tighten their belts even further just to pad the revenues for Comcast’s pay-TV business model.

Original photo by Flickr user Andre Sa