Broadband Data Caps Mysteriously Disappear When Competition Comes Knocking

from the funny-how-that-works dept

We’ve noted for years how broadband data caps (and monthly overage fees) are complete bullshit. They serve absolutely no technical function, and despite years of ISPs trying to claim they “help manage network congestion,” that’s never been remotely true. Instead they exist exclusively as a byproduct of limited competition. They’re a glorified price hike by regional monopolies who know they’ll see little (or no!) competitive or regulatory pressure to stop nickel and diming captive customers.

The latest case in point: Cox Communications employs a 1,280 GB data cap, which, if you go over, requires you either pay $30 per month more for an additional 500 GB, or upgrade your plan to an unlimited data offering for $50 more per month. While Cox’s terabyte-plus plan is more generous than some U.S. offerings (which can be as low as a few gigabytes), getting caught up in whether the cap is “fair” is beside the point. Because, again, it serves absolutely no function other than to impose arbitrary penalties and additional monthly costs for crossing the technically unnecessary boundaries.

And, mysteriously, when wireless broadband providers begin offering fixed wireless services over 5G services in limited areas, Cox lifts the restrictions completely to compete:

“With unlimited home wireless broadband from T-Mobile and Verizon starting to take a dent out of Cox Communications’ customer base, the cable operator is shoring up a defensive position by waiving its arbitrary data cap for existing customers signed up for gigabit speed service in select areas…The fact Cox is willing to waive its own arbitrary data cap for marketing and competition reasons further demonstrates that artificial limits imposed on internet service have nothing to do with congestion, “fairness,” or network management.”

The problem, of course, is that 5G wireless competition isn’t consistently available, and won’t be for millions of Americans deemed too unprofitable to adequately serve. 83 million Americans live under a broadband monopoly that sees no competitive pressure. And whereas in a functioning market regulators would then step in to either regulate prices or embrace policies that drive more competition to market, the U.S. generally suffers from regulatory capture (aka doing whatever the regional and politically powerful telecom monopolies want). As a result, the U.S. remains mired in mediocrity in nearly every meaningful broadband metric except one: we exceed at charging U.S. consumers way more than the global developed nation average.

Like net neutrality violations, privacy violations, high prices, and terrible customer service, arbitrary, confusing, and punitive broadband usage caps are just another symptom of limited competition. But the majority of both U.S. political parties not only haven’t been doing anything to fix that problem, it’s fairly rare you can get anyone to admit the very obvious problem is even real. Instead, we get some nebulous hand waving about the “digital divide,” billions more in tax breaks, subsidies, and regulatory favors thrown at entrenched regional monopolies, and little substantive change.

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Comments on “Broadband Data Caps Mysteriously Disappear When Competition Comes Knocking”

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30 Comments
Marcussays:

competitive markets

("in a functioning market regulators would then step in")

There are no government regulators in a functioning market.
To assume regulation is a fundamental requirement of satisfactory economic markets is a popular but incorrect ideological viewpoint.

Regulation is never some objective rational optimizing of markets.
Regulation is always political interference that degrades markets.

The BroadbaBand markets are already loaded with heavy regulation; that is the problem, restricting genuine market competition.

When you let politicians/regulators control buying and selling in markets — the first things bought and sold are politicians and regulators.

That One Guysays:

Funny how little it takes for them to shoot their own argument

ISP: We need caps because otherwise our network would get clogged up and that would be bad for everyone!

ISP after facing the dreaded competition: So, funny thing, turns out our networks will work just fine without caps so as long as that other company is offering service in this area we’ve temporarily done away with them.

Anonymoussays:

One of the main tricks of capitalism is shame. They want YOU to think that YOU FOULED UP, you are a BAD PERSON, and you can ATONE for your wicked sins by PAYING THEM. And that’s an absolute with every product and transaction you can think of. You should have paid by the deadline. You should have known that the flimsy cap on the new plastic pepper container would come off and spill it all over the floor. You should have known the flimsy cap on the COVID wipes would stay open and dry them out in the car. You should have known that the plastic latch on the microwave had to be babied*, and that no one would be allowed to 3D print a new one for you for less than half the cost of a microwave. You should have known the soda you bought at Wal-Mart would ring up for 50% more at the register – shame on you for not noticing the price. You should have known there was a recurring fee. You should have stayed on the phone line another two hours so you could cancel! So many, many, many sins, and always the atonement the same: pay, pay, and pay again, with nothing to show for it but the Forgiveness Of Those Above You.

Ehud Gavronsays:

Wait... I get billed and the line item is "because we say so"?

When my bank tells me that after 10 "foreign" ATM transactions per month all the rest have a surcharge, I understand that’s part of the contract that other people sign.

Still they send me a lit of dates, times, locations, and transactions. That should convince me [or others who have signed said agreement] that the charges are legitimate.

Cox, Comcast, TW, AT&T, etc. don’t provide ANY proof of the bandwidth overage. It’s not difficult. They could use free and open source software (https://www.google.com/search?q=foss+bandwidth+monitoring) and send the resulting information to the person unfortunate enough to be their customer.

You don’t really get to "charge the client whatever we say without any proof they used the service beyond the first high-water mark."
I can’t wait for my current provider (it’s in the list above) to charge me for an overage without providing said data.

Probably this is a factor in why I recently was told I AM over my limit but I get a freebie… so no charges this month.

What are the legalities in claiming someone "took" or "used" or "stole" something, billing them for it, but providing no information to substantiate it? We’ll find out when they actually do it.

Ehud
Tucson AZ US
(CenturyLink, Comcast, Cox territory)

Ehud Gavronsays:

"Foreign fees"

Those foreign ATM transactions actually cost your bank in transaction fees…

Classic example of begging the question, assuming that facts not proven are true.

NO, those "foreign" transactions do not cost my bank anything. That it is accepted as a given and the hand is waved as if to say "Well, this fee is ok, because it costs them" is a failure to inquire, comprehend, and refuse the fees.

I use several banks. Here are the ones off the top of my head:
NASA Federal Credit Union doesn’t charge foreign fees.
Pentagon Federal Credit Union doesn’t charge foreign fees.

It’s not "normal" it’s just that suckers are used to bending over for it so they think everyone else should. Worse, they call out people who disagree because they are so used to bending over they thing it’s natural. BUT ISPs shouldn’t.

ISPs shouldn’t bill for BOTH connectivity and bandwidth. ISPs shouldn’t bill for "upstream" and "downstream" (colloquially "blow" and "suck"). ISPs should bill for what they pay for – infrastructure, installation, support, etc. Whether your connection is 1Mbps or 1Gbps or more… those costs are generally (except for port type on switch during installation) the same.

If they can’t, those ISPs should close up shop. ISPs are not cable companies or phone companies — those are telecommunication carriers. They do have a corporate (or company) division that provides Internet Service on their infrastructure. It stands to reason they want to pile on whatever fees they can. That doesn’t make it right, fair, just, or equitable. Also this is purely a US thing. When comparing "rates" with Denmark, England, Turkey, Israel, Egypt, etc. these "fees" only exist in the United States. Sucks to be US.

Imagine if your local supermarket said "Oh, we also charge an additional fee by the bag. You used 6 bags, and 2 were double bagged, so here’s your fee." Would you just accept that and wave your hand and pretend "that’s just how things are"?

There’s a sucker born every minute. Try not to be one.

E

Anonymoussays:

Re: competitive markets

Only in ‘merica, where the claim "that is socialism" can be used to scupper any proposed legislation to benefit the consumer. In the UK, the infrastructure is heavily regulated, including making it available to competing ISP’s. As a result. unlimited broadband with no data caps is available to most people at a reasonable price.

Also, UK regulation is carried out at arms length from the politicians, avoiding the cronyism and regulatory capture that plagues US regulatory effort. Changing the direction of UK regulators actually requires parliament to pass a law, where a US president can make reverse an agencies course, or weaken it effect by appointing someone to head the agency.

PaulTsays:

Re: competitive markets

Ah, the siren call of the American so brainwashed by the laws written by ISPs that he doesn’t realise he’s paying more for and getting less than people in countries with actual regulation.

"the first things bought and sold are politicians and regulators"

…and who are buying those people? The corporations whose "free market" you’re rushing to defend here.

Marcussays:

Re: Re: competitive markets

Ah, so you have remotely diagnosed me as "brainwashed" and therefore my obviously defective mental capacity entirely negates my viewpoint.
How convenient for you.
(sounds like just a personal insult– isn’t that frowned upon here)

Corporations that buy politicians/regulators are not engaging in a free functioning market and no one here is defending that routine corruption — that is entirely your very weak straw man.

Please consider a serious approach to the original topic.

PaulTsays:

Re: Re: Re: competitive markets

"Ah, so you have remotely diagnosed me as "brainwashed" and therefore my obviously defective mental capacity entirely negates my viewpoint."

I have remotely diagnosed you as repeating the same tired bullshit as the pro-corporate echo chambers always spout that contradicts documented reality, yes.

"Corporations that buy politicians/regulators are not engaging in a free functioning market"

That’s true – but the existence of regulators is not the problem, despite your claim that I was responding to.

"Please consider a serious approach to the original topic."

The original topic is that ISPs in the US, when exposed to the same type of competition that regulators impose in other countries, suddenly provide better service.

My serious approach is "I’ve enjoyed better internet than the average American directly due to effective regulation, and I hope this happens in the US". I don’t know why you went "duurrr regulators bad", but given your parroting of the most tired propaganda, I don’t believe it’s coming from an honestly held position free of "brainwashing".

Anonymoussays:

Re: Wait... I get billed and the line item is "because we say so

Those foreign ATM transactions actually cost your bank in transaction fees, while extra bandwidth usage costs you ISP about $0. The banks have to keep accurate records of every cent, and settle up with each other at regular intervals. The ISP just has to switch packets, and can forget about them as soon as the they forward them, or drop them if their network is congested.

Anonymoussays:

Re: "Foreign fees"

NO, those "foreign" transactions do not cost my bank anything.

Are you certain of this, or is that just your conclusion because the banks you use don’t charge you the fee? Some brief internet research tells me that it depends on the bank. Some charge other banks to use their ATMs, some don’t. In many cases it looks like they just charge the end-user.

I use several banks. Here are the ones off the top of my head:
NASA Federal Credit Union doesn’t charge foreign fees.
Pentagon Federal Credit Union doesn’t charge foreign fees.

That they don’t charge you fees, does not mean they don’t incur them. They might just be eating the cost as a value-added service to their customers.

Imagine if your local supermarket said "Oh, we also charge an additional fee by the bag. You used 6 bags, and 2 were double bagged, so here’s your fee." Would you just accept that and wave your hand and pretend "that’s just how things are"?

Of course the supermarket has to pay for those bags. The cost of those bags is typically absorbed into the price we’re paying for groceries, though. We’re used to it being that way, so we’d balk at the idea of a grocery store now adding a fee for bags, but it’s not out of the realm of possibility. However, in what could be a good PR move, the store could reframe the bag fee as a "discount if you bring your own bags." We might be more accepting of that, perhaps?

PaulTsays:

Re: "Foreign fees"

"NO, those "foreign" transactions do not cost my bank anything"

Banks have agreements as to fees charged to transfer money internationally, and depending on the banking system may apply to different banks within the same country.

Some banks may choose to adjust their fee structure in different ways so that you don’t see these directly as an end consumer, but that doesn’t mean they’re not there. Whereas, ISP caps are more about network management, which is why some US ISPs make huge fees on their caps and many ISPs in other countries don’t have caps at all, even though the charges are essentially for visiting the same sites.

At the end of the day it’s all about how the services are managed and regulated, but outside the US the regulation tends to be more effective and more focussed on the consumer.

PaulTsays:

Re: Re: "Foreign fees"

Or they have agreements with the banks in other countries, or regulators force them to behave differently.

A great example of this in another industry is with mobile providers in the UK. There is an EU rule in place where they’re not allowed to charge roaming fees within the EU. Guess what happened when Brexit’s gone through? They opted to charge again not because the charges didn’t exist before, but because they’re no longer in the agreements that allowed them to hide them. It’s bad for the end consumer, no matter whether the reason they didn’t have them while in the EU was because they negotiated a deal or because they hid the costs elsewhere – a British tourist accidentally streaming a movie via 4G is still going to be hit with a larger bill than they did.

Ehud Gavronsays:

Re: Re: Wait... I get billed and the line item is "because we sa

I get where you’re coming from… so here’s an analogy in another direction:

You want to open up a gas station. You put in one tank, and two pumps. Your price is market friendly so your real advantage is
your location is ideal, easy in/out, and if someone hits the "Service"
button someone comes right out and pumps fuel and runs their card (useful for disabled drivers).

As you continue word gets out, and now the pumps are full most of the day. You even see people slow down and signal — only to see no available pumps — and drive away.

You buy another tank, and more pumps. The second tank is for #2 Diesel, and it goes to the second nozzle on the new pumps. So now not only can you serve more people, but contractor/construction vehicles as well.

Do you raise the prices because you had to pay for pumps, the tank, and related permitting and shipping? No, you don’t.

Analogy #2: Same thing only with PaulT’s Deli. You have one display cooler, a bunch of hard to find meats, cheeses, olives, etc. People come from all around.

But then you notice some turn away when they see the lack of parking, or the line inside.

So you make a deal with the business next door and now parking is available. You buy a second cooler, second PoS terminal (or use Square…) and more people are buying your deli stuff. That second person you hired to run the second terminal can also make sandwiches in between customers so premade sandwiches in the deli case makes for easy in/out inside, and quicker churn in the parking area.

You have to pay for the cooler, and then monthly for the parking and your new employee. Do you raise the rates? No.

Back to bandwidth. You have a large pipe to your upstream and either a fixed cost fixed bandwidth or burstable service. You sell service to residential (inbound b/w) and businesses with web and media servers (outbound b/w) such that your in/out balance is such that nobody in his right mind would penalize you — you can just go elsewhere.

People love your service and more and more sign up. You buy a bigger router with a redundant backbone, a bigger UPS, and even a fully-automatic standby generator. All this costs you money. Do you raise the customers’ rates — no. If they went elsewhere you’re still stuck with the payments.

Enter the duopoly in the US of Telco+CableCo. Can your customers REALLY leave you? Yes, they’ll go to one of your business customers and subsidize that business connection with their monthly payment.

When dealing with expenses not directly attributable to the new customers, it’s difficult to justify without lying charging them more…

E

PaulTsays:

Re: Re: Re: Wait... I get billed and the line item is "because w

Any analogy with a physical good is going to fail because there’s fixed costs and economies of scale that an individual supplier cannot overcome on their own. You can’t share supply between 10 customers if they all want salami and nobody wants olives but you got equal stock of each and they all have to use the same parking lot. You can share bandwidth if some signed up for email and others use 4K Netflix streams on multiple devices, and some use a phone and others use a PS5.

"Enter the duopoly in the US of Telco+CableCo"

You will notice that as someone who doesn’t live in the US I don’t have that problem. The ultimate issue is that after years of crippling regulators and buying out lawmakers the ISPs are free to rip off customers on a greater scale, but they ultimately don’t face the same restrictions as the retailers of a physical good do.

The point is – these corporations will rip off consumers any chance they get unless competition or regulation tells them otherwise. That you’re in a market that has neither doesn’t change this fact.

Tomsays:

Re: Re: Re: Re: competitive markets

You are completely disregarding that in cities in the US there is competition with ISPs. The areas where competition is lacking would be suburbs and rural areas. In the country you live in the number of people per square mile is similar to the medium size cities in the US. Comparing your country with its small size to that of the entire US is ridiculous. Regulations are good for things where safety is involved. Regulations are bad for areas where competition and or consumer choice can solve the problem. Once broadband is available in more areas in the US competition will exist and they will be forced to improve service as well as price. Name calling and or judging people by their comments in the way you did isn’t helping this topic at all. Lets all try practicing being adults and leave childish comments to politicians.

PaulTsays:

Re: Re: Re: Re: Re: competitive markets

"You are completely disregarding that in cities in the US there is competition with ISPs"

No, I’m not, since that’s not true. For example, many apartment buildings in New York do not give their tenants any choice of what service they have, even if there are technically others available in the city. There might be competition for the owners of the building to make their choice, but the resident has zero options.

"Comparing your country with its small size to that of the entire US is ridiculous"

This is why you fail – there’s always an excuse as to why you can’t do what everyone in the world is doing, so you accept the worst (see also: transport, healthcare, etc.). Nobody’s saying that another country’s infrastructure can map perfectly on to the US, only that everyone else seems to manage much better than you do with options in many markets.

There are places in the US where it’s not possible to do a direct comparison. There are places in the US where the market would be identical to what many other countries have, had the incumbent players not written the rules to make it impossible and removed the regulations that would return power to consumers.

"Regulations are bad for areas where competition and or consumer choice can solve the problem"

Whereas, in the rest of the world, regulation is often what created the competition to begin with, and it’s what forces the industry to remain competitive. You often have the illusion of consumer choice in the US, but realistically there’s not much difference because the lack of regulation means that price fixing, collusion, etc. are the way the game is played.

The choice I have in my area has little to do with the size of the market, it’s that regulators control things like preventing bandwidth caps, ensuring that incumbent infrastructure providers are forced to share infrastructure with competition, ensuring that prices be within certain standards without a US-style litany of hidden charges, etc.

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