New report: Capping the nation's broadband future

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For Immediate Release
Monday, December 17, 2012

Media Contact
Clara Hogan
(202)-596-3368
hogan@newamerica.net

New Report from the Open Technology Institute Questions Necessity of Increasingly Costly and Restrictive Data Caps

Washington, DC —  A growing number of Americans are being forced to cap the amount of data they use, both on their cell phones and even at home, or face expensive overage charges. A new report from the New America Foundation's Open Technology Institute [OTI] found these increasingly costly and restrictive data caps are serving little purpose other than to raise the already high profit margins of broadband providers.

Internet service providers argue data caps are necessary to manage growing traffic and maintain quality of service on their networks. But the report, "Capping the Nation's Broadband Future?" explains the monthly caps rarely serve that purpose — instead, they are the product of an uncompetitive broadband marketplace where providers use data restrictions to increase revenues and protect legacy services such as cable television from online competition.

More services are moving online and into mobile applications, but the report warns that Americans who are worried about their data usage may be hesitant to use them. Broadband data caps affect not only activities such as streaming TV shows or making video calls, but also limit the use of an increasing number of online education courses for both adults and children.

"Data caps may be good for the short-term profits of broadband providers and please investors, but they are not benefiting innovation or access to the Internet," said OTI Policy Director Benjamin Lennett. "Costs for providing broadband connectivity are continuing to decline, yet Americans continue to face higher prices for a service that is no longer a luxury."

The technical rational for imposing monthly limits on all subscribers makes little sense when network congestion tends to occur at limited times of the day and in certain locations.  In addition, maintaining quality of service does not require Internet service providers to charge users exorbitant overage fees rather than pursuing less costly and punitive measures, particularly as the costs for operating broadband networks continues to decline.

"Even as Internet service providers complain to regulators they need caps to manage the flood of new data traffic, many boast to Wall Street of their rapidly declining costs for equipment and transporting data, despite adding more and more subscribers to their network," Lennett added. "Repeated calls [insert link to OTI/PK letter] from public interest groups urging the Federal Communications Commission to investigate the issue and require service providers to provide data that justify caps have been largely ignored."     

Read the full report, "Capping the Nation's Broadband Future?"

For more information or to schedule an interview, please contact Clara Hogan.

About the New America Foundation
New America Foundation is a nonprofit, nonpartisan public policy institute that invests in new thinkers and new ideas to address the next generation of challenges facing the United States.

About the Open Technology Institute
The Open Technology Institute formulates policy and regulatory reforms to support open architectures and open-source innovations and facilitates the development and implementation of open technologies and communications networks.