Mobile and wired broadband providers should disclose detailed information about data caps, and the U.S. regulators should "vigilantly monitor" so-called usage-based pricing for abuses, digital rights group Public Knowledge said in a white paper released Monday.
Also on Monday, Public Knowledge asked the CEOs of the largest U.S. Internet service providers to provide detailed information about data caps. In a letter to four mobile carriers and five wired broadband providers, Public Knowledge asked the companies how they determined the correct penalties for exceeding data caps.
The letter also asked the CEOs what problems the data caps are trying to address and how they determined the proper caps.
Data caps "threaten" innovation on the Internet, wrote Gigi Sohn, Public Knowledge's president and CEO. "They turn connectivity into a zero sum game where every new application or activity must come at the cost of an existing one," she wrote. "Caps can freeze innovation in place, discouraging the development of beneficial -- even if data intensive -- technologies."
The letters went to mobile carriers AT&T Mobility, Verizon Wireless, T-Mobile USA and Sprint Nextel, and wired providers Verizon Communications, AT&T, Comcast, Time Warner Cable and Cox Cable. All the providers receiving the letters, except for Sprint and Verizon on its fiber network, have monthly data caps in place.
Public Knowledge announced the letters and white paper a day before a U.S. Senate Commerce, Science and Transportation Committee hearing on the growth of online video services.
Public Knowledge, Free Press and other groups sent a letter to the committee Monday, asking lawmakers to examine consumer harms from data caps.
Public Knowledge's white paper calls for broadband providers to be transparent about their data caps and to implement the caps selectively.
"Data limits and UBP [use-based pricing] that does not take time of day into account are ill suited to address service provider concerns about network congestion," the white paper said. "Network congestion is not a cumulative phenomenon. Instead, it occurs at specific times of day on specific parts of the network. A UBP scheme that does not recognize that cannot credibly claim to be designed to reduce network congestion."
The paper also calls on U.S. regulators to closely monitor data caps. "There are many market forces pushing service providers in this anticompetitive direction, and precious few guarding against it," the paper said. "Until there is robust competition among service providers to discourage network pricing manipulation, regulatory oversight is critical to maintaining a competitive landscape for services delivered over IP."
Government intervention in data-cap issues could lead to less carrier investment, countered Jot Carpenter, vice president of government affairs at CTIA, a trade group representing mobile carriers.
"Critics of data caps operate under the flawed view that networks should be free, ignoring that they are actually built and maintained through significant and ongoing investments by wireless and other broadband providers," Carpenter said in an email. "They also pay little attention to the need to ensure that the data consumption patterns of a few do not impact the ability for the other users to have a high-quality broadband experience."
Public Knowledge's call for pricing transparency is welcome, but the government oversight of data caps could lead to price regulation, added Randolph May, president of the Free State Foundation, a free market think tank.
"Make no mistake," May said in an email. "This type of government intervention ultimately would lead to rate regulation of Internet service providers not unlike the regime we had in the monopolistic Ma Bell-era. The difference now, of course, is that Internet service providers operate in a competitive environment and consumers have choices."
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is [email protected]