ISPs tell government that congestion is “not a problem,” impose data caps anyway

After consulting focus groups of Internet customers, government researchers have come to a conclusion that should surprise no one: people don’t want data caps on home Internet service.

But customers are getting caps anyway, even though ISPs admit that congestion isn’t a problem. The US Government Accountability Office (GAO) today released preliminary findings of research involving surveys of cellular carriers, home Internet providers, and customers.

The majority of top wireline ISPs are at least experimenting with data caps. But while cellular carriers say they impose usage-based pricing (UBP) to manage congestion on wireless networks, that’s not the case with cable, fiber, and DSL. “Some wireless ISPs told us they use UBP to manage congestion,” the GAO wrote. On the other hand, “wireline ISPs said that congestion is not currently a problem.”

Why set up data limits and charge extra when users go over them, then? “UBP can generate more revenues for ISPs to help fund network capacity upgrades as data use grows,” the GAO wrote.

The GAO said it interviewed “some experts” who think usage-based pricing “may be unnecessary because the marginal costs of data delivery are very low, [and] heavier users impose limited additional costs to ISPs.” Limiting heavy users could even “limit innovation and development of data-heavy applications,” the GAO wrote.

Customers told the GAO they don’t want data caps, at least on home Internet.

Eight focus groups of nine or 10 people each were polled about data caps on both cellular service and wireline home Internet. While they were generally accepting of limits on cellular data, most did not want any limits on home Internet usage, in part because they manage limited wireless plans by connecting mobile devices to their home Wi-Fi. The GAO wrote:

In only two groups did any participants report experience with wireline UBP [usage-based pricing]. However, in all eight groups, participants expressed strong negative reactions to UBP, including concerns about:

• The importance of the Internet in their lives and the potential effects of data allowances.
• Having to worry about data usage at home, where they are used to having unlimited access.
• Concerns that ISPs would use UBP as a way of increasing the amount they charge for Internet service.

While all four major cellular carriers impose some form of data limits, seven out of the 13 top wireline ISPs surveyed by the GAO have deployed usage-based pricing “to some extent.” Some of the limits are more strict than others, the GAO said:

• Three wireline ISPs use UBP with data allowance tiers and impose overage fees on customers who exceed allowance. (Overage fee charges are generally $10 a month for 50 GB of additional data.)
• Two have data allowance tiers but do not impose fees for overage.
• One offers a voluntary low-data plan at a discounted rate.
• One is testing UBP approaches that include overage fees in select markets of varying sizes.

The GAO didn’t name any specific ISPs, but they are publicly known. GigaOm surveyed 15 ISPs last November and found that eight capped data, at least for some customers. Those ISPs with data caps include Comcast, AT&T, CenturyLink, Cox, Charter, Suddenlink, MediaCom, and CableOne.

What’s next? Well, probably nothing.

This information isn’t likely to cause any immediate change in government policy. The GAO report came in response to a request in May 2013 by US Rep. Anna Eshoo (D-CA). Preliminary findings were summarized in a slide deck (see it here), while a more extensive report is expected in November.

Eshoo plans to share the findings with the Federal Communications Commission. “Now in the midst of the net neutrality debate, the topic of usage-based pricing is more relevant than ever,” Eshoo said in a press conference. “While much of the talk has focused on the anti-competitive impact of fast and slow lanes, data caps, particularly when applied discriminatorily, could have the same damaging impact on the free and open Internet as we know it.”

The FCC is planning to implement net neutrality rules that would prevent blocking of applications and guarantee a minimum level of service. The FCC also last week reminded wireline ISPs and cellular carriers of their obligations to disclose accurate information about network management practices, performance, and the commercial terms of their services. The FCC hasn’t proposed any restrictions on data caps and usage-based pricing, however.

The focus groups interviewed by the GAO included both heavy and light Internet users and “a mix of ages, races, genders, and education and income levels.” The participants were drawn from Baltimore, MD; Des Moines, IA; Las Vegas, NV; and New York, NY.

While the focus group participants generally didn’t object to wireless data caps, they expressed “confusion regarding wireless data usage,” including “uncertainty over plan details, such as their data allowance,” and “uncertainty whether their plans were subject to throttling.” (Hint: they are being throttled.)

The focus group participants were accustomed to not having to consider wireline data usage, and their opposition to home Internet data caps was “in part driven by confusion about the amount of data used by Internet applications,” the GAO concluded. But while focus group participants seemed to overestimate the amount of data used by activities such as online shopping and “leaving social media applications running in the background,” they were savvy enough to limit their use of video streaming on cellular networks and save data by connecting wireless devices to their in-home Wi-Fi networks.