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Monday, September 29, 2014

How data caps are affecting Internet development

By Jodi Grant

Since the internet came into mainstream existence, one thing is for certain: there have been multitudes of innovations and many new technologies developed as a result. In fact, in just the last few years, growth and innovation online has been unprecedented. In addition to the highest-ever quality available for online video streaming, consumers can now pick and choose from a number of new digital platforms to access rich online content. The benefits of these innovations are virtually endless to anyone using the internet for any reason.

But the landscape is changing. Data caps have now come on the scene, much to the chagrin of internet customers who want to keep accessing high-bandwidth content without penalty. Some say that data caps are simply an engineered solution to a make-believe crisis, and that all they do is create a climate of scarcity, doing nothing to help the internet continue to innovate at the pace it was comfortably keeping.
Internet data caps and ecommerce
Internet data caps limit the available use of online bandwidth

An unmetered environment, and the data cap myth

Much of the innovation which has occurred online over the years was due to the fact that the internet was not controlled by caps and other limitations. But now, internet companies have decided to do what they can to curb their customers' usage of the service. And this is costing customers more. For the part of the ISP, they say that curbing usage with data caps is necessary, as the more traffic grows on their networks, the lower the quality of service their customers will receive.

However, the rationale behind using data caps to address network congestion is, according to experts, fundamentally flawed. Limiting customer usage does not appear to make sense, especially since the cost to provide service is declining for ISPs, and rapid technological advancement is allowing more alternatives to data caps to be developed than ever before.

Interestingly, the data cap makes no sense where a wired internet provider is concerned. This is because transmission speeds are being increased and costs lowered by network equipment manufacturers. And yet, consumers are paying the same, if not more than they used to for their internet service.

Cable industry comes clean

It was recently admitted that data caps have nothing to do with the congestion being experienced by consumers accessing the internet. And the person who admitted it was a former FCC chair. To an audience, this individual admitted that congestion isn't the reason for the imposition of data caps. Instead, they were a tool used by internet companies to help them more fairly monetize their high fixed costs. This is quite the departure from the data cap information that's being communicated from other sources. And so it would seem there are two sides to this story, the one that's being told to consumers, and the one that the companies themselves are telling with the purpose of fueling their own sustainability.

No competition = End of choice?

This is a tune that many have heard before; that without competition to drive the innovation that gives us variety in the internet provider arena, there will be no variety. What's happening now, according to many is that competition amongst ISPs is dwindling, which has caused the rampant imposition and usage of data caps by ISPs.

This practice has served to make the business of providing internet services an incredibly profitable one. In addition, the introduction of tiered pricing and data caps are also producing unprecedented revenue for those who offer mobile internet services. Of course, these tiered and capped models were introduced with the announcement that unlimited plans would no longer be available.

It is being increasingly believed that the introduction of data caps is a bad thing, both for consumers and for innovation. On the consumer side, it's about more than simply having access to rich online content for entertainment; it's about being able to access public, emergency, health and educational services online, something that may not be possible should data capping make internet access more difficult that it is currently.

Lack of competition will serve to stifle the innovation that has been occurring with the internet thus far. And this will mean fewer developments which attract and retain customers, which could have far-reaching consequences for everyone who counts the internet as a part of their daily lives.

About the author:  Jodi Grant writes on a variety of topics, particularly related to technology.  She recommends www.high-speed-internet-service-providers.com, a site dedicated to helping consumers find internet providers in their neighborhood through a unique and helpful methodology for comparing available options.

Image license: Smartphotostock.com