Time Warner, Charter won’t be able to charge usage-based pricing as condition of merger.
Broadband Data Caps:
Read in 1 minute
On Monday, the U.S. Federal Communications Commission took its opening shot against broadband data caps by banning Time Warner and Charter, two merging cable companies, from imposing them on customers.
The ban comes as a condition of the regulator approving a tie-up of the cable giants. The merged entity will not be able to go anywhere near usage-based pricing for at least seven years, meaning that its 19.4 million customers will be able to stream and download as much as they want.
The move will also act as a warning to other U.S. internet providers, notably Comcast, that are starting to roll out their own data caps. With such a ban taking effect, Comcast and others might start rethinking their plans.
The FCC clearly has its sights set on the artificial limits, which are commonly understood to be cable companies’ best tool for discouraging customers from cutting their TV subscriptions. Caps harm choice and innovation by requiring users to limit their internet consumption.
Indeed, the FCC’s edict comes just a few days after a Wall Street Journal story about how such caps are forcing some users into keeping their TV service. Many are streaming shows and movies until they hit their cap, then they resort to plain old TV.
“I wouldn’t have regular TV if not for the data cap,” one subscriber told the newspaper. “Comcast has got me by the throat.”
Meanwhile here in Canada, there’s a veritable collective choking sound thanks to data caps that have been in place for years. Canada is one of the few developed nations where capped broadband plans are the norm rather than the exception, according to the OECD.
Unlike its American counterpart, the CRTC hasn’t just tolerated caps, it has endorsed them as acceptable “economic measures” for managing supposed network congestion.
It’s ironic that the regulator is currently in its third week of hearings on how it should approach broadband going forward.
The CRTC should take this opportunity to emulate its veritable American cousin by moving against broadband data caps, which exist only to fatten service provider profit margins.