Data caps do not address network congestion.

The main challenge for network en-

gineers is how to deal with demand during peak hours. The critical factor is the time of day when an indi-
vidual uses data, not an individuals aggregate data consumption over the course of a month. Even major
ISPs have acknowledged this:
In a disclosure document required by the FCC, Comcast admitted that data
cops "do not oddress the issue oj network congestion, which results jrom trojc
levels that vary from minute to minute.
The cost of delivering broadband service is decreasing, not increasing.
The price of service is often cited as a justification for data caps. However, declines in network equipment
costs and costs to move data, including IP transit, mean that ISPs are now spending less while profiting
from more customers.
17%
decrease in cost of
network operation
Tnis trcnd is rcjcctcd in u ccnpuriscn
cj Ccncusts dcc|ining quurtcr|y cpcrut-
ing cpcnscs uguinst its grcwing cus-
tomer base from Q4 2007 to Q4 2010.
Evcn us it udds ncrc uscrs, Ccncust is
spcnding |css tc cpcrutc tnc nctwcrk.
CAPPING THE NATIONS
BROADBAND FUTURE?
Dwind|ing ccnpctiticn is juc|ing tnc risc cj incrcusing|y ccst|y und rcstrictivc dutu
cups cn !ntcrnct usugc in tnc Unitcd Stutcs.
Forecasts of a flood of mobile data have been overblown.
Carriers have justified caps by pointing to the imminent explosion in mobile data
usage. However, the projections they relied on have since been proven inaccurate: in
2008, for example, Cisco Systems projected that mobile data traffic would increase
18-fold by 2012. In 2011, when it became clear that this prediction would not come
true, the number was reduced to roughly 60% of the original projection.
25%
increase in number
of subscribers
Comcasts High-Speed Internet Service Explained: Customer
Growth vs. Network Expenses
$150
$143
$122
$136
$129
2007 2008 2010 2009
Avg. No. of High-Speed Internet Customers Avg. Quarterly Operating Expenses
17
16
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15
14
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Data caps are about protecting legacy services. The Justice Departments probe into
data caps drew attention to the ways in which cable companies attempt to use caps to protect their legacy
video services from new digital competition. These concerns are well-founded. A 2011 Credit Suisse pre-
sentation intended to advise cable ISPs outlined the ways in which data caps discourage consumers from
using web-based services:
Data caps are good for business. Verizon Wireless and AT&T Wireless have turned to
tiered data plans for revenue generation, earning growing profits from data overage charges in recent
years. In fact, AT&T told investors in a presentation in March 2011 that acquiring T-Mobile would be an
opportunity to implement attractive tiered data plans and enable data growth to be mon-
etized since at the time T-Mobile did not charge overage fees for excess data use.
For more information about data caps, read the full paper published by the New America
Foundations Open Technology Institute, Capping the Nations Broadband Future?
http://newamerica.net/publications/policy/capping_the_nations_s_broadband_future
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cn u pcr-gigubytc busis wncn tncy c-
cccd ncntn|y |inits. Tnis cnurt sncws
tnc grcwtn in uvcrugc rcvcnuc pcr
uscr jrcn rctui| pcstpuid dutu bctwccn
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dutu p|uns tc ticrcd pricing p|uns.
[O]ver the longer term, consumption based billing could reduce the at-
troctiveness oj over-the-top video options (e.g., Netix ond Huluj, os the
economic attractiveness of such over-the-top options could be partially
offset by a [broadband] bill that is higher, due to overage charges that
would be driven by large amounts of data being streamed via a customers
connection.
Average Revenue Per User from Retail Postpaid Data
$30
$26
$14
$22
$18
2009 2010 2012 2011
AT&T Verizon
59%
increase in ARPU
from postpaid data
for Verizon Wireless
53%
increase in ARPU
from postpaid data
for AT&T Wireless