To sum up the conclusion of the report: caps do not help ensure quality of service, as operators claim. The problem is caps are not employed directly to limit congestion, but at best indirectly. Congestion occurs at peak times, while caps are calculated over a full month. To compare it with a similar situation: traffic jams cannot be eliminated by setting a maximum number of kilometers per month for each driver. Using the car less during peak hours is simply not possible, as this is mainly needed for home-work travel. If drivers do take the car out less, it will mainly related to off-peak journeys.
The Open Technology Institute goes further with its conclusion that caps don't work, as these quotes underline:
- Data caps do not address network congestion. As the example of peak traffic shows above.
- Data caps are about protecting legacy services. This is a reference to video services provided by (cable) operators, the incumbents on the TV market. The caps ensure that over-the-top services are offered at low quality. See for example Netflix, which offers HD at less than 4Mbps.
- Data caps are good for business. This refers to the ‘overage fees’, the out-of-bundle costs that are making service providers highly unpopular.
Back to the internet world. There is another argument against the caps. It's not just that they don't work, but curbing traffic is bad for the economy. Not only would governments like to see all sorts of public services shifted to the online world, but there are also social and economic benefits. From a public perspective, parsimonious bit use is not good. This is line with the scarcity thinking over which we have written before.
Breedband Arnhem is a small operator that has embraced this idea. It started in July 2011 offering 1Gbps for EUR 375 per month and has since cut the price to EUR 99. The company's philosophy is clear in its literature: “At Breedband Arnhem we believe that access to the internet, information and communication together are as essential as oxygen in the air (…) The current providers artificially keep bandwidth scarce and speeds low in order to boost their profits. With our new offering of affordable fibre broadband connections we are trying to show how in practice this scarcity does not exist at all!"
The scarcity-abundance opposition is not the only issue here. This also points directly to the price-volume equation. Revenue = price x volume, and Breedband Arnhem is clearly not out to maximize revenue through high prices. What remains is volume. And with a nice price of EUR 99 for a 1Gbps connection there is very likely a market out there for this.
