5 Things We Learned From The GAO Report On Broadband Caps

(Pam)

(Pam)

Broadband data caps might not be affecting everyone just yet, but that could easily change as the current wave of ISP merger mania continues. A preliminary government report taking a look at data caps, both wired and wireless, was released this week. It finds that ISPs and subscribers are far from being on the same page when it comes to how much data consumers move.

The Government Accountability Office (GAO), at the behest of Rep. Anna Eshoo of California, looked at broadband data caps by examining ISPs policies, conducting focus groups with the public, and interviewing tech experts and public interest advocacy groups.

The report (PDF) is still preliminary; the final version won’t be released until November. Even so, though, the report is a good gauge of the pitfalls and potential benefits of usage-based pricing plans. The short version? Consumers don’t feel they’re getting all of the info they need, and are worried about their home and mobile broadband providers soaking them for extra cash.

1.) Everyone expects limited data on their phone; nobody wants it on their home network.
The GAO looked at four mobile carriers and 13 wireline ISPs. All of the wireless companies employed metered data usage, but only seven of the 13 traditional broadband companies did.

In all eight focus groups the GAO conducted, participants “expressed strong negative reactions” to the idea of metered or capped broadband at home. Consumers observed that the internet is increasingly important to all aspects of their lives and that having reduced access could be harmful, particularly to students, telecommuters, and lower-income households.

They also did not want to have to worry about data usage at home, after years or even decades of being used to unlimited access. And participants also worried that ISPs would use broadband caps as a way of jacking up prices for internet service.

2.) Consumers are confused about how much data they use, and the tools ISPs provide aren’t helping.
The focus group participants expressed confusion about how much data usage different sites and applications actually require. For example, the report says that consumers were afraid that leaving social media sites like Facebook or Twitter open all day, or doing a heavy amount of online shopping, would run them into trouble with potential data caps. (Both are actually comparatively low-data activities.) Some participants also said that having many users in their households, with multiple devices each, posed additional challenges in correctly tracking data use.

Although the ISPs customer service representatives and websites provided data-usage estimates, the GAO found that those estimates weren’t consistent. They also found that “hidden” data usage, like system and software updates, accounts for up to 30% of home data use and is trending upward. As a result, consumers don’t necessarily have the information they need to subscribe to the right plan, and may pay for data they don’t need or face surprise overage charges.

3.) Consumers aren’t sure how their carriers handle excessive data usage.
The report finds that focus group participants with wireless data plans often expressed uncertainty about plan details such as their data allowance, and about whether their plans were subject to throttling. However, when it came to mobile data most participants were not concerned that their plans had data caps; instead, they were mainly focused on avoiding extra charges.

The GAO also found that among seven the wireline broadband ISPs with caps, every company handled theirs a little differently. Some imposed overage charges for extra chunks of data, some granted discounts for low usage, and some claimed to have caps but didn’t actually do anything about it at all when customers went over.

4.) Neither wired nor wireless carriers have yet found the sweet spot to meet their customers’ needs with lower-cost options.
When it comes to mobile broadband, the GAO reports that the median wireless customer uses about 102 Mb per month of data on their plan — and yet only a small fraction of subscribers to one of the wireless carriers use a 500 Mb plan. That suggests that a not-insubstantial number of consumers, afraid of ever meeting an overage charge or cut-off, are paying for more data than they need.

As for wired broadband, the GAO report mentions one anonymous company that offers a discount for accepting a low data cap — a threshold 20% of their customers fall below, they told the GAO. Of course, as we learned earlier this year, that’s Time Warner Cable… and their very own CEO admitted that nobody wanted to limit themselves to that data cap for such a puny discount.

5.) Lack of competition means consumers can’t vote with their wallets.
The report did note several potential benefits of broadband caps to businesses and even some consumers. But it also noted that for many consumers, opting into a usage-based plan, should their ISP jump to one, won’t be a choice. Broadband competition is notoriously minimal in most areas; the GAO report cites an FCC statistic that “54% of households are in census tracts” that have more than two wireline ISP options (usually one DSL, one cable). Even if every residences in every one of those census tracts had a choice (and they don’t), that’s still barely half the country with options.

The focus group participants said they would switch away from an ISP that implemented metered broadband if they could, but probably wouldn’t have a choice. Some of the experts the GAO interviewed also pointed out that in a marketplace without competition, ISPs have no incentive to provide a good variety of data plans to subscribers.

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  1. mobafett says:

    It was a great feeling of relief to switch my home ISP to an uncapped provider (a DSL reseller) earlier this year. I no longer need to worry about “excessive usage” as a cord-cutter with a teenager home during the summer. My former 150GB cap from AT&T DSL was exceeded every month consistently, and during the summer months was double-exceeded (two 50GB overages at $10 each). Now my monthly bill is the same, regardless of usage.
    So long AT&T, don’t let the door hit ya….