If you were worried that the debate over Internet data caps would get bogged down in technical mumbo-jumbo, fear no more—it's actually much simpler than you think.
Mediacom, a US cable company with a little over 1.1 million Internet subscribers in 22 states, has put the matter to rest by explaining to the Federal Communications Commission that its customers shouldn't get unlimited data because using the Internet is just like eating Oreos.
"You have to pay extra for double-stuffed," Mediacom Senior VP and General Counsel Joseph Young wrote in a filing with the FCC last week.
Young went into more detail, just to make sure the nation's broadband regulators fully understand how Internet data is just like cookies:
Imagine you are out for a walk and experience a sudden, irresistible craving for Oreo® cookies. You only want to spend two dollars, which means that you will be able to buy a two-pack or maybe even a four-pack but for sure you cannot get the family size of over 40 cookies. For that many, you have to spend more. Of course, it would be nice if your two dollars bought you the right to eat an unlimited number of cookies, but you know that is not the way our economy works.
People thus shouldn't complain when Internet providers impose data caps and charge more when customers go over them, he wrote. "Even though virtually every other industry prices its products and services in the same way, some people think that ISPs should be the exception and run their businesses like an all-you-can-eat buffet," Young wrote.
Young's filing was a response to Netflix asking the FCC to declare that data caps on home Internet are unreasonable. The FCC is required by Congress to determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion and to “take immediate action” to accelerate deployment if it’s not happening to the commission’s satisfaction.
The FCC generally evaluates the nation's broadband deployment based on whether Internet service is available to customers and what speeds are offered. But it could theoretically add data caps to the list of criteria, and determine that usage limits prevent advanced broadband capabilities from being deployed to all Americans.
Mediacom doesn't want that to happen, but its Oreo argument isn't likely to persuade many users of Internet service. After all, Internet data doesn't disappear when it's used the way an Oreo disappears when you eat it.
It's true that there is only so much bandwidth an ISP can provide at any given moment, but a monthly data cap doesn't solve that problem. The per-second bandwidth limitations are addressed by the different speed tiers imposed by ISPs: Customers already pay more to get a higher number of megabits per second.
Cable company: We're not “greedy pigs or evil villains”
Mediacom wrote that ISPs shouldn't be criticized for charging for both higher speeds and higher data caps, saying that it's just like a truck manufacturer charging separately for a bigger engine and for more cargo capacity. (Mediacom charges for speeds ranging from 3Mbps to 150Mbps, with data caps ranging from 150GB to 3TB per month.)
Beyond Oreos and trucks, Young extended his pay-more-to-get-more analogy to socks, coffee, iPhone and Xbox One storage capacities, video games, gasoline, water, and electricity. Young also pointed out that Netflix charges higher prices for higher video quality and the ability to watch on more than one screen at a time.
"Ironically, those who think ISPs are greedy pigs or evil villains because they charge based on consumption through caps or usage-based pricing do not direct the same moral outrage toward edge providers who price their services in basically the same way," Mediacom wrote.
But there are problems with all of these comparisons. It's easy for customers to choose different socks, coffee, cookies, phones, video games, or streaming video services. But (as Karl Bode of DSLReports noted) customers have little to no choice when it comes to high-speed Internet access at home. And the data caps that ISPs impose conveniently make it more difficult for customers to switch from the ISPs' cable TV services to competitors like Netflix.
The comparison to utilities like water and electricity also has problems. Water and electricity usage is similar in that customers don't have a choice of providers, but these industries face more government regulations to ensure that meters work properly and customers aren't overcharged. Water and electricity customers also pay less when they use less, whereas ISPs generally don't provide automatic discounts when you're under the data cap.
With ISPs, there are serious questions about whether the meters are counting data usage accurately, no easy way for overcharged customers to prove they've been overcharged, and no regulatory body ensuring that the meters are accurate. Even if ISPs are counting accurately, data usage can be inflated by factors outside the customer's control, such as data packets being dropped and re-sent, or even denial-of-service attacks that flood a user's Internet connection with unwanted data.
But to Mediacom, the issue is all very simple. "Not surprisingly, a lot of the critics and complainers are people who are heavy Internet users," Young wrote to the FCC. "Because the Internet is so central to their personal lives, they believe that ISPs should have to accommodate their budgetary limitations or preferences by offering unlimited capacity at a limited price. They do not expect to be able to get Lamborghini performance for a Kia price, but believe that they should get unlimited broadband service for a low fixed charge."