The Federal Communications Commission (FCC) recently opened an inquiry into data caps imposed by internet service providers (ISPs). These caps limit how much data a customer can transfer monthly and often result in additional charges when exceeded. The FCC’s inquiry and how long it might last is the subject of my latest video.
The FCC is collecting public input to assess how these caps affect consumers and competition. A 600-page document compiling customer complaints highlights widespread frustration, but ISPs, represented by the National Cable and Telecommunications Association (NCTA), argue that these complaints are unverified and that data caps offer benefits like promoting competition and enabling lower-cost plans.
The issue is deeply tied to the FCC’s regulatory authority. Over the years, FCC jurisdiction over ISPs has shifted with different administrations, creating a ping-pong effect. The Obama administration implemented net neutrality rules that gave the FCC regulatory power over ISPs, which were then repealed under Trump, reinstated by Biden, and now face potential rollback again with the incoming Trump administration. Without clear legislative direction, the FCC’s authority remains in legal limbo.
Jessica Rosenworcel, the current FCC chair, emphasized the essential nature of internet access, citing lessons from the pandemic about connectivity’s importance. However, her term ends with the presidential transition, and Brendan Carr, the incoming FCC chair, opposes regulating data caps. Carr believes caps offer consumers flexibility by providing cheaper options for those with lower data needs, but critics argue they disproportionately affect customers in areas with little to no competition.
Interestingly, data caps are often absent in more competitive markets. For example, in the Northeast, where fiber-optic providers and 5G home internet services offer alternatives, ISPs like Comcast have not implemented caps. This is especially the case in my area where I have multiple options now for Internet service.
In less competitive areas, however, customers face significant costs. Comcast, for instance, charges $10 for every additional 50GB of data over its 1.2 TB cap, up to a maximum of $100 monthly. Unlimited data plans are available but come at a premium and often require renting Comcast equipment.
The fairness of caps is further questioned when considering that much of the internet traffic, like Netflix streaming, doesn’t even traverse the broader internet but flows directly through ISPs’ networks. And that’s because ISPs have long required streaming providers to directly connecting to their networks – often for a large fee.
The bottom line? The incoming FCC chairman has no intention of continuing this inquiry once the current administration leaves office. While it’s possible the Biden FCC could try to impose some regulation before Trump’s team takes over, it’s highly unlikely we’ll see any changes to the status quo.