On Data Caps

Most major internet service broadband providers sell their services as follows: you pay them a certain fee per month, and in return you get:

  1. A theoretical maximum bandwidth.
  2. Up to some pre-defined amount of total data usage.

There is no reason that you as a consumer should be subject to both for internet access.

Let’s say your data cap is 100 GB per month. If you download that much data at a constant rate over the month, your bandwidth is less than 0.31 Mbps. Considering a normal ISP will advertise bandwidths of 10 Mbps or more, this is perfectly acceptable usage… yet you will either get charged overages or get severely throttled bandwidth if you download another byte of information. ┬áIt’s an even more glaring problem when you consider that most people never receive the theoretical bandwidth that is promised to them by their ISPs. They don’t even get close, because too many people are sharing the pipe.

It doesn’t make sense to sell internet access this way. The fact of the matter is, you should pay for internet access by bandwidth alone. Each ISP knows its total throughput – that is, its maximum bandwidth. Consider it like a series of tubes. Think of water flowing through a pipe. The width of the pipe determines the bandwidth of water flowing through it. ISPs know the width of their pipes and, thus, they know the maximum amount of data that can flow through them in a given amount of time.

The second thing that ISPs know, or can reasonably estimate, is the number of users they have today and can have in the near future. Do some fairly trivial math and you can have the maximum bandwidth per user. That is what users should pay for: a guaranteed bandwidth.

Installing data caps is a flawed model based on selling things that have an intrinsic, known value. When you sell water, it makes sense to charge for how much water someone consumes. After all, water is a limited resource and has a known value. It’s the same with petroleum. I’d argue that, yes, digital data is a resource – but its value is not knowable when examining an arbitrary stream of bytes. To charge money by the byte and by bandwidth makes no sense.

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