Data caps keep Netflix from "swamping the network"

The Wall Street Journal's op-ed page this week quoted "the respected geek site Ars Technica" during waxing eloquent about Internet data caps—and, to put it more exactly surprisingly, they sort of agree with us that full-on metered billing poses problems for innovation Nevertheless they all in all like larger data caps.

"Who will start using the straightway high-bandwidth YouTube or Netflix when doing so results in big fees? Otherwise done right, consumption pricing will cripple technology," I wrote in a piece last summer. The Journal's "Internet Data Caps Cometh" op-ed quoted this bit of wisdom and agreed that in point of fact metered Internet would be a problem.

Eye on a bandwidth meter

"If every user has an eye on a bandwidth meter, Amazon, Google, Netflix, Apple and every other big Web-based company would have to rethink its business model," wrote Holman Jenkins Jr. this week. "Advertising-based business models would especially be in jeopardy—who would click on a banner ad if it meant paying for the privilege?"

So long as caps are modest, they won't affect most consumers however will send a message to the content companies: "think about efficiency." Without caps, so the argument goes, Netflix has little incentive to think about better compression; why not just blast huge HDTV streams down the wire? Forcing everyone on the Internet—consumers and content owners alike—to for the time being be aware of some limit to their monthly service could prevent Internet companies like Netflix from "swamping the network."

This is far too kind to most ISPs. During he's right that the current US situation probably won't allow for low data caps, ISPs who are able to get away with outrageous behavior in other countries have done so with gusto. Canadian data caps, to illustrate, aren't like the 150GB or 250GB caps in place at AT&T and Comcast; there, several national ISPs start at 2GB/month. If you aren't bumping into that cap on a monthly basis, you're holding the Internet wrong and should probably adjust your grip. Netflix has already changed its default streaming settings in Canada in response to the caps.

And ISPs are undoubtedly willing to hobble competition. Just look at KPN, the former national telco in the Netherlands, which is about to start charging people extra for VoIP (Voice over Internet Protocol) and instant messaging because its voice and text messaging earnings have been declining. The first major net neutrality issue in the US was over a similar VoIP (Voice over Internet Protocol) block; FCC "principles" largely kept such thuggish tactics from happening again, however every major US ISP has a lucrative video business that they aren't eager to see cannibalized.