Public Knowledge Asks FCC to Examine Data Caps in Light of iPad 3 Complaints

"Millions of consumers ... have now discovered that the new iPads which went on sale come with a hidden cost -- the caps on data usage which wireless carriers put on consumers,” Sohn said. “It’s a ridiculous situation that the carriers sell millions of these devices specifically designed to view video on one hand, while they restrict the usage of their networks for video on the other.” Despite questions, the FCC “has not even seen fit to ask wireless and landline carriers to explain why those caps are necessary, how they are set and how consumers are affected by them,” Sohn said. “If the Commission is truly interested in consumer protection, it will ask the crucial questions and come up with some answers before consumers start getting hit with ever-increasing bills just for using the devices they bought in good faith."

PK noted it sent two letters to the FCC on the issue, asking the agency to investigate, one with the New America Foundation’s Open Technology Institute (OTI) last May (http://xrl.us/bmy9wa) and a second follow up letter in July (http://xrl.us/bmy96z).

"I think it’s really time for the FCC to start an investigation,” said OTI Policy Director Benjamin Lennett. “We have a market where unlimited plans are really becoming a thing of the past. Caps have not changed at all ... even as upgrades to the networks have been made. You have to sort of wonder is there an actual necessity for network management or is this a lack of competition in the market and carriers just wanting to make more money.”

Data caps are “like the weather; everybody wants to talk about it, nobody wants to do anything about it,” PK Legal Director Harold Feld said in an interview. “I think there’s a growing awareness when we talk to the folks at the commission or on the Hill that this issue is complicated and it may have unintended consequences and it’s not a simple question of ‘data caps fine, data caps not fine.'"

But a wireless industry official said many subscribers buy iPads that rely on Wi-Fi and those with network connected devices can also use Wi-Fi to stream video. Also, the official noted, Netflix just changed its application to lower the amount of bandwidth used. “Mobile broadband networks do not have unlimited capacity, and without metered pricing, streaming apps would simply consume as much capacity as possible without any regard for the impact it has on mobile-network resources or other consumers on the networks,” the official said. “We're already seeing the market react to the advances in tablet innovation, with applications makers designing streaming apps to be more efficient, and to lower consumers’ data consumption. And, as technologies improve and if new spectrum is made available, we would expect to see the ‘price per bit’ continue to decline as it has for as long as mobile data services have been available."

"The calls for an investigation by Public Knowledge and others are as predictable as the sun setting in the evening,” said Free State Foundation President Randolph May. “While they sometimes profess, in theory, to recognize that various forms of data caps are appropriate to manage the scarcity of capacity on networks, in practice, they rarely acknowledge their acceptability. ... I'm all in favor of enforcing rules to require disclosure of caps and pricing so consumers know what to expect. But what PK and others don’t acknowledge is that the type of intervention they want ultimately leads to public utility-style rate regulation, and I don’t think we want to go back to that era.”