Benefits, Harms of Data Caps Debated by Industry at Public Knowledge Policy Symposium

"Data caps limit innovation in an ecosystem that is changing very quickly,” said Ryan Troy, senior director-business development for Boxee. Using broadband services to access video content is “just the natural extension of the television viewing experience” as services like Boxee and online video providers offer “a means to watch what you want, when you want.” Data caps limit the ability of providers to offer those services, which hampers their ability to innovate, he said. “We look to legislators to help preserve that innovation."

ISPs should be transparent about the limitations of the services they're selling to subscribers, Troy said after a member of the audience asked the panelists if they were suggesting subscribers shouldn’t have to pay for more data. Subscribers should pay for their broadband service, he said. “I think that you should just be a little more transparent.” Data caps are more problematic than a lack of access to content, which is also a problem, Troy said. “History shows us that people will find ways to watch what they want to watch,” he continued. Troy predicted that in the coming years, “windowing” will decrease -- meaning consumers will be more able to consume content across services -- viewership will rise and content will be available more fluidly across international borders.

Data caps are “anti-American and anti-capitalist,” said Writers Guild of America West Political Director John Vezina. In a world where content producers -- especially video producers -- can turn to online distribution if they can’t find a way to distribute their content through traditional channels, a system of data caps “hurts innovation, and it certainly hurts creators who want to get as much out to the public as they can,” he continued.

Data caps can benefit consumers, said Rachel Welch, Time Warner Cable vice president-federal legislative affairs. Data caps allow ISPs to offer cost-efficient service options to subscribers who know they will only need a certain broadband capability, she continued. “We're seeing that people want that kind of choice.” Time Warner is trying to bring broadband services to subscribers, not keep them from using the services, she said. “All we want to do is sell people broadband service.” Welch rejected an idea discussed in the previous panel that companies like Time Warner Cable use data caps to encourage subscribers to pay for broadcast services. “I think it’s the wrong thesis to think that there’s some sort of nefarious thing going on between broadband and video,” she said.

STELA reauthorization discussions should examine how successful the current broadcast system is, Welch said, pointing to the 1992 Cable Act as a regulatory structure that needs updating. “The goal in 1992 was to preserve local broadcasters and local broadcast programming, and the fee was for the signal, not for the content,” she said. The fee “was supposed to go back to the local network … to prop up localism and make sure local channels did well,” but now the money just goes to the larger networks, she continued. “There’s a question about whether it’s still a workable, viable system.”

STELA reauthorization is “the only must-pass telecom legislation for this session,” Alison Minea, corporate counsel to Dish Network, said during the panel. The distant signal license needs to be reauthorized so that Dish can continue to offer local news outside of its local news market, she said. Alternatively, because most markets have more distributors now than they have had in the past, “the must carry-retransmission consent regime … ultimately doesn’t work for the marketplace that exists today,” she said.