Analysis: Wireless data caps more about profit than congestion

Wireless carriers like to say that monthly data caps are necessary to prevent heavy users from slowing down less active ones.

After surveying the four biggest carriers this year, the US Government Accountability Office reported that “some wireless ISPs told us they use UBP [usage-based pricing, i.e. data caps] to manage congestion.” Verizon Wireless has insisted to the Federal Communications Commission (FCC) that data caps are so effective at reducing congestion that they eliminate the need to throttle most customers.

I won’t argue that data caps have no positive impact on wireless networks—they can prevent the most egregious overuse of what is a limited resource. But it’s a crude tool at best, targeting monthly averages with no regard for whether the network is congested at a particular time or place.

Recent actions and statements from carriers suggest this is the case: data caps are largely a profit play, not an efficient means of preventing network problems. After Sprint offered “double the high-speed data” on its network, 20GB per month for family plans, AT&T responded by doubling data, too, through shared plans of 30GB to 100GB a month. Verizon doubled its own customers’ data, while Sprint offered yet another doubling to stay ahead of AT&T and Verizon. Suddenly, network constraints had apparently disappeared.

Where did all this extra capacity come from? The carriers’ networks didn’t double in size overnight. The capacity was always there—carriers just weren’t allowing customers to use it until one decided to boost data and the others followed. Behavior like this helps explain why federal regulators have blocked mergers that would reduce the number of nationwide carriers from four to three.

Data caps aren’t about protecting the network

If you’re driving in the middle of nowhere and need cellular data to get directions, that data usage isn’t going to slow down anyone else on the network. Backing your phone up to the cloud in the middle of the night probably won’t affect other subscribers, either. Yet it all counts against your monthly data cap, the carriers’ most obvious means of ensuring that networks don’t get overloaded.

“If you try to use monthly volumes as a way of managing congestion, you never do a very good job of it,” Sandvine cofounder and CTO Don Bowman told Ars. Sandvine is known for its research on Internet traffic and its products that help Internet providers (including Comcast) manage network congestion.

Data caps “are more about defining a differentiated value than they are about protecting the network or protecting the other users on the network,” Bowman said. “You don’t want to launch a lower price point and have your higher users jump down into it.”

It probably wouldn’t be smart for carriers to promise everyone limitless data, because there are real capacity constraints in wireless networks. But the specific limits imposed on consumers are chosen not to prevent congestion but to maximize profit.

If everyone had unlimited data, they might “use as much of it as they can because it doesn’t cost them anything, and the whole thing collapses for everybody,” Bowman said. “There is a value in having the limit there, but it’s not about individual locations being busy. It’s about the network capacity as a whole on average. Usage management is a way to align the average cost of running the network with the average revenue you make per user. It’s not about the peaks and valleys.”

Unlimited data isn’t completely dead. Sprint, which still offers such plans, acknowledges that congestion management and monthly data limits “are two separate issues.” T-Mobile offers unlimited data but throttles users after they hit monthly limits on high-speed data. But AT&T and Verizon, which have the two best performing networks, abandoned unlimited data for new customers and are trying to push longstanding customers from unlimited data to capped plans.

Full Story: Analysis: Wireless data caps more about profit than congestion | Ars Technica.