Talk of Bandwidth Caps

In what promises to add a new dimension to the network neutrality debate, Comcast last week said it will cap consumer bandwidth use at 250 gigabytes a month. Even as activist groups like condemn the move, they admit Comcast is setting a very high bar. The 250 Gb limit would still allow you to download as many as 50 to 60 HD movies every month. The chief targets of the policy are heavy users of file-sharing services like Lime Wire, KaZaA and BitTorrent. Those following the issue will recall that it was Comcast’s attempt to regulate BitTorrent protocol traffic that moved the FCC to brand it an Internet outlaw, even though it reached an agreement with BitTorrent over the handling of its traffic. As I wrote in Reason’s 2008 Annual Privatization Report (page 94):

The good news is that Comcast and BitTorrent were able work out their differences without gov¨ernment interference, demonstrating that market mechanisms can resolve conflicts between high bandwidth users and the quality issues they raise for the larger user community. Under the terms of the accord, Comcast will pursue more “agnostic” network management technology that does not target the BitTorrent protocol directly, but, at peak times, prevents a user of any application from hog¨ging too much bandwidth. For its part, BitTorrent acknowledged Comcast’s right to manage its net¨work in order to assure a quality online experience for as many users as possible.

Bandwidth caps, which are also being trialed by Time Warner Cable, represent a market alternative to regulation. They do present a psychological problem for consumers in that what was once free suddenly might come with an extra charge (Time Warner will charge users who exceed a cap; Comcast says it will send a warning and, on a second instance, cut the customer off for a year. As an aside, I would rather see Comcast go Time Warner’s route.). It’s similar to what happened this summer when airlines started charging for checked baggage. Off the bat, it seems unfair to have to pay for something that had always been “free.” But when you think a little longer, you realize that it might be more fair when the individual who uses the service actually pays the cost of providing it. The efficient spreading of cost is exactly what the network neutrality issue is all about. Putting it succinctly, network neutrality proponents see it as more “fair” if the cost of providing a robust Internet were spread out among everyone, with no regard for the amount of day-to-day of each individual contributing. Neutrality opponents, who generally understand market principles, see it as more fairââ?¬â??and a more efficient use of limited resourcesââ?¬â??if price and usage were more aligned. Neutrality proponents, such as Free Press, jump through hoops by declaring that bandwidth scarcity is “artificial.” There’s a lot of it, to be sure, yet there’s no denying that traffic is increasing more than exponentially. “All you can eat” may no longer be an economically feasible model for quality ubiquitous service. Cato’s Tim Lee summed it up much more eloquently than I could on Tech Liberation Front:

“…[T]here’s absolutely no reason to think that this cap is permanent, or that they won’t give consumers reasonable options to get more bandwidth. Comcast is in business to make money. There’s lots of valuable content on the Internet. Therefore, it’s in Comcast’s interest to sell consumers the bandwidth they need to access the Internet content they want. Now, Comcast might charge more for a really high-speed, high-cap Internet access plan. That’s their right, and I’m at a loss to see why it would be a problem. Infrastructure upgrades cost money. It’s only fair to charge the most to the people who use the infrastructure the most. Provided that users do have the option to access the content they want, I fail to see what the problem is.”