Charter Communications has claimed to the Federal Communications Commission that broadband users enjoy having Internet plans with data caps, in a filing arguing that Charter should be allowed to impose caps on its Spectrum Internet service starting next year.
Charter isn’t currently allowed to impose data caps because of conditions the FCC placed on its 2016 purchase of Time Warner Cable. The data-cap condition is scheduled to expire on May 18, 2023, but Charter in June petitioned the FCC to let the condition expire two years early, in May 2021.
With consumer-advocacy groups and Internet users opposing the petition, Charter filed a response with the FCC last week, saying that plans with data caps are “popular.”
“Contrary to Stop The Cap’s assertion [in an FCC filing] that consumers ‘hate’ data caps, the marketplace currently shows that broadband service plans incorporating data caps or other usage-based pricing mechanisms are often popular when the limits are sufficiently high to satisfy the vast majority of users,” Charter told the FCC.
Charter’s filing continued:
There is also evidence that some consumers—either those who do not consume a lot of data and/or those who are looking for a lower-cost plan—may want a service where prices are based on the amount of data used… These different plans are proliferating in the market because they offer consumers a cost-effective alternative to unlimited data plans that are more than adequate to meet their needs. The DC/UBP [data caps and usage-based pricing] Condition, however, prevents Charter from keeping pace with its competitors and offering consumers the kinds of plans they are looking for. While Charter sees value in providing its service without data caps or UBP and has no plans to change that practice, Charter reasonably seeks the same flexibility that all of its competitors and peers have to manage data usage. This way if circumstances change, it has flexibility to offer the service packages its customers want.
Charter neglected to mention that home-Internet providers generally don’t charge customers less when they don’t use much data. Instead, the price is usually the same regardless of whether one uses 10GB a month or 1.2TB. Cable customers who exceed a data cap have to pay extra fees, but aside from some limited exceptions, they don’t get a discount off the base price when they stay under the cap.
Charter pointed to Comcast’s 1.2TB monthly data cap and the fact that most customers don’t use that much data as evidence that “the market does not support unreasonable data limitations.” But Comcast—like Charter—is the only high-speed cable or fiber provider for tens of millions of customers across the United States, so Comcast customers don’t have much choice. Comcast imposes its cap in most of the states it operates in, but not in the Northeast US where it faces strong competition from Verizon’s un-capped fiber-to-the-home FiOS service—evidence that “the market” discourages caps when ISPs face real competition.
Charter also claimed the merger condition “prevents Charter from developing innovative service plans that are more tailored to consumers’ needs,” but there is nothing preventing Charter from offering cheaper plans to customers now and differentiating plans by speed instead of data allotment. In fact, Charter already does that by charging different prices for different speeds and by offering a low-cost plan with 30Mbps speeds to low-income families.
Charter: Lack of competition is “beside the point”
Charter’s petition also asks the FCC to lift a condition that prevents the company from charging network-interconnection fees to large online video providers.
Charter claimed that it faces sufficient competition from wireline, mobile, and satellite providers. But Charter also argued that “Opponents’ claims that the [broadband] market is not competitive are beside the point… because Charter, like other broadband providers, lacks the incentive or ability to discriminate against OVDs [online video distributors]. OVDs are critical to the [broadband] business and far too large and powerful to thwart with data caps or interconnection fees.”
Charter’s petition said that in June this year, “residential data usage for Internet-only customers was 600 gigabytes per month, up nearly 20 percent from the fourth quarter of 2019 due to pandemic-related working and learning from home.”
Roku: Data caps should be “a relic of the past”
“If it were to sanction data caps in the absence of competitive broadband Internet access services, the Commission would not only allow Charter to act on its incentives to act anti-competitively but also signal to other broadband providers who are unconstrained by competition that they too are free to adopt anti-competitive measures. Data caps should become a relic of the past,” Roku told the FCC last week.
Charter also faces opposition from Incompas—an industry group that represents Netflix, Amazon, other online service providers—and a variety of companies in the telecom business. Charter has gotten support for its petition from charities and politicians it donated to, as we detailed in a previous article.
But Charter apparently wrote letters on behalf of charities, and one of the groups has said it doesn’t actually support Charter’s petition, Bloomberg reported yesterday:
When asked by Bloomberg News about a letter filed July 20, the Niagara Falls Boys & Girls club, which got $5,000 from Charter for a summer camp, backed away from its support for the measure Charter is seeking from the FCC.
The letter the club submitted was prepared by Charter and “upon closer review, the last paragraph of the letter states that we support” Charter’s request, Rebecca Vincheski, chief executive officer of the club, said in an email.
The club has “a position of neutrality on this important community issue,” Vincheski said.
The deadline for submitting responses to Charter’s petition passed on August 6. FCC Chairman Ajit Pai voted against the merger conditions when they were imposed in 2016 under then-FCC Chairman Tom Wheeler and could ask the Republican-majority commission to vote on Charter’s petition in the coming months.
Disclosure: The Advance/Newhouse Partnership, which owns 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.