December 28, 2011

To Cap or Not to Cap?

Evidently I seem to hold a contrarian position on whether Broadband access bandwidth consumption should be capped or not. My position is that ISPs are in the business of offering service at the Network Layer and they should be free to charge based on the consumption. My rationale is simple: with the freedom to charge at the Network Layer, ISPs will not be in a position to dictate usage policy or to play favoritism to one provider over another. Please note that I also contend that freedom to charge at the Network Layer includes offering differentiated service (at the Network Layer) as long as differentiation is requested by the users and are charged to them. Today I read something from an unexpected source that reinforces my position., a competitive access provider based in California is strongly and unequivally opposed to capping bandwidth usage. So I had understood. Indeed, they supplied usage data to widely reported study that refutes effectiveness of bandwidth caps in relieving congestion. But an article in Gigaom that quotes Dane Jasper, CEO of seems to suggest their position is conditional after all. First let me quote some passages (referring to why the company is offering fiber access only to consumers and not to businesses) from the article:

“... when it comes to delivering broadband to businesses, he recognizes that a superfast gigabit connection to a business will have a very different usage pattern than one delivered to a consumer. ... “With our stance on no capping, I [Jasper] have a little bit of concern delivering 1 gig to a business at $89.95 and them using half of it, because that could really happen.”

… For example, the lack of applications for gigabit networks probably helps Jasper here, as does the fact that most consumers typically use downlink services to consume content. And currently there’s a limit to how much they can consume, even with three or four TVs downloading or streaming HD content.

“Consumption is still constrained by the number of TVs and hard drives and even though everyone eventually has more stuff, practically speaking it really does end up normalizing down to a reasonable level,” Jasper says. … But a business might hook a data center or several servers up on a gigabit connection and use that to send a lot of traffic out. And that could get expensive.”

This is my take away from this article: Currently consumers use the connection mostly to download content and there is a natural limit on how much they can use it for. In other words, is relying on the empirical cap. what happens if the usage pattern changes and the empirical cap is not acceptable anymore? What happens if consumers place low-cost servers to serve their content by themselves? What if some OTT player distributes Nano Data Centers to’s customers? After all rate arbitragers would love this, won’t they?

There is a more damning indictment with regards to businesses. has decided to not offer gigabit access to businesses, just so they can cling to “no cap” policy. What would be our reaction if AT&T Worldnet decided not to offer DSL, but stick to just dial-up modems for some policy reasons. Isn’t it better for businesses to pay for consumed bandwidth, but still get gigabit access? After all the major benfit of high-speed access is reduced latency.

So I say to and other proponents of “no cap” policy: fanatical adherence may be robbing the very same customers you think you are protecting.

Posted by aswath at December 28, 2011 01:13 PM
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