The Data Cap Problem

DataCapProblemSquareOver the past few years, several U.S. ISPs (Internet Service Providers) have started imposing data caps on their residential customers. This means the amount of data that you can download is limited, and if you go over you can face heavy fines. I’ve had many people ask me why ISPs would impose data cap. I hope with this article I can help shed some light on the real reasons data caps are in place, and hopefully change how we approach them.

The Reasoning

The current stance of many ISPs that impose data caps is that it is necessary to keep their network running smoothly. In fact, it’s done to protect the normal user from bad actors who “use a disproportionate amount of bandwidth”.

Plus, they say it only affects less than %1 of users anyways, so no biggie.

In a conversation with Suddenlink about my own data overage, the manager I spoke to went into even more detail. I was told that we need to think about the internet like a water utility. If someone was using more than their fair share of water there wouldn’t be enough water for the other customers. Action needs to be taken to prevent this from happening, and people who use more than their fair share of Internet need to be punished.

How Bandwidth Actually Works

Unfortunately, how the ISPs want you to think the Internet works, isn’t actually how it works. To understand why, we need to understand a little bit about networking. Let’s start by defining a couple terms.

Data is the size in 1’s and 0’s of the content you are consuming on the internet, and it is represented as bits or bytes. A bit represents one 1 or 0, and a byte is 8 bits. The size hierarchy from smallest to largest is generally text < pictures & audio < video. So text emails are usually smaller than pictures. Pictures and songs can vary in size depending on the quality and size/length. The fact that videos take up the most data is going to be very important later in the article.

Bandwidth is the amount of data or content being transferred over a given amount of time. You’ll see this advertised as megabits per second. If you had a 600 megabyte file and it took one minute to transfer, the bandwidth of the transfer would be either 600 megabytes/min,  10 megabytes/second, or 80 megabits/second. Generally when you are sold a residential internet plan the ISP sells you on the amount of bandwidth that you can use, not the amount of data.

Let’s use Suddenlink’s analogy of the water utility, and imagine a fictional water utility that worked like an ISP. Now for ISPs, data doesn’t cost anything. That’s the great thing about files, they can be copied over and over. There is no well that will run dry, no Netflix reservoir that is being drained, no YouTube river that needs to be protected. The internet has an unlimited supply, and ISPs don’t have to pay to have access to it.

This holds true for our fictional water utility as well. In this world the water utility has all the water they want, and they don’t have to pay for it. All they have to do is maintain the infrastructure to deliver the water to you, and the only limiting factor in how much water they can give to you is how much water pressure their infrastructure can handle. To manage this setup, the fictional water company charges its customers by how much water pressure they want, not by how much water they use. Plus, if neighbor Tom down the road uses 100 gallons a day, it won’t affect you since the water is unlimited.

This works the same way with ISPs, but instead of water pressure you have bandwidth. Your ISP has a certain amount of data per second it can handle, so it sets its prices on how much data per second you want. And in theory, it shouldn’t matter how much data you receive, since the data itself is unlimited.

Issues do arise for the ISP when everyone wants to use the internet at once. When the ISP determines what bandwidth it  can sell to users, it doesn’t take it’s total bandwidth and divide it up evenly. The thought process is that they can sell higher speeds to people and count on the fact that not everyone will be using their max speeds at the same time, essentially overselling their network. This is why in some areas during “peak hours” your internet speed can be slower than what you pay for, since the network is under a heaver load. Just like if everyone turned on their faucets at once, everyone’s water pressure would drop. ISPs have gotten pretty good over the years about predicting this, and the “peak hours” issue isn’t as big of a deal as it used to be.

The “Bad Users” Fallacy

We now know network management deals with not the amount of data transferred, but the amount of data being transferred at once. Let’s try to figure out problems what the %1 of heavy internet users must be causing. It can’t be the total data, since data is free. Therefore, it must be the amount bandwidth being used by these people.

This leads us to the first problem with the ISPs position. Users can only use the amount of bandwidth that the ISP sells them. That means that no matter how much data our bad users download, they can only do it at the speed they pay for. Secondly, ISPs say that only %1 of users get near the data caps they set. So it follows that the ISPs standpoint is that if only 1% of their users use the speed they pay for their entire infrastructure is in trouble. What a terrible infrastructure that must be.  Obviously this isn’t true. The usage on the network must fluctuate more than 1% throughout the day, plus they are able to keep internet speeds around the speed you pay for, even during peak hours. Now, I don’t want to call the some of the most hated companies out there liars, but something else is going on with data caps.

The Cost of Data Caps

Let’s look at data caps from a couple of different perspectives.

Bandwidth is data over a certain amount of time, and that’s what we pay for. So if you pay for 100 megabits/second, that’s the same thing as 12.5 megabytes/second, or 750 megabytes/minute. But, according to Suddenlink’s Allowance Plan, even if you pay for 100 megabits/second you can only download 350 gigabytes/month.

Since 350 gigabytes/month is technically a measure of bandwidth, being a measure of data over time, lets do a little bit of math. If we convert gigabytes/month to megabits/second it comes to a minuscule 1.065 megabits/second! That means if you download at over 1.065 megabits/second for the entirety of the month, you will be fined. That speed is not even allowed to be called broadband. In fact, that means if you purchased a 100 megabit/second connection your monthly bandwith would be about 1% of what you pay for.

What if we did use the bandwidth we paid for, for the entire month? How much would it cost? Let’s use our 100 megabits/second Suddenlink plan, along with their policy. If you go over your data cap, Suddenlink charges $10 per 50 gigabytes. If we used 100% of our internet connection over 30 days, we would have downloaded a whopping 32,850 gigabytes, or 32.85 terabytes. If we paid $75 a month for our plan, we would have to tack on an extra $6,500! That’s enough money to buy hard drives for all the content you’re downloading. This is compared to an ISP that doesn’t have data caps, like Time Warner, which would have $0 in overages.

Internet by the Hour

Now, most people aren’t going to download 100% of the time. In fact, a lot of what people do online doesn’t use their full connection speed. So how do data caps affect the average user?

For this example let’s try to remember a time where we paid for internet by the hour. A time when it took ages to download your favorite picture, every website had an AOL keyword, and you were kicked off any time someone needed to make a call. With data caps, we can estimate how much time we are allowed to do things like download files, and watch movies.

With our plan of 100 megabits/second and our data cap of 350 gigabytes, lets figure out how long we can use our connection at the speed we are paying for. 100 megabits/second comes to 45 gigabytes/hour. So after about 7.8 hours of downloading, we will hit our data cap for the month. That’s about 16 minutes of downloading per day. Once again we can compare that to a Time Warner or Google Fiber plan without data caps, which give you 24 hours a day that you can download.

Since a lot of activities online don’t use your full bandwidth, lets look at it another way. Netflix uses about 5 megabits/second to stream an HD movie, or 2.25 gigabytes/hour. So with our data cap we are allowed 155 hours of Netflix a month, or a little over 5 hours a day. That seems reasonable, if that’s all you use the internet for and if there are no other users in the house. If you have 2 users, that goes down to 2.5 hours a day per person.

Let’s say you have a slower plan, with 150 gigabyte data cap. You will hit your cap before you finish binge watching Dexter.

The real issue is that as technology progresses, so does the amount of data we use. When I wrote a previous article, Netflix only had HD videos. Neflix now offers Ultra HD videos at 4K resolution. There isn’t much content now, and most people don’t have 4K tv’s, but it will be the new standard soon enough. To stream a 4K movie or show, you will need about 25 megabits/second, or 11.25 gigabytes/hour. If we put that in our formula, that comes to about 1 hour of Netflix per day.

Let’s say you have a Suddenlink plan of 25 megabits/second, just enough to watch 4K videos. Your data cap is only 250 gigabytes, leaving only 45 minutes a day for Netflix, or if you have 2 people in your house, 22.5 minutes per person.

Advertised Speed (megabits/second) 5 10 30 50 100
Data Cap (gigabytes) 150 250 250 350 350
Netflix HD/Day (HH:MM) 02:13 03:42 03:42 05:11 05:11
Netflix Ultra HD/Day (HH:MM) 02:13* 01:51* 00:44 1:02 1:02
Hours Downloading/Day (HH:MM) 02:13 01:51 00:37 00:31 00:15
Monthly Bandwidth (megabits/second) 0.46 0.76 0.76 1.065 1.065

*25 megabits/second required for Netflix Ultra HD

Why Data Caps Exist

We have now come to the real question. Why do data caps exist? Well, the biggest largest amount of bandwidth is used by video streaming providers  (Netflix, Hulu, Crackle, YouTube, etc.). And by limiting the amount of data you’re allowed to use, ISPs can effectively limit the amount of streaming content you can watch. This greatly benefits Netflix’s competitors, the cable companies. The same cable companies who are also your ISPs.

ISPs impose data caps to keep you from streaming content as an anti competitive measure to preserve their antiquated business model. And most importantly, they get to do this because your local ISP has no real competition.

Right now, data caps only affect a few users by design. But as more people start switching to streaming as their main source of entertainment, as video quality gets better and larger, and as cable companies see their subscriber base start to shrink, these data caps will affect everybody.

  • ArthurEilering

    So, how much time and effort would it take for the community to rewrite this perspective to something that will hold up in something like a class action lawsuit? I mean, is it reasonable to think we may one day even get a free and independent internet that isn’t being corrupted by the competitive nature of these media companies?

  • drive_by_poster

    I thought this was an excellent article, which very logically points out the “elephant in the room”. Perhaps this argument could be framed as a “false advertising” suit, or as the other poster suggested as a class-action to make the corporation realize that they only get payed for what they deliver, not what they *say* they deliver.

  • Michele

    Great bottom line!

    And by limiting the amount of data you’re allowed to use, ISPs can effectively limit the amount of streaming content you can watch. This greatly benefits Netflix’s competitors, the cable companies. The same cable companies who are also your ISPs.

  • Colorblind

    Comcast is limiting us [users in Knoxville, TN] to 300GB a month now. We were charged $40 USD in overage fees which brought our bill up to $80 USD. It doubled. Furthermore, in my small town just outside of Knoxville we have no other ISPs in the area. We have no other option but to pay comcast the fees and accept their rates if we want “high-speed” internet.

    It’s extremely obvious why they are doing this. Streaming services like Netflix are hurting their profit margins. My house has no cable subscription. We haven’t had one in more than five years. We watch no cable tv thus we watch no commercials. From time to time I’ll catch some cable programming at a friends house. It is all commercials. Why would anyone pay for that when they can get the same shows through a streaming service like HBOgo or Netflix? We don’t and I can only assume we cost Comcast more money than they would like to make on us – enter the controlled usage and overage fees.

    [Don’t use them. We don’t make money on them. Use us. We want to make money off of you.]

    • marmar

      My ISP – Suddenlink – just started charging us – their customers – for going over a ‘cap’ or maximum amount of internet data we may upload/download per month – 250GB. It sounds like a lot but it is about 8,500MB per Day.

      If you watch about 3hrs (possibly less?) of HD or a 3D move or a UHD (stream it from VUDU or others) you will have used your allotment for the day! If there is more than one person in your house and you don’t control everything they do – well you have even more problems!

      What is VUDU and others going to do about this? It definitely puts the kibosh on streaming movies or TV! And now my nice new 4K tv – can’t fully use/enjoy it can I?

      We got to do something about this before they get all of us and pass some laws that we can’t live with!

      And as for VUDU and others — IT LOOKS LIKE THEY PUT A CAP ON YOUR BUSINESS PROSPECTS! – just sayin’

      -I just posted this on a VUDU forum – we need to be shouting this from the rooftops! Do all the 4k tv manufacturers realize – does Amazon, Netflix, VUDU, Hulu – even if they already know – we need to drive it home! These companies should be with the rest of us – pestering and bugging our congress for rules in favor of the ‘average joe’ so we can’t be pushed around by these greedy bast tards! We gotta nip this!
      Thanks for the great, clear article – I hope everyone reads this!

  • Matt

    I have 50mb/s and cap is 250
    Not 350 like your charts says.

    • Danny

      It is… but they bumped everyones speeds up. I had 15mb/s with a 250gb cap now we have 50mb/s for the same price but they didn’t bump our cap up.

  • dw22

    Thank you, this is very insightful. I got my first overage notice today, a month after canceling cable with Suddenlink, so I began to search for info and stumbled onto this excellent article. Before today I was unaware that there was a cap, as the salesperson had never mentioned it.

  • Guest

    I am still waiting for the “empty” promises for the $200 Billion dollars the taxpayers gave them, why does no one think this is bad? Does anyone care that the Corporations just took your money and gave nothing back?

  • Jake C

    The problem outlined here only has a handful of potential solutions:
    1. The ISP’s could start doing the equal division mentioned here (dividing their total capability by the number of customers), which would mean that total use of their infrastructure would plummet, and all of those big expensive routers our tax dollars bought are mostly useless.
    2. They could upgrade their expensive network gear to even More expensive equipment. At great expense to their customers or the government, no less!
    3. Or they could do quality of service during peak hours (Slow down time insensitive traffic like torrents and file downloads) just like is done on any enterprise network. Unfortunately, this is the most reasonable solution but it was also made illegal by the reclassification of internet service as a Title II utility.

    Frankly, we can’t, in this case, have our cake and eat it too. If the ISP’s just let everyone use as much of the available throughput (Water pressure) as the pipe to the house supports and let the traffic fail during peak hours, as would happen with heavy network congestion, we’d all be complaining about how they’re breaking the internet during prime-time so that we have to buy cable packages for entertainment! What a mess the ISP’s have created by not being open and honest with their users/customers!

    • Neal Piche

      that is total bullshit, that is the crap they spew as reason for their greedy caps and it is BULLSHIT. They are constantly getting government money saying they are going to upgrade an area and DON’T. when the traffic really does get bad for their network it will be their fault for not keeping up with progress.

  • Going to bring this back into today. This article is so true it hurts reading it. I have to manually watch what I do on the internet because of the others in my house. We went over our cap easily three times, I got smart enough and instead of paying for more data, I got a new router and flashed it with Gargoyle. Now I just have to deal with heavy network throttling (sub DSL speeds) when we hit our daily allotment I have set at 4GB.

    • Tony95

      Insane and very sad

  • Tony95

    I would only add one other problem with the cap. They charge you for up and down stream data. So if you are using Skype which can be 300-400 KB/s each way then you get nailed for 700 KB/s of usage. If the person on the other end is also on the same capped plan then only half the bandwidth of the cap is actually getting consumed between the two users.

  • Tony95

    This really need to be anti-trust lawsuit. There is no competition in the broadband space. We should not be seeing mergers but should see the companies busted up and/or other broadband only providers allowed to compete. Currently, competing companies are having a very hard time getting to the homes because of red tape. We need to do something about that.

    At the end of this month, because I downloaded some XBOX ONE games, I had to practically go offline to avoid going over my cap. This means I was not buying anything or talking to anyone. Very bad for the economy I would guess.

  • Valerie CA

    what is even more funny is that this was written 2 years ago and now 2 years later, they are putting internet on the TV’s so you intentionally load streaming video and thus jack your billing up because you do not realize that what you are pulling up on your TV is now classified into your Internet billing with even harsher cap penalties…..welcome to the new age of capitalism……lol