Why Netflix asked the FCC to oppose data caps

When internet service providers cap digital downloads, it affects the online marketplace.

First Look

Netflix Inc. has asked the Federal Communications Commission to pressure internet service providers into doing away with data caps.

Such limitations impede consumer behavior online and serve as “an unnecessary constraint on advanced telecommunications capability,” the video-streaming company argued in a filing last week.

“Watching television shows and movies on the Internet is no longer a novelty,” Netflix wrote. “Consumers increasingly expect more from their broadband connection, and they expect that broadband Internet will deliver a television experience that is the same or better than what they receive from their cable service, satellite provider, or local broadcaster.”

The argument aligns with that of net neutrality advocates who view data caps as mere money-making formulas implemented disingenuously in the name of “network management,” as Gizmodo reported. In 2014, a US Government Accountability Office report found that a majority of in-home, or “fixed-line,” Internet providers employ usage-based pricing, while all four top mobile phone providers use the model.

Netflix argued in its filing that all caps on fixed-line networks and low caps on mobile networks could unreasonably limit internet TV usage. The company proffered its opinion as part of the FCC’s yearly investigation into whether advanced telecommunications are being rolled out in a reasonable and timely manner to all Americans, as mandated by Section 706 of the Telecommunications Act, Ars Technica reported.

Although the FCC typically focuses on internet speed and availability, Netflix has asked the commission to include data caps as well – a suggestion the National Cable & Telecommunications Association opposes.

"The Section 706 inquiry is not the appropriate context for the Commission to examine factors that go beyond deployment into other areas, such as broadband subscription, performance consistency, and usage allowances," the NCTA wrote in its own FCC filing last week, noting that such factors “are only tangentially relevant to broadband deployment or availability.”

Beyond challenging the very existence of data caps, Netflix criticized internet providers that use them in a discriminatory manner, favoring some online companies over others by exempting certain sites from monthly data limits. This situation could mean online companies would have to pay an internet provider to “zero-rate” traffic to its site, granting customers unlimited access, Netflix wrote.

"Such arrangements create an incentive for ISPs to maintain artificially low caps,” Netflix added, arguing the FCC should clarify that such discriminatory data caps “skew consumer choices and work against consumer-driven incentives to deploy advanced telecommunications capability.”

Netflix says a monthly allotment of 300 gigabytes is necessary to meet the internet television demands of an average American today.

“This does not account for the other things that consumers typically do with their broadband connections, such as web-browsing or downloading games or apps from the Internet,” Netflix wrote.

This issue is one the commission has already been watching, as evidenced by the way it imposed conditions on Charter’s acquisition of Time Warner Cable to limit the company’s ability to hurt video-streaming services, as The Verge reported. In that case, the FCC banned data caps and usage-based pricing for seven years.