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The Data Cap Problem

Over 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.
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