The article is arguing that the caps are out of sync with the actual scarcity of the resource. Prices are rising and caps are dropping, even though bandwidth is becoming cheaper and more available. That suggests the caps aren't being used to make people pay for resources they use, but rather to trick people into spending money they didn't realize they'd be on the hook for. That's sneaky and skeezy.
It's like the banks that charge a $50 overdraft fee on each of six trivial transactions. No one is saying there shouldn't be a fee, but if it's turning into a significant profit stream, something's not right.
Prices are rising for services and commodities in almost every industry. For instance, cotton has hit record highs this year, food is more expensive, gas is higher, etc. We're in an inflationary economy right now, so I don't think ISPs should be singled out for raising prices as their costs increase (e.g. they have to pay rising utility costs, salaries/benefits/health coverage, property taxes, etc). Perhaps what should be examined is change in net profit margins for ISPs that cap usage, but even if that rises, it is hard to know with certainty if the "sneaky and skeezy" "tricks" were the factor. One could argue if their tactics are indeed so "sneaky and skeezy" that they would loose business in the long run and negatively impact their profit margin.
The reason it can be distasteful when an ISP raises its rates or limits its services is that ISPs often have a monopoly over many of their customers. At best most people get to choose from a duopoly, so the ISPs don't really have to compete in a free market.
Isn't this a site revolving around entrepreneurs in IT? Doesn't everyone want to make more money then they spend?
The fact that bitching about the caps is people's only option should tip you off to the fact that the market is not, in fact, open.
I have a throttle cap on my mobile internet though, I can use as much internet as I like on my iPhone for a flat fee, but if I go over 5GB in a month, they may throttle my speed for the next month. That's pretty fair, I guess, but they're building out 4G now with even faster mobile internet, so those caps are probably going to disappear slowly as people move over to newer technology with more bandwidth than the current 3G/EDGE systems.
Stop being an apologist.
How do you define competition between ISPs?
Where you are, are their lies that affect providers in that area? Or is it all pure competition?
Did those 9 ADSL providers all lay their own line, or is their laws in effect that make those providers lease their lines out to other providers?
Basically, is it pure competition?
There's no competition and choice for cable though, you have the cable company you have, and that's it.
For GSM networks, there's three separate, and two or three 3G networks, so there's competition there as well.
In a few months my house is gonna be hooked up to the city fiber network, at which point I can choose from another bunch of ISPs.
I don't have any problem with usage based pricing. ISPs don't really want that either though. They want to push users to a high priced tier and then hope the users don't use the entire bucket each month.
Look at AT&T cell phone data plans for example. They used to have a $30 plan that was 'unlimited'. This plan really had a soft cap of 5GB, so $6/GB. I find that a very fair price. Then they changed to 2 plans, one for $15/250MB or $25/2GB. I bet they did some analysis and found out that most users use 300-500MB/month so they made the plans to push people into the higher plan with the hopes they would not use the data. If they were really concerned about high usage they would have just moved to a flat $6/GB (or something similar), but then most people would ended up paying $6-$12/month.
Those grandmas are not paying $65/mo for the top service tier. They are paying $35/mo for 3Mbit/s lowest-tier uverse service, and they still get a transfer cap of 250GB.
Streaming netflix users, who are pretty much all going to be in the top tier or two of service (24Mbit/s or 18Mbit/s) get pinched by the same cap. 250GB is 3.2% utilization of an 24Mbit/s download link, over a month, btw.
Even in some alternate universe where caps make sense, the least AT&T could do is grade the caps by line speed. It seems to me like I'm subsidizing grannie's transfer allowance, even if she doesn't fully use it.
Since the primary issue is traffic congestion at peak usage times, the obvious solution is to rate limit heavy users, rather than punishing them with hard caps which indiscriminately targets users who transfer lots of data in off hours.
Given all that, why does AT&T cap all uverse tiers the same? The first explanation that comes to mind is that they know if they drop the caps too much for lower tiers, because despite what they claim 250GB really isn't that much, they'll start cutting into too many grannies' modest internet usage. They want to keep their low-end customers from being hurt by lower caps, but they want to gouge their higher-end customers for going over the same caps.
And why do they cap instead of rate limiting heavy users? Rate limiting doesn't make them money. Caps might (though they will lose some customers over this outrage, and others will cut back usage or service tiers, so AT&T might even lose money overall).