Usage caps: Will one size fit all?
Recent moves by broadband ISPs suggest that 250 GB per month is the de facto standard for bandwidth usage caps. Several operators have set their caps at 250 GB to start, while others, such as Rogers Communications (NYSE: RCI) and Shaw Communications (NYSE: SJR) in Canada, have raised their limits to 250 GB from starting points that originally were lower.
Lower caps have drawn much criticism, but will creating an industry standard at 250 GB satisfy everyone? Gradually, consumers and regulators have been coming around to the idea that usage caps may be necessary to some degree. It wasn't so long ago that any kind of cap was thought of as a travesty and service providers attacked for tough policies, but now when someone consistently goes over the 250 GB cap, as a Comcast (Nasdaq: CMCSA) customer in Seattle recently did before seeing his service suspended, the violator gets mocked almost as much for not managing his own usage better.
The 250 GB cap standard seems viable for now, but as video streaming continues to increase, service providers should not be surprised to see renewed challenges. They may even find themselves challenge their own current thinking about where the caps should reside. The cap violators may be few and far between, and public perception about their right to unlimited bandwidth may be changing, but video streaming models and applications continue to evolve.
If the mass market does eventually start to drift away from traditional pay TV in higher numbers, ISPs such as cable TV operators may eventually need to rethink caps that right now appear to provide plenty of headroom.--Dan