gineers is how to deal with demand during peak hours. The critical factor is the time of day when an indi- vidual uses data, not an individuals aggregate data consumption over the course of a month. Even major ISPs have acknowledged this: In a disclosure document required by the FCC, Comcast admitted that data cops "do not oddress the issue oj network congestion, which results jrom trojc levels that vary from minute to minute. The cost of delivering broadband service is decreasing, not increasing. The price of service is often cited as a justification for data caps. However, declines in network equipment costs and costs to move data, including IP transit, mean that ISPs are now spending less while profiting from more customers. 17% decrease in cost of network operation Tnis trcnd is rcjcctcd in u ccnpuriscn cj Ccncusts dcc|ining quurtcr|y cpcrut- ing cpcnscs uguinst its grcwing cus- tomer base from Q4 2007 to Q4 2010. Evcn us it udds ncrc uscrs, Ccncust is spcnding |css tc cpcrutc tnc nctwcrk. CAPPING THE NATIONS BROADBAND FUTURE? Dwind|ing ccnpctiticn is juc|ing tnc risc cj incrcusing|y ccst|y und rcstrictivc dutu cups cn !ntcrnct usugc in tnc Unitcd Stutcs. Forecasts of a flood of mobile data have been overblown. Carriers have justified caps by pointing to the imminent explosion in mobile data usage. However, the projections they relied on have since been proven inaccurate: in 2008, for example, Cisco Systems projected that mobile data traffic would increase 18-fold by 2012. In 2011, when it became clear that this prediction would not come true, the number was reduced to roughly 60% of the original projection. 25% increase in number of subscribers Comcasts High-Speed Internet Service Explained: Customer Growth vs. Network Expenses $150 $143 $122 $136 $129 2007 2008 2010 2009 Avg. No. of High-Speed Internet Customers Avg. Quarterly Operating Expenses 17 16 13 15 14 H i g h - S p e e d
I n t e r n e t
E x p e n s e s
( M i l l i o n s
o f
D o l l a r s ) N u m b e r
o f
C u s t o m e r s
( M i l l i o n s ) Data caps are about protecting legacy services. The Justice Departments probe into data caps drew attention to the ways in which cable companies attempt to use caps to protect their legacy video services from new digital competition. These concerns are well-founded. A 2011 Credit Suisse pre- sentation intended to advise cable ISPs outlined the ways in which data caps discourage consumers from using web-based services: Data caps are good for business. Verizon Wireless and AT&T Wireless have turned to tiered data plans for revenue generation, earning growing profits from data overage charges in recent years. In fact, AT&T told investors in a presentation in March 2011 that acquiring T-Mobile would be an opportunity to implement attractive tiered data plans and enable data growth to be mon- etized since at the time T-Mobile did not charge overage fees for excess data use. For more information about data caps, read the full paper published by the New America Foundations Open Technology Institute, Capping the Nations Broadband Future? http://newamerica.net/publications/policy/capping_the_nations_s_broadband_future Vcrizcn und ATT bctn cnurgc uscrs cn u pcr-gigubytc busis wncn tncy c- cccd ncntn|y |inits. Tnis cnurt sncws tnc grcwtn in uvcrugc rcvcnuc pcr uscr jrcn rctui| pcstpuid dutu bctwccn .cc und .cr.. Tnc incrcuscs ccr- rcspcnd witn u ncvc jrcn un|initcd dutu p|uns tc ticrcd pricing p|uns. [O]ver the longer term, consumption based billing could reduce the at- troctiveness oj over-the-top video options (e.g., Netix ond Huluj, os the economic attractiveness of such over-the-top options could be partially offset by a [broadband] bill that is higher, due to overage charges that would be driven by large amounts of data being streamed via a customers connection. Average Revenue Per User from Retail Postpaid Data $30 $26 $14 $22 $18 2009 2010 2012 2011 AT&T Verizon 59% increase in ARPU from postpaid data for Verizon Wireless 53% increase in ARPU from postpaid data for AT&T Wireless