I just finished the  Open Technology Institute’s (OTI) report on data caps. The report has received a lot of attention since being released earlier this week:

•  Ars Technica – Report: data caps just a “cash cow” for Internet providers
• Broadband Reports – Study: Limited Competition Results in Caps, Overages: Just Another Price Hike in Sheep’s Clothing
• Wireless Week – OTI Report Suggests Data Caps Result of Decreasing Competition
• Info World – Study: Data caps bilk users and stifle competition

So you get the gist – Wireless World disputes the research. The rest of the publications emphasize the findings.

I thought it was helpful to learn a little bit about OTI; here’s what I learned from their website…

The Open Technology Institute formulates policy and regulatory reforms to support open architectures and open source innovations and facilitates the development and implementation of open technologies and communications networks. OTI promotes affordable, universal, and ubiquitous communications networks through partnerships with communities, researchers, industry, and public interest groups and is committed to maximizing the potentials of innovative open technologies by studying their social and economic impacts – particularly for poor, rural, and other underserved constituencies. OTI provides in-depth, objective research, analysis, and findings for policy decision-makers and the general public.

The report is thought-provoking. A couple assertions are made…

As this paper documents, data caps, especially on wireline networks, are hardly a necessity. Rather, they are motivated by a desire to further increase revenues from existing subscribers and protect legacy services such as cable television from competing Internet services.

So obviously that’s frustrating if you’re a consumer – especially if you’re a consumer that’s paid higher rates to increase or surpass data caps. But from a community perspective it’s more than frustrating it’s alarming…

Investment in infrastructure will ultimately be a major driver of U.S. competitiveness going forward. Rather than trying to curb consumer use and protect high profit margins on services over existing networks, it is critical that ISPs build for a future where the U.S. can provide competitive speeds and pricing in comparison to its international peers.

The case presented in the report feels like the incumbent providers are trying to maintain the status quo – but inherent in the technology game, I think, is the fact that if you’re standing still, you’re losing ground. Eventually I think providers who are motivated (and that includes many current incumbents, local governments and others) will find a way to serve communities – especially when there is a business case to support investment but until that time we’re losing ground as a nation – and the ones who are served by less motivated providers are feeling the pinch first.

The current providers attempting to maintain the status quo keep the US in a position to “maintain status quo” but again we’re losing ground by standing still. As other countries develop better infrastructure, we are losing ground in terms of innovation and economic development. (The US comes in 10^th in the Global Innovation Index of 2012 and 15^th in OECD broadband ranking. Compare the 2012 top innovators with the OECD top broadband subscribing countries. Six of the top innovators rank higher on the broadband charts as well.)

I understand that it is easier to provide service in smaller countries (less land to cover, generally higher population density) – but this latest report indicates that maybe the cost is not as big an issue as short term profitability. Again, as a country that is alarming. I will include one chart from the recent data cap report summary that shows the incumbent expenses versus customer base.

Again – very thought provoking! The report goes on to make policy recommendations to encourage greater competition.