At one time, the word "unlimited" meant unlimited. Sprint's mobile broadband service is the latest to abandon the term and the principle in favor of a monthly cap designed to keep their heaviest users from overwhelming their network. But Sprint isn't alone: its two 3G competitors also cap usage, and two wireline broadband operators are testing explicit caps as well.
In the earliest days of broadband, service was either heavily capped, with ridiculously low limits--I recall DSL plans that had 1 GB monthly downstream limits for business-grade offerings--or totally uncapped. As Internet bandwidth has become laughably cheap, most of the caps came off. But that was before YouTube, peer-to-peer file sharing, and digital movie downloads hit.
Now, the idea of capped service with metered rates, stern warnings, or cancellations above a monthly limit are fully in fashion. For the last few years, companies like Comcast and Verizon's wired broadband division have warned users about excessive downloads, degraded their service, or canceled their accounts, often with little recourse, and sometimes denying it all the while. Enough states' attorneys general and FCC staff and commissioners have been involved that what was implicit has become explicit, but with the related effect that caps have become much lower than what they were in the ad hoc days before these changes.
Driving all this is not scarcity, because there's plenty of headroom out there on the Internet, but two interrelated issues: service providers always dramatically oversell their service, and some users are actually abusers.
On the first issue, if an ISP has 500 people connected to a central office DSLAM (a DSL aggregator) with a total downstream bandwidth of 2 Gbps, there's no universe in which a phone company makes available 2 Gbps to that location. Rather, they allot a fraction of that, which works when traffic is bursty, not continuous. Many people downloading or streaming a lot impact everyone in the same grouping. (I've seen this at home when I complained about my 3 Mbps DSL dropping to 500 Kbps at night. A Qwest technician explained I was lumped with heavy users, and with about 20 minutes of waiting on the phone, regrouped my line to another, less used pod of users, and my service has been fine since. The nice part is that was a logical change; no one had to walk over to a cage and move my wires around.)
The second issue has provoked a lot of debate. It's clearly true that some users abuse broadband. It's likely true that the 20/80 rule applies to broadband: 20 percent of users likely consume 80 percent of bandwidth. But there's also something like the 3/80 rule: perhaps 3 percent or fewer of subscribers on a system consume 80 percent of that 80 percent. Many of those users are engaged in P2P file sharing of illegally copied material, according to many of the studies of bandwidth use.
But without explicitly labeling the limits on a service, a subscriber can't technically abuse it. If you know when you sign up for Comcast that they limit your use to 10 GB and provide tools to monitor as well as an understanding of what that bandwidth would allow you to "consume" each month, it's a very different matter than "all you can eat."
Verizon had long promised unlimited BroadbandAccess for their 3G EVDO mobile broadband service. But it was well documented that unlimited had fairly strict limits. After an investigation by the New York attorney general's office, Verizon agreed to change its disclosures, pay some costs to the state, and refund money to some subscribers. The company now fully discloses its 5 GB per month limit for combined upstream and downstream data.
Verizon charges you 49 cents per MB ($490 per GB) when you cross that limit, and the company says that they use email, SMS, and a live data usage display in their connection manager to keep you apprised. Note that a single high-definition movie download might consume nearly 5 GB.
AT&T, likewise, has a 5 GB cap each month on LaptopConnect, its 3G cell data offering, with unspecified behavior when you top that amount--additional charges may apply, but clarity would be helpful. They note in their PDF-only terms and conditions: "The parties agree that AT&T has the right to impose additional charges if you use more than 5 B in a month.
Sprint has joined this club with first the leaked news and then official confirmation that starting July 13, 2008, its 3G service would also have a 5 GB cap. A spokesperson told me that off-network roaming--ostensibly with Verizon or Alltel, the only other major providers of 3G in the US using the EVDO flavor--is capped at 300 MB per month.
Now these are all 3G providers, who have limited spectrum over which they have to make sure all contending users in each cell get approximately the same kind of experience. They can't afford one user sucking down all bandwidth. However, we're seeing the same kinds of limits start to be tested for cable-based broadband.
Comcast is testing delaying traffic--slowing down packet tranmission to throttle the bandwidth rate--in two Eastern cities they cover for the heaviest users of their service. This is an effective cap, rather than a cutoff. (Comcast has been delaying BitTorrent P2P traffic for all its users prior to this; this change affects all traffic, not just BitTorrent, and is being announced, instead of sub rosa.)
In a town in Texas, Time Warner Cable is experimenting with offering different speed packages each of which is coupled with a monthly limit on usage. The lowest-priced package offers a ridiculous 768 Kbps downstream and 1 GB per month for $30 per month; the highest-priced is 15 Mbps downstream with a more reasonable 40 GB per month limit. Charges are $1 per GB above that.
With cable companies traditionally and telephone companies newly offering television programming, premium channels, and on-demand video, the caps are another tool to prevent competition from over-the-Internet sources of things to watch.
In a situation in which a few carriers control all the pieces, it's unclear whether rate caps can stick. If both telcos and cable companies decide to impose such limits and restructure their networks, who do you turn to? People with broadband are unlikely to cancel it. In a monopoly or duopoly market, you can't switch brands.
There has to be a happy middle--a role that the FCC may help to negotiate. A 40 GB cap switched to 400 GB might serve precisely the right purpose without penalizing average users who have no other market choice. With Time Warner Cable charging a buck a gigabyte above their monthly limits in their test market, but with Amazon's S3 service delivering it retail for as little as a tenth that, it's not hard to see that carriers are looking to caps to solve network problems and make a little scratch on the side.