Increased Spectrum Availability Will Relieve Pressures Created By Rising Data Usage, FCC Wireless Bureau Chief Says
Unless the U.S. is able to increase the amount of available spectrum, there will be a gap between supply and demand as mobile data use continues to increase, said FCC Wireless Bureau Chief Ruth Milkman Tuesday during a Broadband Breakfast event. Today’s smartphone and app economy “simply did not exist” in 2008; between 2009 and 2012, mobile traffic grew by 1,275 percent, and that level of growth will continue through 2017, she said. That demand is being driven by the proliferation of smartphones, and that “necessitates” the need to increase spectrum availability, Milkman said. The federal government has been engaged in a series of efforts to increase spectrum availability, including the FCC’s considerations of the 3.5 GHz and 5 GHz bands and the ongoing evaluation of the 1755-1850 MHz band. Wireless carriers have responded to the spectrum crunch by increasing their use of data caps to curb customers’ data use. While such caps are controversial, industry experts noted that the industry is changing so rapidly that it is not useful to specifically target the use of caps in the midst of larger competition issues.
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The FTC hasn’t taken a position on whether data caps are good or bad, but the commission does want customers to “understand what they’re getting” with the plans, said FTC staff attorney Serena Viswanathan. “We think that if a company introduces a data cap, it’s their responsibility to make consumers understand what that means, so when a consumer signs up for a plan, they know what they’re getting,” she said. “Or if they’re running up against a limit, that they’re not subjected to fees that they weren’t expecting.” The FCC is closer to issues of competition in telecom than the FTC is, and since the FTC moves on a case-by-case basis, it’s not necessarily the agency that can most efficiently address the issue, Viswanathan said.
U.S. policymakers should take a “laissez faire” approach to regulating telecom’s use of data caps because the industry’s use of the caps is “rapidly evolving,” said Recon Analytics analyst Roger Entner, who has clients in the wireless industry. “By the time any rules come into place, the reality on the ground will have shifted so dramatically” that the rules will no longer work, he said. “When AOL started out, it was unlimited usage, then they went to a by-the-hour model, and then they went unlimited again.”
Policymakers should examine data caps as a “symptom” of the larger wireless competition issue, said Patrick Lucey, program policy associate for the New America Foundation’s Open Technology Institute. “Churn rates are going down, so consumers are stickier now than they have been before,” he said. “Ways to promote competition both in the wireless realm and in the wireline realm would do a lot more than just focusing on trying to address data caps themselves.”
Data caps are a “red herring,” while competition is the real issue, said Nick Feamster, an associate professor at the Georgia Institute of Technology. “The issue is that none of these things would be an issue if people had a choice” in wireline, he said. “If you don’t like what’s being done with caps and pricing, switch providers,” he said. “But that’s not an option.”
Choice is certainly more prevalent for wireless broadband customers than it is for wireline, where data caps are a feature for almost every service, Entner said. The U.S. wireless industry effectively has the same number of major competitors as it did when churn rates were still high. The market will take care of truly objectionable plans, Entner said, saying the U.S. wireless industry still includes unlimited data plans that consumers can choose “if that makes the most sense for them.” The spectrum crunch has caused the rise of data caps in wireless broadband services, so once spectrum availability increases, it is likely carriers will ease off their offerings of data caps and increase the use of unlimited data plans, Entner said.