FCC Republican opposes regulation of data caps with analogy to coffee refills

The Federal Communications Commission is taking a closer look at how broadband data caps affect consumers, and is considering whether it has authority to regulate how Internet service providers impose such caps. Democrats are spearheading the effort over the opposition of the FCC's Republican minority. FCC Chairwoman Jessica Rosenworcel floated a plan to open a formal inquiry into data caps in June 2023, and the FCC is finally moving ahead. A Notice of Inquiry announced today "explores how broadband data caps impact competition and consumers," the FCC said. "During the last year, nearly 3,000 people have gotten so aggravated by data caps on their Internet service that they have reached out the Federal Communications Commission to register their frustration," Rosenworcel said in a statement issued today. "We are listening. Today, we start an inquiry into the state of data caps. We want to shine a light on what they mean for Internet service for consumers across the country." Rosenworcel's office published 600 of those complaints today and called out a few specific ones. "We have had to unplug our modem to prevent going over our data cap," an Arkansas resident told the FCC in May 2024. "We have to take our kids to find public Wi-Fi to complete their school work. We can't afford $190 a month for unlimited Internet." Rosenworcel said the consumer complaints show that caps are a source of stress. "The mental toll of constantly thinking about how much you use a service that is essential for modern life is real as is the frustration of so many consumers who tell us they believe these caps are costly and unfair," she said.

Federal Coffee Commission

Whether the FCC can do anything significant about data caps is an open question. "As the Commission considers the impact of data caps on consumers and competition, we seek comment on our legal authority to promulgate rules in this area," the Notice of Inquiry said. FCC Republicans Nathan Simington and Brendan Carr dissented from the Notice of Inquiry and released statements blasting what they call an attempt to regulate Internet service rates. Simington argued that regulating data caps would harm customers, using an analogy about the hypothetical regulation of coffee refills:

Suppose we were a different FCC, the Federal Coffee Commission, and rather than regulating the price of coffee (which we have vowed not to do), we instead implement a regulation whereby consumers are entitled to free refills on their coffees. What effects might follow? Well, I predict three things could happen: either cafés stop serving small coffees, or cafés charge a lot more for small coffees, or cafés charge a little more for all coffees.

Simington went on to compare the capacity of broadband networks to the coffee-serving capacity of coffee shops. He said that tiered coffee prices "can increase overall revenue for the café," which can be invested "in more seats, more cafés, and faster coffee brewing." Simington is against rate regulation in general and said that regulation of usage-based plans (aka data caps) is just rate regulation with a different name. "Though only a Notice of Inquiry, because it is the first step down a path toward further rate regulation, I can't support the item we've brewed up here. I dissent," Simington wrote.

Carr: Data-capped plans “more affordable”

Carr's statement said, "I dissent from today's NOI because I cannot support the Biden-Harris Administration's inexorable march towards rate regulation and because the FCC plainly does not have the legal authority to do so." Carr pointed to the recent 6th Circuit appeals court ruling that blocked the Rosenworcel FCC's attempt to reinstate net neutrality rules under Title II of the Communications Act. Judges blocked enforcement of the net neutrality rules until the court makes a final ruling, saying that broadband providers are likely to win the case on the merits. Carr said the FCC is "start[ing] down the path of directly regulating rates... by seeking comment on controlling the price of broadband capacity ('data caps'). Prohibiting customers from choosing to purchase plans with data caps—which are more affordable than unlimited ones—necessarily regulates the service rates they are paying for." Carr said the Notice of Inquiry "is legally infirm, too, for want of statutory authority. Indeed, the Sixth Circuit has stayed the FCC's Title II decision, which is based on the same claims of authority that the FCC invokes today."

Democrats consider possible sources of authority

The FCC is taking a first round of comments until November 14 and reply comments until December 2 (the docket is on this page). In addition to asking for comment on the impact of data caps, the commission is seeking input on several possible sources of legal authority. "Specifically, we seek comment on whether the Commission's authority to address market entry barriers related to telecommunications and information services in section 257 of the Communications Act of 1934, as amended, provides sufficient authority to take potential actions to address data caps," the FCC said. "We also seek comment generally on our ability to rely on other sources of statutory authority within the Act for potential actions related to data cap practices. For example, we seek comment on whether section 706 of the Telecommunications Act of 1996 would provide sufficient authority to take actions to address data caps." While any future action would likely focus on home Internet access, the FCC is also asking whether it can use its spectrum licensing authority to address data caps on mobile plans. But as the FCC majority seems unsure of whether it can regulate data caps, the Notice of Inquiry may ultimately only lead to a gathering of information instead of new rules. "Our goal here is to understand what these caps look like now," Rosenworcel said. "We know that during the pandemic many fixed and mobile Internet service providers refrained from enforcing or imposing data caps, suggesting that our networks have the capacity to meet consumer demand without these restrictions. We know that some providers do not have them at all. Others lifted them in network merger conditions. The bottom line is that in our post-pandemic world, so much in our lives depends on Internet access and so many consumers are writing us frustrated by these restrictions. We are going to get to the bottom of it with this inquiry. We are going to identify what is happening now and what we can do next; we are going to make sure that the consumers writing us are heard."