Wide Open West Says Broadband Caps 'Inevitable'

Wide Open West executives last week proclaimed that they see the implementation of usage caps across the company's network as "inevitable." WideOpenWest Holdings LLC (WOW) COO Cash Hagen told attendees of an online webinar last week that when it comes to broadband providers and usage caps, "it's not a matter of if we all do it at some point, but when, how and how the customers adapt to that."

What kind of caps the nation's ninth largest cable company intends to apply to its users isn't clear, Hagen insisting that finding the right spot is "more art than science."

"It's really what happens if I exceed whatever that cap may be," pontificated Hagen. "Is it a cost per megabit, cost per gigabit over that? Really don't know, and I think it's a function of different areas of the world, different areas of the United States, and how much data gets used and what's that data being used for."

"For us," noted Hagen, "it's too early to tell."

As we've noted time and time again, there is no financial or technical need for fixed-line ISPs to implement usage caps. ISP executives admit they don't effectively manage congestion, but they are a perfect way for incumbent ISPs to protect their legacy TV revenues from the rise of streaming internet video competitors. Caps can also be abused anti-competitively via zero rating, which lets an ISP exempt its own content from caps while still penalizing competitors.

Hagen's confidence in the "inevitability" of usage caps is rooted in the fact that as incumbent telcos fail to upgrade unwanted DSL users, cable's broadband monopoly is only growing . With less fixed-line broadband competition, there's no organic market forces to punish cable companies as they expand what really are simply glorified price hikes. Hagen's confidence is also rooted in the fact that there's every indication that the incoming FCC will likely be friendlier than ever to large broadband providers, making it easier than ever to deploy usage caps -- then use them to place streaming video competitors at a notable market disavantage.