A Wall Street Journal op-ed writer and columnist this week quoted "the respected geek site Ars Technica" while waxing eloquent about Internet data caps—and, rather surprisingly, he sort of agrees with us that full-on metered billing poses problems for innovation But he still likes larger data caps.

"Who will start using the next high-bandwidth YouTube or Netflix when doing so results in big fees? If not done right, consumption pricing will cripple innovation," I wrote in a piece last summer. The Journal's "Internet Data Caps Cometh" column by Holman Jenkins Jr. quoted this bit of wisdom and agreed that truly metered Internet would be a problem.

"If every user has an eye on a bandwidth meter, Amazon, Google, Netflix, Apple and every other big Web-based company would have to rethink its business model," wrote Jenkins this week. "Advertising-based business models would especially be in jeopardy—who would click on a banner ad if it meant paying for the privilege?"

A little goes a long way

But Jenkins' view is that modest data caps are good for the 'Net—and groups like Public Knowledge and the New America Foundation, who worry about caps, are engaged in "heavy breathing."

So long as caps are modest, they won't affect most consumers but will send a message to the content companies: "think about efficiency." Without caps, so the argument goes, Netflix has little incentive to think about better compression; why not just blast huge HDTV streams down the wire? Forcing everyone on the Internet—consumers and content owners alike—to at least be aware of some limit to their monthly service could prevent Internet companies like Netflix from "swamping the network."

The piece makes a few odd assertions at the end, where Jenkins suggests that ISPs have no interest in using caps as a competitive weapon against online video, and that Canadian data caps won't affect almost anyone.

This is far too kind to most ISPs. While he's right that the current US situation probably won't allow for low data caps (see: the Time Warner Cable debacle), ISPs who are able to get away with outrageous behavior in other countries have done so with gusto. Canadian data caps, for instance, aren't like the 150GB or 250GB caps in place at AT&T and Comcast; there, several national ISPs start at 2GB/month. If you aren't bumping into that cap on a monthly basis, you're holding the Internet wrong and should probably adjust your grip. Netflix has already changed its default streaming settings in Canada in response to the caps.

And ISPs are certainly willing to hobble competition. Just look at KPN, the former national telco in the Netherlands, which is about to start charging people extra for VoIP and instant messaging because its voice and text messaging revenues have been declining. The first major net neutrality issue in the US was over a similar VoIP block; FCC "principles" (and now, years later, an actual "rule") largely kept such thuggish tactics from happening again, but every major US ISP has a lucrative video business that they aren't eager to see cannibalized.

As The Economist recently argued, "Caps are a last-ditch effort to preserve a fusty model with artificial limits that resemble broadcast TV."

Still, Jenkins is right that current US data caps are generally high enough not to ensnare many people—the real question, though, is why new and lower caps are even arriving at all? Three years after Comcast's 250GB cap, that limit hasn't been raised, and AT&T's new cap is 150GB, a full 100GB less than Comcast's three-year old limit. (And even without caps, the big ISPs are insanely profitable.) The concern here is largely about whether we are moving in the right direction and what such caps mean for the future.

At least some commenters on the piece have no doubt that scarcity is the engine of progress. As David Eyke, one of the column's first respondents, put it, "Consumption pricing is ALWAYS the path to innovation and new inventions. And consumption pricing always leads to conservation of expensive resources. I hope everyone here understands that bandwidth capacity is very VERY expensive."

Listing image by Photo by Todd Barnard