Netflix to FCC: Get Rid of Low Data Caps

The push for larger and unlimited data plans just got a new backer: Netflix.

In a filing with the FCC last week, the video streaming giant said data caps are inconsistent with Section 706 of the United States Code and urged the commission to crack down on the telecommunication industry’s use of such limits.

Netflix said its argument that data caps “discourage a consumer’s consumption of broadband” and “unreasonably limit Internet television viewing” applies to both wireline and wireless networks.

“Data caps (especially low data caps) and usage based pricing (“UBP”) discourage a consumer’s consumption of broadband, and may impede the ability of some households to watch Internet television in a manner and amount that they would like,” Netflix Manager of Global Public Policy Joshua Korn wrote. “For this reason, the Commission should hold that data caps on fixed line networks and low data caps on mobile networks may unreasonably limit Internet television viewing and are inconsistent with Section 706.”

Based on Americans’ average daily TV consumption of 3.4 hours of viewing, Netflix said a data cap of 300 GB per month or higher would be necessary. That figure – which assumes 10 GB of data is used for 3.4 hours of Netflix viewing in HD – does not account for the additional data that would be required for other common Internet-related activities, like web and app browsing and gaming.

Current popular offers in the U.S. wireless market generally offer data tiers that max out at an average of 30 GB per month. Verizon, for instance, offers an XXL data tier of 24 GB per month for $110, while Sprint offers an XXL plan with 40 GB of data for $100 per month. AT&T’s largest regular plan offers 30 GB of data for $135 per month, however the carrier said it also offers additional plan options through 200 GB per month.

Three of the carriers – AT&T, Sprint and T-Mobile – offer unlimited plans, but data speeds on these plans are slowed in congested areas after users hit caps of 22 GB, 23 GB and 26 GB on the respective carriers.

Thanks to these wireless data caps, Netflix said the cost required to transfer wireline viewing habits to wireless formats is prohibitive. The company argued these limits have a “material impact on Internet video usage,” citing the spike in wireless video viewing that came along with T-Mobile’s elimination of data caps via its Binge On service.

Thus, Netflix said, the FCC should “stand ready to adopt a higher benchmark (thank 10 mbps) in future reports.”

“As consumers increasingly expect mobile to substitute for fixed line connections, the Commission’s criteria in this proceeding should track this evolution,” Korn wrote. “The Commission should continue its wise policy of tracking mobile fixed Internet access substitution and revise its mobile speed benchmark once that substitution reaches a tipping point.”

In a shot at zero-rating and sponsored data offerings, Netflix in its filing also railed against “discriminatory application of data caps” that favor one content source over another. The company said such offers steer consumers toward the free services, once again impacting a consumer’s viewing habits.

“By imposing limits only on certain video services, BIAS providers effectively increase the cost that consumers must pay to access those services while making exempt content comparatively cheaper, steering consumers toward the exempted services. The effect is even more significant when combined with a low data cap, and can materially impact how a consumer watches Internet television,” Korn wrote. “The Commission should clarify that discriminatory application of data caps skew consumer choices and work against consumer driven incentives to deploy advanced telecommunications capability.”

The comments come in the context of an increasingly competitive wireless environment that has seen operators including Verizon, AT&T, Sprint and T-Mobile all offer zero-rated or sponsored data options.

Like Netflix, Net neutrality advocates have argued zero-rated and sponsored data offerings fly in the face of the FCC’s Open Internet rules. Other, however, have said sponsored data offers the opportunity to “reach the unreachable.”

The FCC has said it would keep an eye on zero-rated and sponsored data offerings, but has not yet moved to curb them.