FCC Issues NOI on Broadband Data Caps

On October 15, 2024, the Federal Communications Commission (FCC) issued a Notice of Inquiry (NOI) seeking information about broadband providers' current use of data caps in both the fixed and mobile broadband service markets and their impact on consumers and competition. With the goal of gathering insights about providers' data cap practices generally and determining whether regulatory action is needed, the NOI seeks comment on consumer data usage trends, the impact of data caps on consumers and on broadband market competition, and the FCC's legal authority to take action regarding data caps. Of course, given the dissents by Republican Commissioners Carr and Simington, a Republican-led FCC under President-elect Trump's new administration is likely to either recall the NOI or relegate it to the FCC's virtual dustbin.

Comments on the NOI are due Thursday, November 14, and reply comments are due Monday, December 2.

Background

Sometimes also referred to as "usage allowances" or "usage limits," data caps are the limits that broadband providers place on the amount of data that a subscriber may use over a period of time (typically monthly). If the subscriber exceeds this limit, the provider may apply either a "hard cap"—which requires the subscriber to incur additional fees based on the subscriber's excess data usage—or a "soft cap" (throttling)—which would reduce the subscriber's broadband upload and download speeds for the remainder of the data cap period.

While data caps have been a typical component of broadband plans in the past, many providers temporarily refrained from enforcing or imposing data caps during the COVID-19 pandemic to ensure subscribers remained connected. Reports at the time indicated that the temporary suspension of data caps did not significantly affect broadband network performance. Therefore, the FCC seeks through the NOI to determine whether and how providers' use of data caps should be regulated in the future and to build on other data cap-related actions the agency has already taken, including the recently adopted Broadband Nutrition Labels Order that requires broadband providers to display information about monthly data allowances and related fees at the point of sale.

Focus of the NOI

Asserting that data caps may "cause harm to competition or consumers' ability to access broadband Internet services," the NOI seeks comment on four broad categories of information, including: (1) consumer data usage trends; (2) the impact of data caps on consumers and their broadband experiences; (3) the impact of data caps on broadband market competition; and (4) the FCC's legal authority to promulgate data cap-related rules.

1. Consumer Data Usage Trends. The NOI seeks information about consumers' current fixed and mobile broadband data usage, as well as how consumers' data needs may evolve under emerging technologies like the Internet of Things and artificial intelligence services. It asks whether data caps undermine Internet adoption or adoption of future services.
   
   
2. Consumers' Experiences with Data Caps. The NOI asks questions about several aspects of consumers' experiences with data caps and usage and seeks to understand whether consumers have the necessary information to make informed choices about their broadband service plans. Among other things, the NOI asks:
   • Whether data caps influence subscribers' online behavior and, specifically, act as a deterrent to or limit on subscribers' internet use;
   • How subscribers are able to manage data usage and/or whether providers offer tools for tracking data usage;
   • Whether providers' use of data caps prevents network congestion;
   • How capped versus uncapped broadband plans are priced;
   • Whether data caps negatively affect public safety communications and subscribers' access to emergency services;
   • Whether data caps disproportionately impact disabled or low-income consumers;
   • What are the typical provider-set data cap levels and how do such levels relate to consumers' usage patterns;
   • How often do subscribers exceed their data caps, what overage fees are charged, and what other enforcement mechanisms do providers use to manage data overages;
   • Whether providers offer subscribers the ability to roll over "unused" data to the next billing cycle;
   • How data cap disputes between subscribers and the provider are handled generally; and
   • Whether providers' current data cap disclosures are adequate for consumers to make informed decisions about their broadband plan purchases.

   The NOI also solicits comment on FCC proposals to collect information about providers' existing data caps and mandate clearer measurement practices related to data usage.
   
   

3. Competition. The NOI poses questions about the impact of data caps on competition within the fixed and mobile broadband markets and in markets for related services. Seeking to clarify the role of data caps in shaping both consumer behavior and competitive dynamics among service providers, the NOI asks:
   • Whether consumers view data caps as a significant factor in distinguishing between service and plan types;
   • Whether providers apply data caps universally across their service areas or adjust their limits and related practices in selected service areas;
   • How data caps affect competition between providers and their affiliated over-the-top (OTT) services, like Voice over Internet Protocol and streaming; and
   • Whether data caps stifle innovation in the development of new OTT services and applications.

   The NOI also invites comments on potential regulatory steps the FCC could take to ensure that data caps do not hinder competition, innovation, or the growth of OTT services.
   
   

4. Legal Authority. Finally, the NOI seeks comment on the FCC's authority to regulate data caps imposed by broadband providers. In particular, the NOI asks whether the agency's spectrum licensing authority can be applied to regulate the data caps of mobile broadband providers and whether provisions of the Infrastructure Investment and Jobs Act directing the FCC to adopt broadband nutrition label rules and collect data cap and other information from providers participating in the Affordable Connectivity Program provide the agency with the authority to regulate data caps more generally. The NOI also asks whether there are any potential legal barriers to adopting rules regarding data caps, including considerations related to the First Amendment.

Next Steps and Takeaways

With the Supreme Court's recent elimination of Chevron deference, the FCC's proclaimed authority to generally regulate broadband service pursuant to Title II of the Communications Act being challenged in the U.S. Court of Appeals for the 6th Circuit, and the upcoming change in administration, the NOI and contemplated data cap regulations arise at an interesting time. Given those events—and both Commissioners Carr and Simington speaking out against the NOI as another attempt by the FCC to introduce broadband rate regulation—the NOI will likely garner attention and comments from industry and consumer groups alike, and new rules could be subject to invalidation under Congressional Review Act in January when the 119th Congress convenes. Regardless, stakeholders should provide feedback on the NOI now so that their perspectives can shape any potential data cap-related rules and inform the new administration about providers' concerns.

DWT will continue to monitor and advise on this proceeding. Please feel free to reach out to DWT if you have questions about this NOI or related regulatory matters.