Are data restrictions actually a sham?

ISPs argue they can’t keep up with consumer demand — and have to implement caps to cope. Not true says one pundit.

FORTUNE — The argument by Internet service providers (ISPs) that too many people are using too much bandwidth seems plausible enough. After all, streaming high-definition movies, posting high-megapixel photos and downloading video games are making ever-larger demands on networks. But does that mean ISPs are really running out of bandwidth? Is capping individual usage the only way they can cope?

No, says tech pundit Robert X. Cringely (a.k.a. Mark Stephens). He argues that data caps are a ploy by ISPs to position themselves to increase their profits as data consumption explodes in the coming years.

The ISPs’ motivation aside, Cringely counters the their claims on the basics of bandwidth economics. Bandwidth usage is certainly increasing, but at the same time “backbone costs [basically, what ISPs pay to hook themselves into the Internet] are going down and have been doing so for many years,” he writes. In Tokyo, he says, the ISP Softbank BB charges its customers about half of what American ISPs charge, even while offering speeds four times faster. “Yet Softbank BB is profitable. Their backbone costs are inconsequential and to argue otherwise is probably a lie.”

Still, given the capacity in place now, it’s a problem when particular users go way past the norm in bandwidth consumption, as when Comcast (CMCSA) recently booted a Seattle man from its network (and, not surprisingly, treated him shabbily in the process) because he went way past the 250-gigabyte monthly limit.

Here is where Cringely gets into informed speculation as to the real motives of ISPs for setting caps. “Data caps that may make logical sense today make no sense tomorrow,” he writes, “yet once they are in place they’ll tend to stay in place.” And eventually, “we will all bump into these caps and our Internet bills will suddenly double as a result, circumventing competition and ending a 15-year downward broadband price trend.”

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