Where there's a cap, there's no competition

AT&T plans usage caps from May 2, 2011 for its DSL and U-verse subs: 150 or 250 GB/month, and an overage fee of 20c per GB. Similar policies are installed by Canadian ISPs (but with much more expensive overage fees), whereas BT is abolishing caps/FUP.

Dave Burstein was quick to point out that installing caps has little to do with cost (see previous post: The Incumbents' solution is in search of a problem). So which are the true reasons?

• Make an extra buck. There's nothing wrong with that, except that AT&T is not being fair about why they are doing this.
• Fight OTT. This write-up reveals that IPTV (U-verse) usage does not count toward the cap. By installing a cap, users may be led to think twice before using Netflix or Google TV. If you are used to leaving the TV on all day, this turns into a real problem.
• Insufficient competition. In a competitive market, there would be little room for installing caps just to make an extra buck (see above). Put bluntly: caps prove that competition is insufficient.