Data caps can be a costly part of doing business if not managed correctly. A surprise bill can turn a profitable month into a confusing billing problem.
If your business buys Data Limited Internet services or is considering buying an Internet plan with data caps or data limits, read this article to ensure you know what you’re getting yourself into and what other questions you can ask your ISP.
What are internet data caps?
Table of Contents
Data caps, a term frequently thrown around in discussions about internet plans, refer to the limit Internet Service Providers ISPs put on the amount of data a customer can use. Once this cap is exceeded, users might face an overage charge where more usage means paying more money. Or you could experience a reduced internet speed, a practice known as throttling.
Types of Data Caps in Business Internet Plans
- Hard Cap: This is an absolute limit. Exceeding it can result in additional fees or service suspension until the next billing cycle.
- Soft Cap: Crossing the data cap leads to reduced speeds, but no extra fees are charged.
- Tiered Data Plans: These plans offer different data usage levels, each with its cap and corresponding price.
For a business example, we turn to Xplornet. Xplornet advertises a package with 50GB of monthly data transfer and $4 for every additional GB transferred. (example taken from Xplornet Satellite packages)
How to know if you have data caps?
The simple way to know if you have data caps is to look at your contract or bill. You should see if any number is related to GB rather than Mbps or Gbps on this document. The difference is that GB stands for Gigabytes, a measure of size or the measure of an amount of data. Mbps or Gbps measure bandwidth (or throughput) and data transfer capacity.
To use a car analogy, the bandwidth is the size of a highway, and the data size or monthly usage is how many cars drove on the highway in the last month.
Data caps are concerned about the total number of cars (but not measured in cars..you see where I’m going with this)
What happens if you go over your data cap?
When you go over a data cap, you will incur overage fees. Overage fees can vary in amount, but often are punitive relative to the average cost of Internet Bandwidth.
The amount of data you transfer technically does not cost your ISP anything. You might ask, if it doesn’t cost them more, just let us use unlimited data!
Data caps are put in place to drive desired behavior and make extra money. Many instances where data caps are fixed wireless, where the rural or remote connection to the community is limited, or Geostationary satellite, where the satellite itself only has limited capacity.
Data caps are a variable put in place to maximize profit from a capital-intensive asset, and monopoly power allows for data caps.
How can you avoid going over your data cap?
Going over your data cap can be costly. Thankfully, there is a solution if this is a problem for you. The problem can be addressed from as low as $0 if your Internet provider has bandwidth usage tools. Some may even send email alerts based on your usage.
If you can use a tool to set up reminders or alerts, do this.
If your provider does not make this simple for you (because it’s not in their best interest…unfortunately), there are some tools you can look at. The lowest cost starts at just $49, and you can spend more if you have more complicated needs.
I recommend measuring your usage for a few months, analyzing where it makes sense to reduce Internet usage, and adjusting your business processes or accepting the cost. If a video call costs you $4 in overage fees, but it’s with a client, you may accept that as a cost of doing business.
Other options could include upgrading to a better internet service. This may not be your option if you operate your business somewhere with data caps. Read our complete guide on business Internet costs for more advice.
Advice: If you work with an IT company, have them implement the low-cost tool and deliver a report identifying how to optimize your Internet spend.
How Do Usage Limits Affect Businesses?
Data caps can profoundly impact businesses, especially those heavily reliant on cloud services, online transactions, and constant data transfer.
- Budgeting Challenges: Unanticipated overage charges can disrupt financial planning.
- Operational Disruptions: Hitting a data cap mid-cycle could slow down or halt business operations, especially if critical processes are cloud-based.
- Strategic Limitations: Companies may limit their use of data-intensive applications or innovations to stay within caps, potentially hindering growth and competitiveness.
What is bandwidth throttling?
Bandwidth throttling is the reduction of bandwidth once you reach your data caps. The throttling of bandwidth is another mechanism carriers and ISPs use to promote their desired behavior. Throttling allows them to offer “unlimited” data plans for customers.
As a business, ensure you understand the throttled bandwidth and assess if your business systems can operate on that lower bandwidth. In some throttling situations, speeds will be reduced to kbps (kilobits per second). While this could sustain a voice call, it will not allow fast image transfers, document uploads, or multiple clear video calls. Read more about throttling at Wikipedia here.
Advice: Ask your ISP to identify in writing how the service will perform once throttled.
Does the speed of my Internet connection impact my Internet data usage?
The speed of your Internet connection can impact data usage to a point. If you compare a business that operates on 5Mbps and has built its business processes around having a 5Mbps Internet connection, the day it upgrades to 100Mbps, it will likely see no change in total data transfer. This is because a 5MB PDF is 5MB, whether transferred on a small or significant connection.
The actual difference is time and the changing of business processes. If, after 3 years, that business is used to 100Mbps bandwidth, uses simultaneous video calls, switches to IP Phones, and does daily data backups, the total data transferred will be much higher than before.
Advice: Ask for multiple quotes at different bandwidths and see if the total monthly cost differs based on your expected data transfer.
How often is my Internet data usage updated?
Data transferred is updated frequently because your usage can vary widely throughout the day. More advanced software for network monitoring, like Orion Solarwinds, can update your statistics in real-time or at longer intervals.
You’ll have to ask your provider how often they sample your data to get a data usage reading.
The Reasons Behind Data Caps
Why Do ISPs Implement Data Caps?
Internet Service Providers (ISPs) justify the implementation of data caps for several reasons. Primarily, they are seen as a way to manage network traffic and ensure fair usage among all customers. With increasing demand for bandwidth-intensive services like video streaming and large-scale file transfers, ISPs argue that caps are necessary to prevent network congestion and maintain service quality for everyone.
Network Management and Fair Resource Allocation
- ISPs claim that data caps help distribute network resources fairly among users.
- This is particularly relevant during peak usage hours when networks are most strained.
What are “peak”, “non-peak”, hours and when do they occur?
Peak or non-peak hours refer to the time when most people are using the Internet. This is the evening, or 4 pm-11pm, but can vary from carrier to carrier. When kids get home from school, residential customers are streaming TV, playing Video Games, and downloading their homework…(some are maybe).
ISPs monitor peak hours because their network equipment has limits. If the limits are going to be reached, it’s during peak times. This causes customer complaints, which costs money. Because of this, carriers try to persuade customers to use data in off-peak times.
As a business, your peak times may overlap with residential peak times, but they may not. A simple example of working within these constraints is to schedule your data backups during non-peak times. This will reduce costs.
Managing Internet Usage Within Data Caps
Effectively managing internet usage is critical for businesses operating under data caps. Here are strategies and tools to help businesses stay within their limits without sacrificing operational efficiency.
Tools for Monitoring Data Usage
- Network monitoring software can provide real-time data usage insights.
- ISPs often offer tools to track usage against your data cap.
Practices for Reducing Data Usage
- Optimize File Sizes: Compress files before uploading or sharing.
- Streamline Communications: Use text-based communication where possible instead of video calls.
- Selective Cloud Syncing: Sync only essential data to cloud services.
- Schedule Data-Intensive Tasks: Perform large data transfers during off-peak hours.
Comparison of Data-Capped vs. Unlimited vs. Custom Business Internet Plans
| Feature | Data-Capped Plans | Unlimited Plans | Custom Plans |
|---|---|---|---|
| Cost | Generally lower | Higher, but predictable | Varies based on customization |
| Flexibility | Limited by cap | High | Tailored to business needs |
| Scalability | Limited | High | Depends on the terms |
| Suitability | Small to medium businesses with low data usage | Businesses with high and unpredictable data usage | Businesses with unique requirements |
In summary, while data-capped plans may suit some businesses, others might find more value in unlimited or custom internet solutions. Assessing your business’s specific needs and usage patterns is crucial in choosing the most suitable option.
Future of Data Caps in Business Internet
Understanding the future landscape of data caps in business internet is essential for long-term strategic planning. Let’s explore the trends, predictions, and technological advancements shaping this area.
Trends and Predictions
The internet landscape continually evolves, influenced by user behavior, technological advancements, and regulatory changes.
Emerging Trends
- Increased Data Consumption: With the rise of cloud computing and streaming services, data usage is expected to grow, potentially leading to more ISPs reconsidering their data cap policies.
- Regulatory Influence: Governments and regulatory bodies may play a more significant role in dictating terms around data caps, especially in regions where internet access is considered a utility.
Predictions
- Flexible Data Policies: ISPs might offer more varied and flexible data plans to cater to different business needs.
- Greater Transparency: There may be a push towards more transparency in how data caps are implemented and enforced.
Conclusion
As a business, you may need to deal with data caps. Luckily, most businesses will soon forget about data caps, and they will be a thing of the past.
Check out our in-depth article on upgrading your internet, and consider shopping around for services without data caps. Perhaps you now have new options in your business park.
If the cost of your data caps is too much for your business, deploy a network monitoring tool to help understand what, who, and why you’re using too much data.
After making these decisions, adjust business processes and return to work.
Thank you for reading. Leave any questions or comments if you have experience with data caps in your business.
