Data Caps Freeze Innovation: Higher Quality Video Edition

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Of the many problems with data caps, one of the most pernicious is the way they freeze innovation and the evolution of online services. Today’s announcement from Kaleidescape that they will begin offering “Blu-ray quality” video downloads illustrates that beautifully. That means that one video weighs in at over 50 GB of data.

Remember, there was a time when this video was "good enough" for most people. | image by flickr user Louis Abate

Usually we embrace services that offer higher quality than their competitors as an important evolution. If the improvement proves popular the market will reward the innovator, all of the competitors will have to adopt the new standard, and consumers’ experiences will improve.

But data caps can stop that from happening. If a consumer has a low data cap, instead of thinking “maybe I’ll try out this new service because it sounds better,” she may think “this new service sounds like it will cost me a lot of money in overage fees.” Worried about paying overage fees, she sticks with what she knows. Since she does not try the ne service, Kaleidescape does not get any new customers and Kaleidescape’s competitors are not forced to improve to keep up. Instead of an internet constantly striving to improve itself, we get one that is satisfied with a “good enough” world.

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