A data cap (bandwidth cap) is a service provider-imposed limit on the amount of data transferred by a user account at a specified level of throughput over a given time period, for a specified fee. The term applies to both home Internet service and mobile data plans.
Data caps are usually imposed as a maximum allowed amount of data in a month for an agreed-upon charge. As a rule, when the user exceeds that limit, they are charged at a higher rate for further data use. However, the provider may not charge overage but instead throttle the users’ transfer rate per second beyond the limit. For example, a mobile user paying for a 4G plan may be downgraded to 3G for mobile data beyond their data cap.
Data caps result in lower rates of access to online materials, especially multimedia and streaming content, which is a problem for content creators and their advertisers. T-Mobile reported recently that users with capped or throttled data used 20-30 times less data and 37 percent of subscribers avoided streaming media because they were afraid to exceed their limits.
Data caps are also uniformly unpopular with customers. As a result, service providers often refer to data caps by other names such as fair usage or fair access policies, usage based billing or vaguely as band caps.
Broadbandnow.com lists 58 United States home ISPs using data caps.
See a video presentation: What’s the problem with data caps?