WASHINGTON, Oct 15 (Reuters) -

The U.S. Federal Communications Commission said on Tuesday

it was opening a formal inquiry into why broadband providers cap

data use by some customers, and how it impacts consumers and

competition.

"For most people in the United States, rationing their

internet usage would be unthinkable and impractical. But, for

millions, limitations on how much data they can use online is a

constant concern," said FCC Chair Jessica Rosenworcel.

Many consumers face no data caps on internet service but

millions -- especially those on lower-cost plans -- do face

limits.

Rosenworcel said it is now easier and less expensive for

broadband companies to provide unlimited data and noted that

caps "can cut off small businesses from their customers, slap

fees on low-income families, and prevent people with

disabilities from using the tools they rely on to communicate."

Rosenworcel first said in June 2023 she was seeking support

from other FCC commissioners to support a formal inquiry to

learn more about how broadband providers use data caps on

consumer plans.

Last month,

a trade group said Americans

used just over 100 trillion megabytes of wireless data in

2023, up 36% from the prior year, the largest single-year

increase in wireless data consumption.

Some consumers have complained about their struggles

with internet providers who receive government subsidies. The

FCC separately released 600 stories from consumers about their

struggles with wireless and broadband providers data caps.

Rosenworcel noted during COVID-19 many fixed and mobile

internet service providers refrained from enforcing or imposing

data caps "suggesting that our networks have the capacity to

meet consumer demand without these restrictions. We know that

some providers do not have them at all."

In May, a

broadband internet subsidy program

used by 23 million households ran out of money and shut

down after the White House unsuccessfully urged Congress to

dedicate another $6 billion.

Rosenworcel is seeking input on the current state of

data caps and if they harm competition or consumers' ability to

access broadband internet and review why data cap use "continues

to persist despite increased broadband needs of consumers and

providers' demonstrated technical ability to offer unlimited

data plans," the FCC said.

The FCC will look at "current trends in consumer data

usage; the impact of data caps on consumers, consumers'

experience with data caps, and how consumers are informed about

data caps on service offerings; the impact of data caps on

competition" and the FCC's legal authority to take action

regarding data caps.

In August,

a federal appeals court blocked the FCC's reinstatement of

landmark net neutrality rules

, saying broadband providers are likely to succeed in a

legal challenge.