On bandwidth quotas and streaming video


— 2:50 PM on February 4, 2011

If Canada isn't off your radar completely, you've probably heard about the recent fuss over a CRTC ruling that effectively forced independent Internet service providers to implement usage-based billing. The Canadian government now seems likely to throw the ruling out the window, no doubt to the relief of most consumers here. Being still very much a guest in the Great White North, I've watched from the sidelines as the situation has progressed—and as my own ISP, Shaw, has quietly rolled back a 25% increase in my 100GB bandwidth quota, with plans to start charging overage fees of $1 per gigabyte this month.

I won't pretend to like Shaw's change in policy, even if my particular service wasn't rendered as unattractive as others. Shaw's cheaper Internet plans with lower quotas are subject to $2/GB overage fees, which as this infographic nicely illustrates, are very much unreasonable. Regardless, the Canadian government's backlash against the CRTC decision seems encouraging. As a French citizen, I'm more used to my government trying to pass stupid, repressive Internet legislation than looking out for the benefits of consumers. Here's hoping things keep moving forward in that direction here.

Metered Internet access isn't a new concept at all, though. We've seen ISPs all over the world implement bandwidth quotas. I think part of the problem, especially in countries like Canada and the States where Internet connectivity is sold by cable companies, must be the meteoric rise of online video.

A recent usage study by Cisco showed that peer-to-peer file sharing is no longer the single biggest source of traffic on the Internet. Far from it. As of October 2010, P2P sharing made up 25% of all 'net traffic (down from 38% in 2009), while online video accounted for a whopping 26%. That figure is no doubt going to increase over the next few years.

Of course, odds are much of that online video streaming replaces, rather than supplements, cable TV. Our last poll revealed that almost equal percentages of TR readers consider cable TV and online streaming to be their primary source of video content—22% vs. 20%, respectively. It's perfectly understandable. DVRs can be awkward to use and expensive to buy or rent. Without a DVR, having to arrange your personal schedule around TV shows is totally last century. Meanwhile, streaming services like YouTube, Hulu, and Netflix provide free or very cheap content all the time, everywhere, be it on your cell phone, your Xbox, or your laptop at work.

The enemy. At least for now.

In a way, I believe what cable providers are currently experiencing resembles the seismic shift the music industry underwent at the beginning of the last decade. The Internet is, once again, causing an old, tried-and-true business model to fall apart... except this time, business is being lost not to college kids downloading music illegally on Napster but to honest cable TV subscribers using entirely legal services with the blessing of content publishers.

Curbing the growth of streaming video by imposing quotas on bandwidth usage seems like a quick, knee-jerk reaction to this change, much like the RIAA's mass lawsuits were several years ago. But is it sustainable?

On the one hand, you could argue that 'net bandwidth isn't inherently free, and if we pay for electricity or telephony based on our consumption, it makes sense that Internet billing be metered, as well. I personally don't see any problems with that stance, just so long as ISPs charge reasonable rates for bandwidth. The $2/GB rates we're seeing from some Canadian ISPs don't fall under that umbrella, as I pointed out above. At those kinds of prices, if my math is right, downloading a season of Lost in HD might cost you as much as the DVD box set in bandwidth fees alone. Try a buck or two, and we'll be in business.

On the other hand, cable companies could be much more clever about all this and start offering online streaming services of their own, which they could monetize directly. What if you could get the same selection and service as Netflix from a hypothetical cable ISP service, but the ISP service was free as part of your TV or Internet bundle? I would switch to the ISP service in a heartbeat, and I'm sure a lot of other folks would, too. Implementing such services might be tricky to pull of for smaller cable companies, but I'm sure such firms could pool their resources together and share revenue among themselves. Alternatively, TV networks could shoulder the load and offer deals to cable providers that would be similarly enticing to their customers.

Ultimately, I think it's pretty clear that the Internet is becoming a unified playground for all of the world's information—be it video, music, telephony, or the web. The sooner big, decades-old industries realize this fact and begin transitioning to the 'net, the better for all of us. We saw the music and movie industries make this move, thanks in no small part to Apple and iTunes. Perhaps this decade, we'll see Internet service providers and cell carriers make the switch—to Internet TV and VoIP, respectively, both with unmetered and unfettered access to the rest of the Internet.

I'm keeping my fingers crossed.

   
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