from the pricing-innovation dept
Despite claims that imposing caps is about altruism or even helping grandmothers, most consumers understand that ISPs want them to pay more money for the same product at a time when network hardware and bandwidth costs are falling. Generally, ISPs that do impose caps insist that these caps will be flexible as modern usage evolves. That claim is about to get tested more seriously as next-generation game console downloads and 4K video slowly come to market.
Netflix CEO Reed Hastings not that long ago stated the company's planned 4K streams will need at least 15 Mbps but optimally 50 Mbps. Streaming a 1080p 3D movie from Netflix at the moment eats around 4 to 5 GB per hour, a total that could jump to closer to 20 to 30 GB per hour with 4K video. Similarly, Sony is cooking up a 4K video download service that could involve downloads as high as 100 GB per title. It's a subject getting revisited with everybody binge-watching "House of Cards." Tacking 4K video on to existing bandwidth consumption begins to get very bandwidth intensive when you're talking about entire series at 4K resolution (how much modern compression codecs like Google's VP9 or H.265 will help are very rough estimates):
"Streaming in 1080p on Netflix takes up 4.7GB/hour. So a regular one-hour episode of something debiting less than 5GB from your allotment is no big deal. However, with 4K, you've got quadruple the pixel count, so you're burning through 18.8GB/hour. Even if you're streaming with the new h.265 codec—which cuts the bit rate by about half, but still hasn't found its way into many consumer products—you're still looking at 7GB/hour. But you're not watching just one episode, are you? Of course not! You're binging on House of Cards, watching the whole series if not in one weekend then certainly in one month. That's 639 minutes of top-quality TV, which in 4K tallies up to 75GB if you're using the latest and greatest codec, and nearly 200GB if not. That means, best case scenario, a quarter of your cap—a third, if you're a U-Verse customer with a 250GB cap—spent on one television show. Throw in a normal month's internet usage, and you're toast."Gizmodo doesn't note that many people's bandwidth caps are even lower. CenturyLink, Suddenlink and AT&T lay claim to tens of millions of DSL users (which the companies don't intend to upgrade anytime soon) who face 150 GB monthly caps on top of a significant flat monthly fee -- plus sometimes the cost of a mandatory copper voice line and all the additional, annoying fees that entails. Those slower, 3-10 Mbps connections in reality cost very little to provision and provide, but there's the rub: these customers are being aggressively beaten about the head and neck on price because of limited nationwide competition. Innovation and creative pricing, indeed.
ISPs have long defended low bandwidth caps by claiming that the majority of today's users wouldn't be impacted by them, knowing full well that the majority of tomorrow's users would. That day is coming quicker than you'd think, and it's worth watching whether ISPs are flexible on allotments, or if they keep existing allotments firmly in place to intentionally clothesline Internet video customers -- especially those looking to cut the cord.