Netflix Vs The Internet Providers

It won't surprise anyone who's been following such things, but it looks like the battle between video-streaming service Netflix and the cable and telecom companies who provide Internet access to most North American homes is starting to heat up. The battleground is obvious: bandwidth. Before the streaming of video became ubiquitous, bandwidth utilization was relatively flat - excluding increased market penetration, which is something that yields correspondingly higher revenue - and well within the parameters the ISPs were comfortable with.

With the introduction of a streaming (DVD-less) version of Netflix both here and in the States, however, longstanding bandwidth limitations have started to be put to the test. Roger Ebert tweeted recently that Comcast is at least considering some idea around charging Netflix for the use of "Kabletown"'s Internet pipes (more info here). There are also rumours floating around that throttling of Internet traffic will be imposed strategically, with the goal of either killing the streaming services or forcing them to pay for 'preferential treatment'. It won't be long before such stories become rampant, I suspect.

Anecdotally, I've been monitoring our own household Internet use, ever since we signed up for Netflix and a friend mentioned that his family had to up their monthly allocation as a result of using the service. We have a 60 GB (up and down) limit that we've had for ages. In the past, we usually averaged around 15 GB use each month, meaning that we were only utilizing about 25% of what we were entitled to. In the current billing month, which is really the first one that has seen us visiting Netflix on the PS/3 on an almost-daily basis, we'll probably finish in the 50 - 60% range. In other words, our use will have increased by somewhere between 100% and 140%! And I'm not even convinced that we won't go higher, since we only started watching Mad Men on Netflix partway through the month. (On the other hand, of course, we may not find many more attractions there as compelling as Season Two of that show has been.)

So if we're in any way typical, we should expect to see some significant tremors begin to rock the world of the Internet providers, any time now. My best guess is that we'll see some sort of across-the-board rate increases passed along to the customer base shortly, 'justified' by the sorts of statistics I've outlined above from our own experiences. Or maybe the ISPs will go after Netflix, YouTube and other big-use streaming companies, as Comcast is said to be. Or probably both!

[Update Dec 4/10: Our monthly total for Nov 4 thru Dec 3 came in just under 40 GB, slightly exceeding my 50 - 60% estimate (at 67%).]