Outside of perhaps Comcast’s shareholders and employees, I can’t imagine that anyone’s happy about the recently-instituted 250 gigabyte per month bandwidth cap. But, I gotta tell ya, I understand where they’re coming from.
Here’s an analogy for you. Ever been on an airplane? Ever sat next to a “person of size”? Did you wish that person had purchased an extra seat so you weren’t having your space invaded? Or, have you ever had to sit with your legs so tightly jammed against the seat in front of you that you thought you’d die of DVT before landing?
Somewhere along the line, maybe you’ve paid extra to reserve a premium seat, giving you more legroom and/or shoulder room, as well as better service. Last week was a pretty good example. On my United flight from ORD to SFO, I purchased the cheapest possible economy ticket. If I’d been stuck in a standard UA economy seat, I’d’ve been bummin’, as United’s standard seat pitch is fiscally responsible (for them) but physically uncomfortable (for most fliers). Fortunately, over the years, I’ve earned the right to move into a better seat in Economy Plus (E+), providing an extra 4-6 inches of legroom, which makes a massive difference in comfort and productivity. Flying enough BIS (butt-in-seat) miles affords me Economy Plus access whenever I’m on United, but E+ is also a purchase option for those who want a little more legroom but haven’t flown enough to have earned the right to move forward. In this case, paying extra gets you a little more.
The morning of my flight, my upgrade request cleared, enabling me to move up to first class on that particular two-class airplane. If I’d chosen to leave 90 minutes earlier, I’d’ve moved up to business class on a three-class airplane. In either case, some portion of the folks in the forward cabin/s paid more for their tickets to ensure that they’d receive the best seats and service on the airplane. Again, pay more, get more. Other folks paid for upgrades, allowing them to move up for less than the cost of a revenue first/business class ticket. Still others (of whom I was one) burned upgrades earned by flying so many BIS miles. Regardless of how the two dozen of us in that particular first class cabin moved up, we were all up there by choice (no op-ups, with about a dozen opens in the back). And, regardless of what we paid, we all received the benefit of extra leg and shoulder room, as well as a better passenger service ratio.
Frankly, I don’t see the implementation of bandwidth caps being any different.
Airlines have a finite amount of capacity on a given airplane; they need to monetize that capacity in the best way possible. If having two people of size in a three-person row prevents a third person from sitting reasonably in that row’s third seat (leading to the airline’s inability to provide customer #3 the seat and space for which they’ve paid), that’s a problem, which has led most airlines to create policies governing people of size. Anyone, regardless of size, can choose to purchase a ticket providing additional room on most airlines; on airlines without premium cabins (e.g., Southwest), you can purchase two tickets to ensure sufficient space. Because, after all, that’s what airlines are really selling--space to get you from point A to point B. You can pay more, you can pay less, you can redeem miles for different classes of service. Options abound. But, net-net, you’re buying space to take you from one location to another.
Well, guess what? Just like an airplane only has so many seats, service provider pipes only have so much capacity--and spare me any discussion about DWDM and lambdas and such. Service providers are trying to run a business, too. Yes, we’re all yearning for more bandwidth to do whatever it is we do on the Internet. And, we’ve now reached the point that we’re gonna have to start paying for that bandwidth, in fashion little different from classes of service on an airplane.
Am I sticking up for Comcast? Hardly. But, a monthly 250 GB cap is a pretty hefty amount of traffic for today’s Internet use. Using up 8 gigabytes a day is a whole lot of Internet surfing and e-mail.
What’s that, you say? People are doing more than just web surfing and e-mailing on the Internet these days?
Here's the challenge--Comcast has stated that today, fewer than 1% of their user base approaches the 250 GB per month number. My parents are unlikely to hit that number anytime soon, maybe ever. Me? Heck, I could hit that number next month if I wanted to, but I don't currently have a compelling application to do so. I mean, I'd have to keep my AT&T ADSL line darn-near saturated; at the average speeds I get (1.2 mb/s down, 300 kb/s up), I might end up melting the copper to get to 250 GB in a month, but I could do it.
The question is, how? Well, I certainly know of people who've dedicated one of their home PCs to do nothing but run a torrent client 24 hours a day, 365 days a year. So, yes, they're the people who're in that 1%. Some/many of those 1% are downloading movies encoded in high definition video formats; I recently watched an HD movie being served from a network-attached storage device over a wireless home network at a colleague's house, and I gotta tell ya, it was awesome--serious geek envy, particularly since the double-whammy of living in a Faraday Cage in RF-saturated Mountain View makes even basic 802.11 connectivity at our home less than reliable. If my colleague would have downloaded that 8 gigabyte file over an Internet connection, he would've wiped out his day's Comcast Internet allotment with a single movie.
But, again, I understand that Comcast is trying to balance a given amount of resource for a given price. Not to use the old parental adage of one bad apple spoiling the bunch, but the 99% of folks who aren't using 250 GB of traffic aren't the issue here.
Now, lest you think I've lost my mind and am defending the implementation of bandwidth caps, here are a couple of other thoughts.
First, a 250 GB cap is actually a pretty darned good number to start with. Time Warner is testing a 40 GB cap on their high-end ($55/month) offering. If you think you're gonna hate 250 GB per month, you'd really hate 15% of that. You'd also hate the much-lower-than-250 GB limit from Rogers, Bell Canada, Frontier, and lots of other providers who've implemented caps.
So, in my mind, the issue isn't, how do we vilify Comcast (or other providers who've instituted caps)? The issue is, how can we figure out a mechanism to allow those who want a huge (or unlimited) amount of access to actually pay for it, while not unfairly burdening the 90% or more of people who aren't what one might politely call "bandwidth hogs"?
Again, with today’s Internet, my parents aren't going to come near a 250 GB monthly cap, nor will I; those who want to consume that kind of bandwidth simply need to pay accordingly. If you’re in the top 1% of those consuming bandwidth, you’re gonna have to buy a first class ticket for all that leg and shoulder room, Dom Perignon, and caviar.
But, what happens when we start to see more HD video coming in over the Internet? A few hours a day of Internet-delivered HD video will destroy a 40 GB per month cap. A few more hours will wipe out that 250 GB cap.
Heck, I can't wait till the day that I can sit in the living room watching my network-attached TV; browse a program guide showing me offerings on my local set-top box, home network-attached storage devices, and broadcast/Internet video; and fire up those video/audio/photo offerings instantaneously, no matter where the content originates. This is the promise of DLNA, the promise of the connected home, the promise of over-the-top HD video delivered via the Internet, you name it. I've seen demos of this type of integrated guide from folks like Macrovision, and I want it. Now.
At that point, hell yes, I'm going to use 8 GB a day of traffic. On any given Sunday, I could envision chewing up 30-50 GB of traffic simultaneously watching multiple channels of baseball or football all day.
If The Wife would let me, of course. Now, where the hell did she hide the remote?
Last night, as I was goofing around with my Verismo PoD, I was pondering how much video I might consume given the opportunity to seamlessly blend a traditional TV viewing experience with the immediacy of watching anything I wanted over the Internet. Sure, video-on-demand has been around for years, but your provider has to have the content you want on their network for you to (reasonably seamlessly) access it--the flip side being that provider VOD comes with the dual benefit of A) not counting against your bandwidth cap, and B) not infringing on any network neutrality issues.
Looking at a different form of video-on-demand, Apple TV has been out for more than a year; the latest instantiation allows you to not just watch Internet video (and enjoy your own content), but also pay to watch movies over the Internet. The Netflix Roku box takes things one step further, not from a capabilities standpoint per se, but because the box only costs $99, making it an impulse purchase for many households.
The Apple and Netflix boxes are particularly interesting in an age of bandwidth caps. By bringing the promise of premium content into the home at a moment’s notice, they all but guarantee additional consumption of content from, and revenue for, Hollywood studios. I haven’t seen concrete numbers on incremental consumption for those Netflix customers who have a Roku box versus those who don’t, but it’s a safe guess that those who have the box are watching more movies, while generating more money for Netflix and the studios--and eating up more bandwidth per month, leading to an interesting future promotion, "three bucks for a movie and a three gig rebate". Or something like that.
Moving forward, does this presage a world where users are hitting their bandwidth caps every month due to consumption of IP video, either via file download or real-time streaming? Great question, particularly in light of announcements just in the last two weeks—Amazon allowing video downloads with just a web browser, Comcast’s addition of downloading to its previous streaming-only Fancast service, Korea moving away from DVDs as a format in favor of downloaded content, and lots more.
Let’s face it...we’re moving to a world where much of the content we consume is becoming virtualized--either the content itself, the experience, or both. Virtualization is the hot thing in enterprise computing, to enable more efficient use of resources; lots of us also use VM software to enable us to run multiple operating systems on a single personal computer, too. How else would I play Vista Spider Solitaire on my Macbook?
Content consumption is little different. I don’t recall hearing anyone describe the Roku box as a “virtual Netflix DVD”, but in effect, that’s what the experience delivers. In exchange for $99, you get the (admittedly limited selection of) content immediately, without the hassle of little red envelopes and the latency of the postal service—or the need to even own a DVD player. A few years ago, the idea of “virtualized movies” over the Internet was a pipe dream (pun intended). Now, I look at a capability like this and say, sure, this could be in every broadband home in a few years. What’s next? Virtualized high definition broadcast TV, where you don’t need an HD service provider? Virtualized real-time gaming, where you don’t even need to own a console? Heck, if you can dream it, somebody will figure out a way to do it. All you’ll need is a TV and a decent-sized low-latency Internet connection.
Bandwidth caps are going to severely limit the ability for broad consumption of many of these new applications. Does this “limit innovation”, as a number of folks have said? No, not at all. Innovators innovate. These transient speed bumps are nothing more than that--innovators figure out how to evade or avoid them. Those who are stopped by speed bumps aren’t innovators. Plus, they’ve probably chopped their cars a little too much.
But, is it fair to say that bandwidth caps can limit applicability and adoption? Yeah, definitely.
So, what’s the solution here? I believe that we’re destined for at least a few years of tiered service offerings that closely resemble your choices in airline travel. Lots of households (e.g., my parents) will choose a basic plan, with a relatively low cap at relatively low prices. That’s relatively no frills economy class, a la Southwest (although that’s not intended to be a knock on Southwest, whom I believe is now the best U.S. carrier, all things considered). Some folks will choose a premium economy class, providing either bigger pipes, a higher bandwidth cap, or both. Service providers who offer triple- or quad-play are in the catbird seat in this category. I could certainly envision a provider offering customers a higher cap or bigger pipe if you also take their digital phone service, television offering, or mobile offering. The analogy? United’s Economy Plus.
For those who want/need the next level up, we move up to the realm of business class service. Think Virgin’s Upper Class--a service head and shoulders above economy, and considered to be well above the competition’s, too. We’re talking quite a bit more money, with quite a bit more benefit. That benefit might come as a result of simply paying more, or you might receive it by buying the full triple-play bundle from your provider—the latter resembling the use of an earned upgrade to get you into business class.
The piece de resistance ends up being first class on a true luxury basis, a la Emirates or Singapore Airlines. For an enormous, massive, ludicrous premium over other classes of service, international first class passengers receive the absolute best possible service an airline can provide. Similarly, the first class offering for service providers would be a big pipe (think 50+ mb/s, via a fiber or DOCSIS 3.0 link) and no bandwidth cap. At that point, the top 1% of traffickers would be paying their own freight, while staying the heck out of the way of everyone else. For the price, first class passengers get a limo ride to the airport, separate check-in and lounge areas, a personal concierge to walk them to the airplane, the utmost level of service on the flight, a shower on the other end, and a whole bunch more--for 20-50x (or more) the price of a coach ticket.
Do I think that a service provider's ultra-premium bandwidth offering will cost 20-50x that of basic service? No, not at all. But, I think it's entirely reasonable for a standard (economy) rate to be ~$25 a month, with tier 2 (premium economy) at ~$50 a month, tier 3 (business) at ~$80 a month, and tier 4 (first) at $200 a month, at least in the U.S. Charging much more guarantees that the U.S. will continue to end up towards the bottom of the top 20 in terms of broadband value. But, not doing anything will continue to have the few screwing up the party for the many. I certainly envy the Japanese, who can get a 100 mb/s link into the home for ~$30 a month, and yearn for the day where we might see a similar offering here.
Two final thoughts to keep in mind.
One, Moore's Law will continue to be a double-edged sword. On the one hand, network gear is going to continue to wring the most possible bandwidth out of a given medium, whether it's fiber or copper. That's great for consumers and providers. The flip side is that all that computing power in the home and accessible via the network is going to continue to put greater and greater demands on the network itself. It's an endless cycle--nature abhors a vacuum.
Two, a simple pendulum will always search for equilibrium. That's in effect what's happening here. Think of bandwidth caps as gravity, an attempt to bring the highest 1% of traffic (ab)users down to earth and into equilibrium. In air, a physical pendulum is affected by atmospheric and mechanical forces--which is precisely what bandwidth caps are.
(Full disclosure: I have a consulting relationship with a company in which Comcast has invested; these opinions are solely my own, and in no way necessarily reflect those of my customer or of Comcast)