You Can’t Always Watch What You Want

Broadband caps arrive, but video sites mum about threat

The Star Wars cycle. The Lord of the Rings trilogy. The Godfather saga. Imagine all of those in HD, streaming from your Netflix account, and you're imagining somewhere in the neighborhood of 50 GB of entertainment—and you're also imagining how quickly you could come up against newly imposed monthly streaming caps from your broadband provider. And that's before you start to think about what your kids are doing if your family shares a connection (and if you even want to know).

Welcome to the reality facing AT&T customers after the phone giant yesterday finally instituted a change that had been on the horizon for months. For AT&T broadband users, monthly Internet usage will be capped at 250 GB per month for fiber optic U-Verse customers and 150 monthly GB for DSL users—with overage costs of $10 for every additional 50 gigabytes used.

While most of the country seems to have been paying little attention to the move, it will have real implications for both content providers (particularly streaming video sites) and their customers, especially with other broadband providers considering similar moves. As Wired points out, each streaming high-def movie uses up to 2.3 gigabytes per hour. That translates into roughly 32 HD movies per month on a broadband connection. For a household of four using one connection and doing much more on the Internet than just watching movies, that threshold can sneak up on you pretty quickly.

But Netflix—whose bread and butter has become streaming content—has so far restricted any complaints it might have to the fine print of SEC filings; even then, it appears to concede the need for caps. “An independent negative issue for Netflix and other Internet video providers would be a move by wired ISPs to shift consumers to pay-per-gigabyte models instead of the current unlimited-up-to-a-large-cap approach. We hope this doesn’t happen,” wrote company CEO Reed Hastings in a January letter to shareholders. “The ISPs’ costs . . . to deliver a marginal gigabyte . . . is less than a penny, and falling, so there is no reason that pay-per-gigabyte is economically necessary. ”

While we haven’t yet returned to the early '90s age of metered Internet usage, when AOL was still charging hourly rates, gigabyte capping has already started to have real consequences for online video sites. In Canada, for example, Netflix lowered its video streaming quality to accommodate bandwidth limits (which some attributed directly to the caps).

If bandwidth strictures become more prevalent, an impact on online video viewing habits can't be far behind. What’s curious, however, is that Netflix is the only streaming company so far to utter a peep, and that only because the SEC requires it to disclose material threats to its business. Representatives for both Hulu and YouTube contacted by Adweek declined to address the subject at all. “We are not commenting on this,” said Hulu head of communications Elisa Schreiber. "We do not have comment at this time on this particular issue," said a YouTube spokesperson. Their customers may soon wish they weren't so meek.