Wednesday, May 14, 2014

Some Data Cap Math

A Comcast executive VP stated today that he expects data caps, excuse me, metered billing, to be in place for all of their customers within five years. Since all the major cable companies have been trialing data caps for years, it is a safe bet that they are coming, even if you don't believe that the major broadband providers are acting as a cartel. So what does that mean for the average user? That will depend on the cap size. Let us work out some examples.

As we have learned from all the disputes over Netflix lately, the largest use of bandwidth is likely to be video. A quick look at a popular bittorrent site gives a reasonable estimate of what a streaming TV show might require:
1 hour of standard definition video (480p): ~0.350 GB
1 hour of in high definition video (720p): ~1-2 GB
1 hour of in high definition video (1080p): ~2-3 GB
5 minutes of YouTube video at 360p: ~0.015-0.02 GB
5 minutes of YouTube video at 720p: ~0.5 GB

Let's assume a TV series runs 22 episodes (typical in the U.S.). If you prefer to watch TV in HD (and everyone does), it seems reasonable to guess it would take 250 GB for a single season. Of a single show. Comcast currently has 300 GB caps in areas where they are testing the policy. Time Warner Cable has tested caps as low as 30 GB.

Comcast advertises $40 per month internet on their main web page, but if you click through to the fine print you find their actual rate once past the new customer promotion period runs, assuming the inevitable fees, closer to $70 per month. 300 GB at $70 gives a price of about 23 cents per GB. Once the cap kicks in the charges become $10 for 50 GB or 20 cents per GB. Four HD TV shows, less than one a day for a given week, would put you around 1000 GB, which would cost $210.

What conclusions do I draw from this? I think it's pretty clear these caps are designed to punish people that get TV via the Internet rather than purchasing cable TV. In fact, if the caps go into effect is has the magical effect of making cable TV look like a bargain (or a good antenna worth its weight in Google shares). I don't think there is any question that revenue is the goal with the caps, and if they have the side effect of killing Netflix, Hulu, YouTube, Apple, and other competitors, I doubt Comcast will shed any tears.

The Internet became popular by leveraging the common-carrier-regulated telephone lines and a policy of all-you-can-download for a flat rate. Altering this model will inevitably alter the way it is used. And that spells bad news for any service that requires large amounts of data, be it Steam games for your PC, the aforementioned video streaming services, or any number of other things the companies don't care about because it doesn't affect the 98% of their customers that would not be billed overages. How will it affect freelance software developers who depend on transferring code and other assets across the internet for their livings and don't have a giant corporation to pay the inevitable, and inevitably expensive business rates for true unlimited bandwidth? What about companies offering "cloud" backup services? Streaming music? Will it constrain future forms of social media? It looks like we might find out.

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