| Comcast's Fair 250 Gig Bandwidth Cap |
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Bandwidth is cheap and getting cheaper, but it's still not free. So it's perfectly fair to charge for bandwidth as long as the cap isn't an excuse to hide a price increase or discourage competitive video “over the top.” Comcast's Charlie Douglas promised Liz Gannes the cap will go up. Most cablecos are terribly afraid of Hollywood pushing them out of the way, but Brian Roberts claims the web is a "great opportunity for cable." Fancast is just a hint of what Roberts intends to bring to the web. He's honoring that by allowing his customers to watch about 60 hours of HD video a month. At around 500 gig you can watch 130 hours of HD TV. letting the typical U.S. family shift all their vie 250 gigabytes of bandwidth costs a large carrier like Comcast between $12.50 and $25, a high amount to cover in a $40 service. Almost no one is right up against the cap, however, so the average cost is much lower. It's actually about $1/month/customer. Two carriers report cost per gigabyte of under ten cents and it should be similar at Comcast. Comcast doesn't release a figure, so I'm presenting a range based on 5 cents to 20 cents. Smaller and some rural carriers pay much more. Comcast has reported an "average" use of 2 to 3 gigabytes. That's a little lower than the 3 gigabyte worldwide norm (Cisco data.) and cablecos usually are somewhat above. Comcast's 2-3 gig may be a median, with the mean somewhat higher. Virgin cable in the U.K. is about 8 gig, and some Asians higher. It turns out that so few people use 250 gigabytes today that the cap is totally unnecessary. Comcast says it's less than 1% top 250 gig, and the arithmetic suggests it's much lower. If 1% used 250 gig, that's 2.5 gig on average, even if the other 99% are using no bandwidth at all. Under any normal usage distribution, only two or three tenths of 1% hit 250 gig. The cap actually saves them perhaps a dime per customer and probably much less. Measuring and dealing with those very few probably costs more than the amount saved. This makes sense; Verizon, AT&T, Ilaid/Free, France Telecom, and now Sky in the U.K. are unlimited, because customers hate caps and throttling. Current state of the art .264 compression is about 1 gig for a standard def movie, 3 gig for HD (which is soon in 60% of U.S. homes). So even at HD rates that's about 80 movies, or two a day. Saul Hansell calls it "generous” It's important to note that bandwidth demand goes up over time while bandwidth cost goes down, so far at about the same rate. So the capacity of a “reasonable” cap should rise over time with Moore's Law, probably 50-70% every other year. Even a 250 gig cap is not enough to provide the average household a choice of watching all their TV from Comcast or choosing an Internet alternative. Comcast is right that a sudden shift would break both their network and their income statement, but growing the cap at an economically sensible rate can create a natural compromise. The heart of “Net Neutrality” is everyone's choice to watch what they want over the net and do what they want, subject to truly reasonable network management. Tim and Larry did a brilliant job finding a way to define “Open Networks” in a way that creates an enforceable law, and named it “Net Neutrality.” The substance of the issue is not treatment of bits, however, but what we all can do on the net. Now that Verizon and Comcast have essentially agreed not to overtly block video, the battle will shift to indirect means, such as caps and high prices for fast enough service. In Canada, the UK, and Japan, there seems also to be a battle because incumbents are using their market power on backhaul to keep prices high. |
wing to the net if they choose. "If we can't compete, shame on us." Time Warner's Britt is trying to hold back the tide, cutting people off at about 10 movies a month.
