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| Today's Numbers: "Penny or Two/hour" |
| Thursday, 02 December 2010 16:06 |
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"It's reasonable to think of the numbers involved today as a penny or two per hour," streaming media expert Dan Rayburn confirms to me. "What people are worried about is it could go much higher." Dan is at Frost and Sullivan and probably the best informed analyst in the field. I come to a similar figure. At current rates, this would have a significant impact on video over the net. But it is "not the end of the Internet as we know it."
Reaching families that watch 200-300 hours of TV would therefore cost several dollars more to connect over the net. Because the programming itself takes most of the dollars customers pay for subscription TV, that's enough to significantly handicap anyone competing with cable or satellite using the Internet. The 3+ TVs in most American homes average 110-180 hours/month depending on which figure you believe. Terminating fees will become an even more important factor in the future because the other costs of streaming, such as servers, are going down rapidly. Allowing terminating charges will affect video competition.
For more typical web video usage today, say 5-10 hours a week, the increased costs of paying termination are less than $1/month. That's meaningful to all the players involved, but not necessarily devastating. Comcast refuses to tell anyone the amount they want to charge, which distorts the public discussion. I believe it is surprisingly little (for now) but they refuse to answer and their partners are under strict non-disclosure.
Cablecos have the majority of U.S. broadband homes and have powerful incentives to jack up these rates to protect their video package. AT&T and Verizon have built $billions in video revenues and tell wall street video is important to their future. Comcast ihas so far "played fair." Time Warner is the bad actor, proposing 10 gig caps when the average U.S. broadband user is currently drawing 15 gig. Jules would be making a bad mistake ignoring this one. All the carriers have incentive to raise termination charges to abusive levels if not checked.
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