Streaming 411

One of the biggest concerns for both streaming service subscription providers like Netflix, as well as streaming customers who want to enjoy unlimited streaming, is the issue of the broadband cap on their internet plans.  These caps can be as low as 5 GB per month even on some wireline plans, and up to 250 GB - 400 GB per month, depending upon your provider.  Standard definition streaming of one movie uses about 1.4 GB, so you can easily do the math and understand that lower caps are not friendly toward streaming, particularly if you are a wanna-be cord cutter who draws all of their entertainment through streaming.

A Possible Win-Win Solution?

However, yesterday at the ATIS Today's Technology Leaders, Tomorrow's Networks Executive Roundtable event, Tony Melone, Chief Technology Officer at Verizon, along with AT&T's CTO John Donovan onstage, predicted that internet providers may adopt a business model that includes allowing over-the-top providers like Netflix, Hulu Plus, and Google, to purchase a 1-800 type off service to deliver streamed content, which means consumers will not be charged for data used with streaming.

Says Melone "As we move away from flat rate pricing, there is room for an 1-800-type of service where certain destinations could offset the cost of the network to get customers to those destinations.  There are net neutrality issues that have to be addressed, too."

We need to connect the dots here before we start to rejoice about finally being able to cut the cord.  It is highly likely that streaming providers will have to pass along some of that cost, which means there will be a slight rise in subscription prices, most likely.  I hope that consumers will understand, though, that this type of model is a tremendous improvement over what is available now, particularly if your data plan isn't adequate to adopt moderate to heavy streaming.

What About the Dark Horse in the Mix?

This business model may not be well-received by all the players, however.  Comcast has recently come under fire about it's supposed net-neutrality violations when it announced that Xbox users will not use up any of their allotted data when they stream Comcast content.  Net neutrality proponents are crying foul, saying that Comcast is playing favorites to themselves in lieu of other services that deliver their content over the public internet.

What's even more disturbing, however, is that Dan Rayburn, the highly-respected analyst at Streaming Media, claims to have proof Comcast is penalizing the likes of Nefflix and giving themselves preferential treatment.  Says Rayburn "Based on details I have gotten from those who have looked at how packets are marked on their home broadband connections provided by Comcast, packets are in fact being marked with Quality of Service tags."  Apparently Xfinity streams are marked with high priority tags, while Netflix and Hulu packets are being marked as low priority. 

Rayburn goes on to explain that "all internet traffic from at least the cable modem temination system to the home cable modem shares exactly the same path.  There is no "private IP network" between those points."  Rayburn says it's unlikely that this point in delivery is part of a private network, and yet they are tagging packets unfairly as they travel over the public internet.  For those of you who are not familiar with net neutrality, it says that while internet providers are allowed to have private networks to deliver their content, they cannot favor those private networks over the public internet.  If Rayburn's smoking gun is correct, it appears that Comcast is violating the spirit of the net neutrality rules.

GigaOm also wrote an article yesterday that paints an interesting picture of Comcast, as well as the battle lines being drawn by pay TV providers and streaming service providers (we used to refer to it as a chess game, but it appears things are heating up!).  The author, Stacey Higginbotham, notes that Comcast is engaging, or has engaged in the past, in the following activities:

• Blocking peer-to-peer file sharing activities (the FCC slapped it's wrist and ordered them to find a new way to manage their networks that didn't involve the appearance of protecting it's TV business.
• Implementing data caps, and being downright punitive if anyone dares creep over the cap.  There have been anecdotes that people have been booted off their subscriptions for a year for going 3 GB over the 250 GB cap.  Additionally, there is question about how accurate their meters are.
• Seeking additional payments from Level 3 Communications (a middle-mile internet provider) to deliver packets to their Comcast subscribers.  CDN also delivers content for Netflix.
• Waiving data cap usage for Xfinity traffic over Xbox
• Possible deal with Verizon to allow Verizon to purchase spectrum, while agreeing to cross-sell to each others customer base

So - it's a reasonable assumption that Comcast will not play nice by providing such an 800-business model without possible intervention from the FCC, or the ability for consumers to vote with their wallets by changing internet providers.  They don't exactly have a reputation for being pro-consumer as it is, other than having a fairly generous 250 GB cap.  This new business model, if it becomes reality, may force them to start being a bit more consumer-friendly.

Back to the 1-800 deliver model: 

Internet providers are acknowledging that

1. streaming is here to stay, and their customers are clamoring for it, and
2. they need to somehow pay for the increased demand that this will place on their networks without compromising the functionality of the public internet.

This is a brilliant and creatve compromise that is win-win for everyone.  Businesses like Netflix will pay extra for priority access for their customers, which not only means that data caps become a non-issue to us, but also that we don't have to deal with heavy traffic problems during peak times which can interfere with our stream.

"We don't want the service to be too expensive for our customers, but we have to balance that with keeping up demand for services.  Technology can help.  But the demand side will have to be moderated," says Melone.  He noted that as new technologies like streaming take off, broadband providers are left with the burden of dealing with increased demand on their networks.  Someone has to help them pay for having to react.  That is a reasonable argument.  By having over-the-top providers help pay the price (and ultimately, consumers will have to help via a price increase), this will ultimately benefit the consumer.

The biggest issue is can everyone impacted - internet providers, over-the-top providers, and consumers - all agree on what is fair and reasonable to pay.  On the consumer end, it doesn't make sense for us to pay increased costs in either streaming services or broadband subscriptions if we are not saving anything compared to just sticking with our cable or satellite TV subscription.  Many of us want both - our TV bundle and streaming.  But we won't if costs are doubled from what they already are.  The players need to be reasonable in setting price points for these services.  Internet providers need to keep that in mind, or they will only hurt their already fragile reputations they have crafted by capping their plans and throttling.

Melone seems to understand that.  "If you're late to the market, customers will punish you and they'll go elsewhere.  if you go too early shareholders penalize you, because you aren't using the network.  The hardest task is not selecting the technology, but picking the window of time to deploy it."

For more information on how to stream movies online, including a comprehensive checklist of what issues to address, check out our pages on this site.  We have assembled lots of helpful information to aid consumers in navigating the streaming landscape.

Sources:  http://reviews.cnet.com/8301-12261_7-57430190-10356022/verizon-cto-predicts-toll-free-data/

http://blog.streamingmedia.com/the_business_of_online_vi/2012/05/comcast-traffic.html

http://gigaom.com/broadband/7-ways-comcast-is-killing-the-cable-killers/

Author Anne Madison