If you’re a big user of online video, you might want to be checking your cable bill a little more closely. Cable operators may soon be implementing incremental fees to the accounts of users who exceed monthly data limits. Sanford Bernstein & Co. analyst Craig Moffet believes that such fees may begin as early as 2012 for some subscribers.
Said Moffet:
“As more video shifts to the Web, the cable operators will inevitably align their pricing models . . . With the right usage-based pricing plan, they can embrace the transition instead of resisting it.”
Netflix streaming subscribers may be some of the most likely candidates for the fees, along with heavy users of Hulu Plus, YouTube and pay-TV services such as HBO and Showtime that are ramping up their online offerings.
Netflix CEO Reed Hastings, who has long opposed usage-based fees from cable operators, believes that such caps are not in the best interests of consumers. Said Hastings this past May:
“We don’t think ISPs should be able to use their exclusive control of their residential customers to force us to pay them to let in the data their customers desire [and already pay for],”
What do you think, Insiders? Should those who use more of our increasingly busy broadband pipes pay a higher share of the costs involved?
(via Home Media Magazine)
I don’t think it’s unreasonable. We pay more when we use more water, electricity, gas, food, etc. Why not when we use more bits?
What IS unreasonable is the way extra bits have been charged for in the past. 2 Gig for $40 and then $10/gig afterward is preposterous, even if scaled down from cell phone rates.
Water for one person (me) is about $25/month. Gas and electric vary with the seasons, but average $50-70/month each. My broadband, right now, is a flat amount right in that range. If I can stream a movie a day (and do all the other stuff I do online, but streaming uses the most) – or about 30 movies a month – and still be in the $25-50 range of payments then I’m okay with it.
What’s good for Redbox is, if the cost of bits goes up too much, stopping by my local video vending machine looks better and better :)
The difference is that internet doesn’t have a tangible real world cost. The only costs are infrastructure which is set and power to run it which is the same no matter how much bandwidth pass through. If the companies used the money from each customer to ensure infrastructure improvements needed for that customer then we won’t see issues.
The problem isn’t money for bandwidth, it’s money to prop up the cable TV industry. Claiming it’s usage fees is just a red herring.
Citation please, because that really isnt true. The internet DOES have a limited amount of high quality video friendly streaming bandwidth and increasing that nationally to accommodate video streaming will be quite expensive. I’ve been doing networking and communication since the late 1970’s. There arent tons of unused copper and fiber laying around waiting for someone to plug them in and use them for free. Pulling extensive wire costs a ton of money.
You also have to take into consideration that many people are currently paying $25-75 a month for internet and $25-100+ for cable/satellite tv. The cable satellite tv businesses are often operated by the same people who sell you bandwidth. I guess the good news is that when people move from live video, 500 channels to streaming all the bandwidth for delivering tv signals can go to internet bandwidth. But theres going to be a fair bit of time in the transition.
Why on earth would someone lose half of their revenues without figuring out how to make that up? If you’re using a product twice as much as your neighbor, shouldnt you be paying more?
I’ll acknowledge that the stupid marketing people working for internet service companies and cell phone companies screwed up by showing everyone getting video off the internet to their tv and on their phones for years now, when that capability wasnt really user friendly or even possible in many case. And now that you can actually do it, the providers who teased us with all that advertising dont have the bandwidth to provide that service and want to charge us more.
Bottom line is you’ll be paying $20-30 a month for streaming video services that exceed what your $100 satellite bill provides, but you’ll be paying $75-150 for your internet connection.
No one said it would be free or even easy. We are just saying that to make claims about usage rates costing the provider more is wrong. Infrastructure isn’t cheap but it needs to be done. Replacing copper with fiber should have been done years ago however the phone companies are too short sighted to see all the advantages. They just want to maintain things as they are now.
You make it sound like one person will foot the bill which isn’t how it should be. Each part of the system is independent and should be handled as such. Netflix hires lines that can send the amount of needed data. As they need more they hire more lines. The end user gets the data from their provider which should ensure that the last stretch of the journey is clear. If each person maintains their own then the system isn’t ripped out and gutted at enormous cost but instead grows and improves. Netflix pays to get it to the ISPs and the customers pay the ISP to make sure it gets to them. All of this strengthens the backbone system.
I just really don’t see internet costs getting to 150 for the average user anytime soon. Competition will find a way in before that. Right now the costs are about where they will stay. Low enough to make it difficult to justify starting a new company but high enough to keep the old cable TV system happy. There will always be people that convince themselves they need 50 mbps and will pay anything for it, but I think most people will have choices in the 10-15 range and that should suit streaming video just fine with plenty of overhead.
This is going to get ugly right now Bright House Cable in FL is $53.00 dollars
for unlimited 10 megabits down and 1 megabit up.
Look at the new prices from Comcast
http://goo.gl/kGOxp
Local ISPs man, they will kill the competition. Look at RCN, and then look at ones in your area:
http://www.rcn.com/dc-metro/high-speed-internet/services-and-pricing
much cheapre then comcast!
SuddenLink just started doing this. I work from home over a VPN connection and homeschool. We use our connection a lot. Waiting to see how it impacts us.
Not to poopoo the user Wesley, but… poopoo. The amount that ISPs and other upstream operators pay per gigabyte is already grossly outpaced by the charges that are passed on to consumers. Usage based pricing only serves to reinforce the fact that companies no longer adhere to the tenet that, in addition to being accountable to their shareholders, they should also be accountable to society for adding to the greater good of human experience. Not too terribly long along, most companies held that belief. But look no farther than the ridiculousness that is playing out with AT&T (my personal ISP) to see that things are terribly, terribly broken in a way that we can’t fix easily.
America is supposed to be one of the greatest countries in the world. sadly enough they fall below the mark on internet access and cost of said access compaired to third world countries. america (corporate)needs to wake up. more fee’s = bigger profits = more pay for employees(to pay the fee’s)the government comes out on top every time.
It’s true that cable ISP is incurring more cost due to increasing usage from their customers that use streaming video, lot of them from netflix, but I don’t think they should charge per-usage fee, unless it’s minimal (maybe $1/gig above certain gig usage). I work for network company, and there are many ways for ISP to mitigate this issue, the most effective way would be to automatically cache the popular contents that their customers are viewing locally, saving cable company cost from upper level ISP. Netflix typically wouldn’t mind ISP doing this, since it benefits them too, happier customers because their video become faster due to local caching. Their cost for this system is minimal compare to the benefit and saving, and they can even advertize this to attract customers.
I think youtube.com/movies will be a big blow to redbox in future. We get the same movies we get on redbox on youtube for 99c. So why should i go to redbox for a $1.20+tax movie spending money on gas to pick up and return the dvd?
Redbox should come up with a more sustainable business plan or will be heading the grave like netflix.
My recommendation? join hands with youtube! :)
most americans do not have above 1.5mpbs internet connection, so to wait three hours in order to watch a moive is worth the extra quarter to them lol
I remember in like 1992 when internet companies did this. You got 56k connection and could only use like 10 hours a month OR a set amount of data. They were bull#@)$* plans and most people didnt want them. You cannot start capping data, people would rebel en mass! Lets see who takes the plunge first, becuase there are plenty of local ISPs who would love to increase busniess by 500x overnight
Yes david i went though that too in the 90s. it was such bs and i didnt understand why they charged us so much for so little. i remember trying to double to connection speed and it was sucessful but no isp knew ppl were doing that until everyone figured it out. thats when they had to make a faster speed and jack up the price. ppl are good at configuration so the more they know the more we pay when the isps figure out how much data is sent and received. that blows. if we pay $50 a month flat rate with high speed, that would suffice. no need for over charging us and they should include netflix streaming for free because in my opinion. i could download tv shows and movies but some ppl dont and i let my friends use my account for that reason. plus i love watching wonder years without having to download it
What i believe is that the economy is so unorthodox because of the misuse of money, debt and other expenses. so in my opinion. the government needs to reward us with a low cost lifestyle for the less fortunate and for those who make more than enoughj, tax them and that will set us straight. we wont be charged expensive fees for internet, netflix and redbox. we also can enjopy streaming movies without having to be overcharged for them. so government needs to get their act together i order for the right thing to be done
I pay $40 a month for Internet cable, plus whatever Netflix charges me for streaming only. I think that is enough.