Usage Charges: The Bane of Internet TV

The Washington Post published an article describing how the FCC is supporting broadband usage charges. This means that you would have to pay on a per megabyte basis. In addition to your monthly fee to Netflix, you would have to pay a fee to  your broadband provider every time you watched a movie.

Now, it is likely that a usage based broadband plan would include some number of megabytes before the usage charges kicked in. However, these allowances will probably only cover a couple of films per month in addition to normal Internet traffic.

Usage charges will be set high enough to make Netflix streaming and other Internet TV services expensive enough to reduce their competitiveness against the broadband provider's own TV offering.

This is a great idea for the broadband providers and a bad idea for us users.

Netflix Accounts for 20% of Internet Traffic

An article in the San Francisco Chronicle said that Netflix accounts for 20% of Internet traffic during the evening hours, the prime time for TV viewing. At this rate Netflix and the other over the top Internet TV providers will dominate Internet trafic. This will have major consequences.

I expect that the broadband service providers, both cable and DSL, will implement usage caps and use other means to limit the use of their networks for over the top TV viewing. They will see Netfflix streaming and the other over the top Internet TV services as swamping their networks without bringing in new revenues. They will also see these streaming services as important competition to their own TV services as more and more people cut the cord.

This will be viewed as a major network neutrality issue and will become quite nasty. Personally, I wish the broadband providers would get over it and install fiber everywhere.