Monday, May 19, 2014

Comcast expects to have data caps, but not competition

Last week, a Comcast executive VP, David Cohen, predicted that within five years all their customers would have data caps.

It turns out they have been experimenting with 300 GByte monthly caps in some markets and Cohen mentioned both 300 and 500 GByte cap possibilities.

Since Comcast is trying to acquire my friendly monopoly ISP, Time Warner Cable (TWC), I may very well end up being one of those capped customers, and that got me and my colleagues on the YATS podcast, wondering how much data we were up and downloading today.

I visited my TWC account and saw my usage for the last few months:


I have no idea what caused the variation, but even the heaviest month was comfortably under 300 GBytes. But, how typical is my usage? I am a cord cutter, which doubtless leads to atypically high usage, but there are only two users in our home, and we do not watch a lot of video or stream a lot of music.

I can easily imagine our two-person household going over the 3 or even 500 GBytes as video quality improves and more content is available.

But, our usage is a mere anecdote. Sandvine monitors global Internet traffic patterns, so I checked their Global Internet Phenomena Report for the first quarter of 2104 to get a more representative picture. This is what they observed in North America:


Folks were well under 300 GBytes.

But, they drilled down, estimating which users were cordcutters and typical subscribers and non-streamers:


Obviously there are relatively few cord cutters today, but aren't we in a transition to IP TV? The distinction between "TV" and "the Internet" is broken -- it's all bits.

By Sandvine's estimates, cord cutters are averaging over 200 GByte today. Where will they be in five years, when there is a lot more video material on the Net and average video resolution is a lot higher?

Comcast will adjust their pricing to maintain or increase revenue during this transition period.

They will be able to do that because they are a content provider as well as an ISP so they will be able to discriminate in favor of their content. Furthermore, they are big and getting bigger, so they will be able to extract increasing delivery fees from their content-provision competitors.

Don't get me wrong -- I do not oppose the idea of usage-based billing per se. (It would provide the answer to the ISP's claim that network neutrality is bad because it rewards bandwidth hogs). I would be happy to be billed by the GByte or whatever if there were ISP competition. If I could easily switch between several fast, reliable ISPs (as my son who lives in Korea can), they would not be able to set prices at will. But, sadly, that is not the case in the US.

-----
Update 5/20/2014

On a related note, Comcast and their merger target Time Warner Cable, were the lowest ranked companies on the latest American Consumer Satisfaction Index for the first quarter of 2014.

-----
Update 5/29/2014

The New York Times has published an editorial favoring rejection of the merger between Comcast and Time Warner Cable.