Cable Companies See Tipping Point on Horizon, Looking at Usage-Based Billing

Dec 03 2011

Evidently U.S. cable companies have decided that they have had enough of Netflix and Hulu nipping at their heels. Craig Moffett, an analyst with Sanford C. Bernstein & Co., is predicting that at least one major U.S. cable company will start charging Internet customers based on how much data they consume. The cost of securing content and networks continues to rise and the cable companies are increasingly concerned about being relegated to the role of bit-pushers. If Craig Moffett turns out to be right, then it's a fair bet that cable company is going to set off a firestorm. There is no one, other than maybe cable company employees, who thinks of the cable companies as providing a good value and anything that smacks of a major rate hike is going to draw consumer ire. What's more, Netflix is already drumming up the anti-competitive pricing rhetoric. If more than one cable company decides to try out some usage-based billing plans, don't be too surprised if Netflix starts dropping the word "collusion", which is sure to grab the attention of a senator facing a re-election challenge.

Netflix and Hulu’s subscription services have driven up Web usage at peak hours once reserved for watching TV. Google, Amazon, Apple (AAPL) Inc. and premium channels HBO and Showtime have also put shows online and followed viewers onto mobile devices like iPads and Android tablets.

Bloomberg

Comments

This could get very interesting.  Correct me if I'm wrong, but isn't VOD content streamed over the internet to the STB?  If they start charging extra for VOD then they'd better start driving to work in armored vehicles.  Customers will be in an uproar.  If anything, it will drive customers away from the cable providers if there's any other wideband cable alternative available to them.

I dumped Comcast years ago and went with Verizon for my wideband provider.  I don't stream any video content but I do download torrents and such, but not in vast quantities.  Comcast used to claim that they provided unlimited internet access.  That is, until I decided to take it for a spin and see how much I could download in a sort span (about 1.5 TB over a 3-day period).  I received a rather nasty e-mail from Comcast telling me that I exceeded my allotted internet use.  Apparently their "unlimited" service had limits after all.  What pissed me off is that the wording in their service agreement was so ambiguous that the limit on the amount of data you used was never specified but rather was at their discretion.  They informed me that if I needed to use that much bandwidth that I should probably look for another provider.  Well, the joke's on them because I found one and couldn't be happier.Cool

captain_video wrote:

This could get very interesting.  Correct me if I'm wrong, but isn't VOD content streamed over the internet to the STB?  If they start charging extra for VOD then they'd better start driving to work in armored vehicles.  Customers will be in an uproar.  If anything, it will drive customers away from the cable providers if there's any other wideband cable alternative available to them.

All the companies who have tried this or are already doing this exempt their own content from any "extra" charges.  So, if you stream from your own cable company, it won't count against you.  However, if you want to stream from Netflix or any other competitor...  hand over the dough.  My guess is this is how they will eventually be able to regain their monopoly on content.

It will also be the lever that Netflix uses to try to build legislative consensus in their favor. The question will become which earns more votes, cable industry campaign donations or populist rhetoric?

millpub wrote:

It will also be the lever that Netflix uses to try to build legislative consensus in their favor. The question will become which earns more votes, cable industry campaign donations or populist rhetoric?

Absolutely.  Charging for streaming content other than their own could bring up legal issues. 

In my mind, trying something like this is denying the inevitable.  Streaming content like Netflix and Hulu is here to stay.  They can either get on board and cut their costs or lose subscribers.

We need a true net neutrality legislation passed now or we'll be doomed to "free market" goodness, such as this, for a long time. 

Sadly, the biggest pocketbook wins every time in this country.  Lincoln's speech would now end thusly:

...that government of the people (with money), by the people (with money), for the people (with money), shall not perish from the earth.

Is there any country in the world where those with the most resources don't also have the most political power?

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