Your cell phone is metered. Your electricity is metered. Are you ready for Internet metering?
Data consumption on the Internet will be billed and metered just like hydro.
Payment by the byte can’t be far away, as online video streaming, movie downloading, music purchasing and application upgrading continue unabated on most of our computers and broadband connections.
Blame it on Netflix.
Although the popular movie downloading service is just one of many online offerings now triggering a big increase in data consumption across the Internet, the company’s recent launch in Canada has ignited concerns, debates, petitions and some serious household expense reviews.
As many users are finding, it is not just $8 a month.
That may be the company marketing pitch, but it does not include the cost of data transmission. Depending on your ISP (Internet Service Provider) contract, that $8 may easily double or triple by the time your monthly bill arrives.
An hour of HD video is almost three gigabytes. Depending on your ISP, and whether you have a monthly data cap or additional overage charges, even the most liberal plans would top out at fewer than 30 hours per month.
That’s not a lot when you consider the average home watches some 30 hours per week.
The results of a recent Netflix account study showed that customers at Rogers, for example, face additional charges of $12 per month in data transmission fees – and possibly much more – based on even average usage.
And that’s not just a sticker shock for the consumer; it may be a make-it-or-break-it business model for the companies themselves.
Financial analysts from Wall St. and Bay St. are trying to determine who will win the online media battle.
Will streaming TV companies like Netflix or Hulu or Google come out on top, or will the ISPs they run on, like Rogers, Bell or in the States, Comcast and Verizon, find better ways to maximize the profit from data delivery?
So, the results of that video-streaming study, dubbed “Project Canada”, show not surprisingly that online movie and TV streaming services can boost broadband data usage.
The surprise may come as consumers make decisions about balancing their media consumption habits – and bills – among and between old-fashioned over-the-air (OTA), delivery, current cable offerings, and newer over-the-top (OTT) or IP-based TV services.
The online media study was conducted at the New York branch of investment bank Credit Suisse, with analysis provided by media analyst Spencer Wang and his team.
It was conducted to assess the affect of broadband consumption based pricing (CBP) on Internet-delivered video from non-cable or telco services such as Netflix, which recently launched its online service in Canada.
The U.S. does not have consumption-based pricing, in which consumers pay more as they use more, but it has been at play in Canada for two years or more, so customers here have been exposed to the ‘pay-as-you-go’ scheme. Several U.S. companies are looking at CBP plans, but have not implemented any as yet.
Internet billing will reflect specific data consumption and bandwidth usage under new rules in Canada.
Credit Suisse wanted, therefore, to use Canada as a test bed to see what kind of impact such online services will have on both broadband usage (and of course, pricing) as well as TV billing.
The investment firm tested Netflix Canada’s streaming service for one month over a Rogers’ Internet connection.
As Wang said in his study summary, “Not surprisingly, our case study finds that an OTT service like Netflix can lead to a material increase in broadband data usage – in this case, ~20 GBs of data for the month, or ~1GB per hour of standard definition online viewing.
“In turn, based on Rogers Communications’ data pricing structure, this would have resulted in a $12 per month increase in broadband for our test home.”
Content distributors and creators, as well as consumer advocacy groups, have warned or worried about the impact of non traditional distribution services in the market. Increased ‘cutting the cord’ and ‘sticker shock’ was predicted in some cases, but also anticipated is more movement to pay as you go data, be it online or wireless.
If not pay as you go, then more defined – possibly restrictive – fixed monthly plans.
That’s as a direct result of a decision late last year by the Canadian Radio-television and Telecommunications Commission (CRTC), the country’s broadcast and telecom regulator.
Canadian broadband providers like Bell and Shaw sought – and received – permission to introduce “usage-based billing”, so that customers who exceed a pre-defined monthly broadband usage limits will now be subject to additional fees.
And the ‘taxi meter’ approach is open to all ISPs.
Primus and Shaw have said they will begin passing on higher fees to their customers next month (Primus is one of several ISPs that actually rent bandwidth from the big boys, like Bell, to resell to their customers. Those companies face increases, too, and they will pass them along.)
Rogers is also notifying its customers about increased rates that are coming, especially on high speed Internet but also cable TV services.
So, you can get dinged by a higher bill, but you can also get squeezed by new traffic slowing technologies being rolled out at many ISPs.
Traffic control technology can differentiate and discriminate among different types of data, and it can be used to control, manage, slow or even prevent certain types of data flow (often, P2P is targeted).
Rogers has recently been called out by the CRTC for its use of traffic slowing technology, and the negative impact its use can have on the end consumer.
In fact, a Canadian Internet advocacy group called SaveOurNet.ca Coalition is calling out ISP, regulators and elected politicians in its call for Internet openness and transparent audits of Canadian ISPs.
“[T]he CRTC needs to actually put a stop to unjust throttling of online services,” says Steve Anderson, National Coordinator of the SaveOurNet Coalition and OpenMedia.ca.
Anderson says that Internet throttling tools and prohibitive pricing models are anti-competitive, bad for consumer choice, and at the end of the day, bad for online innovation.
“Canadians want more than transparency, they want the CRTC to ensure the Internet remains a level playing field,” he says.
Anderson has helped put together Internet portals with additional information and online petitions advocating for an open and level Internet environment.
You can find out more at SaveOurNet.ca and http://openmedia.ca
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So, what’s your tech?
Are you streaming movies online from sites like Netflix?
Whats’s that done to your Internet bill?
Are you willing to pay for Internet services by the byte?
Data hogs? Nobody is paying for the data hogs, the “data hogs” paid for the services they are supposedly “hogging”…
@Tinger
By your logic, shouldn’t television be charged for each hour watched? The way this will end is by forcing people to limit their internet consumption and veer toward other medias; like TV which is also controlled by the big Telecom.
This is not good for consumers, only for telecoms.
Tinger makes a good point, and it’s one I’ve long asked providers for – one bill for all my data types – TV, Internet, phone, whatever.
Bill by the byte fairly and openly, and let the consumer use (and pay for) the bandwidth as appropriate.
Data is data. Meter consumption of it all or meter none of it.
I hope that if there is to be metering, it’s for all data delivered on a network, not just “internet”. For US FIOS, the “TV” and “internet” service is all on a single network delivered via fiber optic cable to my house. Once inside, it’s split into “TV” and “internet”.
FIOS bundles all sorts of services into their TV offering, which are all unlimited/ “free” to watch for the monthly subscription. I think if they are going to meter my “internet”, then they should
1) allow services to be unbundled so I don’t have to pay for what I don’t care to be available on TV. Ex. I hate sports. I’d like to dump it from my TV lineup. That’d lower my monthly bill, and raise it for those that want those services.
2) meter ALL data consumed through that fiber, including internet, TV, games, sports, home shopping and any other services.
I also feel that the companies should seek out and deal with the fringe mega-consumers and leave everyone else alone. This is likely a problem caused by the <5% of customers that are data hogs.