Incongruous Bandwidth and Usage Cap Policies?

By Gary Kim, Contributing Editor

Analysts at MultiMedia Intelligence say they can't square Comcast's (News - Alert) moves to cap usage at the same time it is increasing bandwidth to as much as 50 Mbps in the downstream and as much as 10 Mbps in the upstream. Currently all Comcast residential broadband subscribers are subject to a 250 GByte a month usage caps.

If faster speeds are targeted at heavy users, or those wishing to consume large amounts of content, it would seem logical to increase the bandwidth caps for these users, MultiMedia Intelligence argues.

There are many hypotheses as to why Comcast would implement wider pipes and bandwidth caps simultaneously, MultiMedia Intelligence muses. Some assert the bandwidth caps are meant to discourage uptake of "over-the-top" video services that compete with Comcast's linear and on-demand offerings.

Others think the actions are transitional steps to a fully-metered or usage-based service. The imposition of caps then would condition customers to the end of "unlimited" usage for a flat fee.

Some might argue it is largely coincidental that bandwidth increases and caps are occurring at the same time. The bandwidth increases Comcast is planning are for different reasons than the imposition of caps, in this view. Comcast essentially separately wants to keep pace with Verizon (News - Alert) FiOS and other telco fiber-to-customer offerings, while at the same time creating a method for monetizing higher end user consumption.

Yet others might argue that cable providers are trying to deal with the heavy burden of video peer-to-peer traffic, which would explain the bandwidth increases and caps. One way to monetize higher bandwidth usage is to create usage buckets. One way to manage network strain is to increase bandwidth.

MultiMedia Intelligence analysts wonder "what people are going to do with all this speed." Most online videos have bit rates that work properly at 5 Mbps speeds, so "50 Mbps seems like overkill," the company says. All that is true, but top-rated speed is a key element of marketing and product positioning, even if most consumers do not buy the top-rated tiers of service.

Still, there are logical reasons why higher bandwidth and caps might be linked. If one assumes users will be using more bandwidth, and if a service provider wants to create a revenue stream to match, then usage plans of some sort have to be instituted. The precise details of caps are less important than changing the way consumers view "logical" ways of paying for bandwidth and usage.

Comcast also creates a bit of a firewall against cannibalization of its linear and on-demand video by capping usage, while at the same time improving both user experience and creating a more-effective marketing "firewall" against contestants such as Verizon or AT&T (News - Alert).

If downloading a 1080p movie at 20 Gbytes to 40 GBytes each, the Comcast 250 Gigabyte bucket does not last long. And that might be one of the other motivators.

The issue of upstream bandwidth conceptually is different. If one assumes more consumer use of P2P, and the possibility that Comcast might itself want to employ P2P, widening the upstream pipes, under the guise of widening the downstream pipes, makes obvious sense as well.

Incongruous? Not really. Comcast has a number of business issues to deal with, including upstream and downstream bandwidth, support for P2P, positioning of its products in the market, discouraging video cannibalization and pricing plans that generate more revenue for higher usage.

Bandwidth caps and bandwidth increases are primary tools for solving these problems.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary's articles, please visit his columnist page.

Edited by Tim Gray

(source: http://wimax.tmcnet.com/topics/wimax/articles/44633-incongruous-bandwidth-usage-cap-policies.htm)

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