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Summary:

Are you an AT&T DSL customer who loves to watch Netflix? Then take it easy with the HD fare once AT&T’s new bandwidth caps kick in. Netflix users may hit the 150 GB cap with as little as three hours of streaming a day.

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AT&T will soon cap its DSL bandwidth at 150 GB per month, the company confirmed yesterday. Customers who use more data during at least three months will have to pay $10 for each additional 50 GB bucket of data. That’s bad news for Netflix and its users, who could get dangerously close to the cap.

How much Netflix video does 150 GB get you? Not that much, actually: If you watch a movie like Moulin Rouge in HD, you’re going to use around 3.5 GB of data. A single episode of Weeds equals about 800 MB when watched in HD. If you were going to use all your 150 GB of AT&T bandwidth to watch HD video from Netflix, you’d only be able to watch about three hours per day — and that’s without doing anything else.

Nielsen recently estimated the typical customer is streaming around 11 hours of video from Netflix’s website per month. However, Nielsen’s data is based on PC and laptop usage only and doesn’t include any streams accessed via iPads, Roku set-top boxes, Blu-ray players or any of the other 250 devices Netflix’s streaming service is now available on. These devices have arguably been the biggest driver for the company’s online video growth, and they’re likely to also have a significant impact on many people’s bandwidth consumption.

Granted, all of this is pure back-of-the-envelope math. Real-life usage involves data transfer overhead, which eats up additional bandwidth. Then again, only a portion of the Netflix catalog is actually available in HD. Many TV shows are, but a good number of movies can only be watched in SD, which doesn’t eat up quite as much bandwidth.

Still, AT&T’s bandwidth cap could have a significant impact on the future of the service. Netflix currently only offers 720p HD. An update to 1080p would close to double its bandwidth impact, meaning that you’d suddenly only have 90 minutes per day to watch before you’d be billed extra by AT&T. Competitor VUDU is already offering 1080p streams, and YouTube has been offering 1080p for over a year. It’s technically possible; there’s demand for it; but bandwidth caps could prevent Netflix from upping the ante in terms of HD quality.

Bandwidth caps could also spoil Netflix’s attempts to position itself as an alternative to traditional pay TV. U.S. households watch more than five hours of TV per day. The average American would burn through his monthly AT&T bandwidth allotment in just 18 days if he’d cut the cord and replace all of his TV viewing with HD streams from Netflix.

The biggest issue for Netflix, however, could be the psychological effect. People will think twice about using Netflix if they think it will lead to extra ISP charges. The company is well aware of these issues; Canadian users, who often have to deal with much lower bandwidth caps, have the option to disable HD streaming entirely as part of their account settings. That’s right; Netflix offers the option to make your video streams look worse so you won’t give up on streaming entirely. There’s no word yet on whether a similar option will be introduced in the U.S. as well.

  1. If I was an AT&T DSL customer this news would make me switch my internet service immediately.

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    1. i am with at&t and have already made the calls im switching to cox service as of 8 am 3/16/2011

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      1. Cox has bandwidth limits also, so good luck with that.

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    2. Ramin many of the other isp are already planning to set caps soon as well. Take time warner cable, in 2008 they tried to set a cap of 40G but were stop by the gov. and customer protest.

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  2. ATT made it easier for me to drop them as a provider. Thanks ATT!

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  3. AT&T DSL customer here. AT&T maxes out in my neighborhood at around 1.5Mbps down, so they don’t make it easy to pull down 150GB anyway. If I pushed it to the limit 8hrs a day, that would probably get me close to the cap, but that’s not practical.
    The speed ceiling along with the new cap really makes cable seem like a better deal. Maybe it’s time to switch…

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  4. I am feeling the effects of rain on my parade. As if just having AT&T wasn’t bad enough…

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  5. This was bound to happen. When videos are ever increasing in resolution and thereby file size, the finite bandwidth had to be capped.
    AT&T’s move is just the beginning of the end. And it wont be just Netflix, but a host of other businesses and services will also be affected.

    Unfortunately there is no easy solution in sight.

    Foreseeing this, we at Chazzstudios are developing a new compression technique which will compress a full length HD movie into a few MB’s instead of the present GB’s.

    This is the only way to ease the strain on bandwidth.

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    1. What strain on bandwidth? This is a money grab.

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      1. Dylan,
        Why do you think they are putting a cap? Bandwidth is a finite physical resource and in short supply. Any expansion means more investment. Nobody could have predicted this explosion in media usage.
        Not that I don’t agree that it is about money, but it is so for AT&T too.
        That is what we meant when we said ‘strain on bandwidth’.

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      2. att doesn’t care about customer loyalty, and this is the big problem. for every customer that cancels their services, another 10 people sign up. this isn’t about bandwidth. it’s about CORPORATE GREED.

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    2. Bandwidth is not the issue – these companies are flexing their muscle to protect more valuable assets like TV and voice, as well as adding a psychological brake to slow down on-line media consumption by their consumers.

      If things like bandwidth played any real role in pricing, all text messages would be free (they almost literally consume no bandwidth for wireless providers).

      The FCC needs to step in and do some serious regulation of the telecom companies – there is not enough real competition to keep the market fair for consumers.

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  6. Netflix already offers movies in 1080p, but only on the PS3 and there is only a very small inventory of content available.

    Agreed that over time there is a slight chance this could impact Netflix, and while it’s not a sure bet, AT&T and Comcast would be crazy if they didn’t raise their caps over time. So in the long run, doubtful it will truly impact Netflix. But then again, last mile providers have not always been the smartest.

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  7. Someone who watches 3 hours of HD netflix content every day of the month has bigger problems than paying an extra $10 for their dsl.

    Four hours of Law and Order in “binges” that I’ve had were about 2.5GB.
    You’d have to download 5GB every single day to get to 150GB. Every day you dont thats like daily rollover. The point is to problably charge people who download torrents constantly just for the sake of doing it which just costs AT&T infrastructure costs by having to spend extra money on their backbone for the constant load.

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    1. “The point is to probably charge people who download torrents constantly just for the sake of doing it which just costs AT&T infrastructure costs by having to spend extra money on their backbone for the constant load.”

      I’d say the point is that AT&T and other mega-ISPs continue to hold down progress in this country by treating the internet as a giant money machine, smothering competition, reducing services, constantly rolling out ways to charge users more for less service. This a naked grab for power over what we should be allowed to view, in the opinions of bloated oligarchs hellbent on a new feudalism. Some, like Josh, may take the line that ATT is within their rights to reduce services after selling customers unlimited bandwidth. Some may well be in the employ of ATT or whatever jackal of a PR firm hired by same to post comments of this nature so the befuddled, socially engineered american public will drift back to sleep. We need to shatter the monopolies of ATT, Verizon, Time Warner and Comcast. Otherwise, what we see and read on the net will be as reliable and honest as what we see on Fox News (which is to say not at all).

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  8. the bigger picture is that all other providers are going to follow suit and cap theirs as well…so everyone that thinks they will get away from it by dropping AT&T is in for a surprise

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  9. Bandwidth caps are going to be the death of us all. I’m much more conscious of how much I download, even though I never come close to my limit. Great news for telecom companies, bad news for technological progress.

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  10. VeryAnnoyedInSanFrancisco Monday, March 14, 2011

    This sucks!

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