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Roku: We Ain’t Afraid of No Caps

Sure, most of us can get pretty fired up over the thought of a monthly 250 GB bandwidth cap, but what about the companies that provide online video services? After all, as Om pointed out, the cap isn’t about excessive bandwidth usage as much as it is about stymieing online video sources like Hulu, Netflix and Amazon.

Roku, which makes the Netflix player, isn’t worried about the cap. The $99 set-top box maker is more of a facilitator than a provider, but its entire business is built upon delivering video to you over your broadband connection, so a cap could impact its sales.

“It really doesn’t give me a lot of concern,” said Tim Twerdahl, Roku’s vice president of consumer products. “It’s unfortunate that the limitless possibilities are being capped by an ISP, but it has no direct business impact on us.”

Twerdhal said that the 250 GB cap is something Roku’s users aren’t currently hitting. He’s almost sanguine about the reality of bandwidth caps because he believes technology will outpace them. “We are looking at the usage of our box and the bitrates,” said Twerdahl. “We’ll be introducing same visual quality at lower bitrates in the future.” Roku currently streams content at four bitrates 500kb/sec., 1 MB/sec., 1.6 MB/sec., and 2.2 MB/per sec.

These low bitrate deliveries are the reason other online video companies are not worried as well. They are taking a wait-and-see approach, comfortable that the cap is sufficiently high enough to not have an immediate impact. One industry source told me that their company figured you’d have to stream the current (non-HD) video offerings 8 hours a day, 7 days a week before you hit the cap.

So are online video providers being lulled into a false sense of security? Once a cap has been set, it’s easy to keep lowering it to squeeze a few more bucks out of consumers, and the advent of HD delivery online means more bits to take a bite out of your monthly allowance.

To that Twerdahl says, “There are lots of things going on with codecs and bitrates that make caps not as relevant as they may appear to be.”

24 Responses to “Roku: We Ain’t Afraid of No Caps”

  1. My ISP (Frontier Communications) is about to impose a 5GB cap on broadband users during a 30-day billing cycle. That’s upload/download combined.On the “bright” side, the services they offer supposedly won’t count against the cap. I thought that was nice-as-pie. Yes Sir, the thought of caps makes me feel all warm and fuzzy inside.

    “What, me worry?”

  2. “One industry source told me that their company figured you’d have to stream the current (non-HD) video offerings 8 hours a day, 7 days a week before you hit the cap.”

    So what does that work out to be for a high quality, full 1080p HD stream? The average person watches 4.5 hours of TV a day, right? The average household has their TVs on 7.5 hours a day?

    http://www.usatoday.com/life/television/news/2006-09-21-homes-tv_x.htm

    And people aren’t worried about caps?

  3. Without some type of penalty for beahvind badly, we will always have a very few that stuff it up for the many.

    CAPs are an easy way to police this, but yes it could be abused.

    But unfortunatly, they ARE needed.

    What if we had no speeding laws/limits, and we had 100 times the crashes, and your mum got killed.

    To bad, at least you can drive fast….

    What side are you on?

  4. Really hope Netflix is correct on this one. I’m currently using the Roku box and an Apple TV for most of our video rental needs. I’d say both boxes are active every evening and part of the day on each weekend. I’ve done some loose math indicting this wouldn’t bring us up to any currently rumored caps, but I’m still wary.

  5. I am the CEO and founder of http://www.travelwizard.com
    and I am very worried. Our travel guide features 1000’s of HD travel videos that range from 3 minutes to one hour in length. We don’t charge for viewing the videos, the purpose is to entice our audience to travel. See http://video.travelwizard.com. If bandwidth limitations are imposed it sets a terrible precedent. It will punish multitudes for the acts of a tiny minority. Mark my word–if this is allowed it will open up Pandora’s box.

    Bob Mc Millen CEO http://www.Travelwizard.com and http://www.travelwizard.tv