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.”

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