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Nielsen Data Offers Real Reason ISPs Are Metering

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A report out today from Nielsen shows why Internet Service Providers and telecommunications equipment vendors are increasingly demonizing video. It consumes a lot of bandwidth, and could compete with an ISP’s existing video businesses, but the worst part is that it’s rapidly becoming more popular to the average consumer. From the report:

  • The number of American users frequenting online video destinations has climbed 339 percent since 2003.
  • Time spent on video sites has shot up almost 2,000 percent over the same period.
  • In the last year alone, unique viewers of online video grew 10 percent, the number of streams grew 41 percent, the streams per user grew 27 percent and the total minutes engaged with online video grew 71 percent.
  • Despite online video’s persistent positive buzz, actual usage is averaging around six minutes per day in the U.S.

Two things are driving these trends: Better access to content in the form of PC-to-TV hardware and services like Hulu, NetFlix and iTunes HD downloads, and faster connection speeds that make downloading movies in HD possible. However video still has a lot of growth ahead for it, which is why ISPs are building out faster networks as well as why they are talking about caps and metered broadband.

20 Responses to “Nielsen Data Offers Real Reason ISPs Are Metering”

  1. Equally in the UK the trend is towards watching TV via broadband – although Sky have the biggest market share Virgin Media are gaining ground and BT Vision may well do if they win a case with Sky to reduce the prices charged for premium content. So bandwidth use in the UK is also heading skywards (excuse the pun). I run a Digtial TV Switchover site in the UK.

  2. VRod007

    Behemoth ISPs want and use bandwidth metering because all that extra bandwidth is used by their customers for downloading movies and watching movies online which eventually renders CABLE TV obsolete. Honey, we need to save some money, cancel the cable tv but keep the internet. Ever faster internet plus ever dropping prices in hard disk storage plus ever increasing free digital tv channels equals demise of cable tv. First came free ad supported tv, then came paid cable tv, then came paid wired internet, then came paid wireless internet and then comes ubiquitous free ad supported wireless internet for all. Make it happen Google.

  3. sounds like there are some industry shills here! i’m a Comcast customer and I don’t download much of anything i the way of movies, etc. I do enjoy PC games and because of the problems with DRM schemes that come virtually all PC games are making the Steam model of game purchases via downloads and administration of these games over the Internet the way of the future. While by no means as large a service as video over the Internet, it is still a concern that this will add to bandwidth usage. I have VOiP telephone service through another company other than Comcast and I worry that they will suppress competition by somehow adding my phone service into their caps. ISPs have certainly not earned the trust and support of consumers. They have tried to wrest control of the Internet under every imaginable guise from protecting copyrighted information to helping national security. Those that also provide television programming refuse to offer a la carte subscription while continually moving popular programming into higher tiered and more expensive packages. Out of the hundred of channels I get, over half I don’t watch and have zero interest in, but I’m forced to buy them. In areas of our town suddenly people have problems with signal splitters that feed multiple TV sets that have worked fine for years. The solution the Cable company/ ISP has is buy separate lines at $22.00 a month for each extra feed. And the list goes on of crappy service, poor programming, and continually increasing rates for the privilege of being treated badly as a customer. And after all this we are supposed to believe them about Internet service? Considering the present economic conditions have likely caused many customers to drop or reduce their services why would this whole bandwidth thing be anything other than a means to recoup profits and a way to ensure highly profitable future revenues when things finally turn around? These companies have lost our trust and don’t even care a bit about us. They use their influence in the Congress and various commissions with their tales of woe in one hand and contributions in the other. I’m glad TW got stopped and I hope the tide turns against these consumer as cash cows companies.

  4. I am all for tiered pricing based on usage, but it has to be reasonable and without hard caps (ala Comcast’s 250 gb). TWC had the right idea, but priced the tiers too high with caps too low. I can’t speak from the company’s end, but from the consumer end, I think that starting with a tier good enough for email and very light surfing at $9.99 and staying under $100 for completely unlimited with reasonable breaks in between would be the sweet spot. That way, the folks who barely use internet aren’t paying for those downloading every mp3 and movie they can find. Now whether that is sustainable on the ISP’s part, I don’t know, but charging more than that will probably not work either. The ISP’s need to realize that they ARE a utility company. The bundling of phone, tv and internet is not long for this world.

    As for mom and pop ISPs. I don’t think they really exist on a large scale anyway, and will lose ground to the Comcasts and AT&Ts of the world. If they can’t compete, they can’t compete. That is the nature of capitalism.

    • Brett Glass

      Gerald, you are wrong on many, many points. There are more than 4,000 independent, competitive ISPs. And while some of them do face high costs, so does any ISP — including a cable company or cell phone company — that must buy backhaul for its data connections from an incumbent local exchange carrier. Large ISPs have no advantage in this regard in rural areas.

      As for your claim that decent $9.99 broadband is possible: Sorry, but if each user makes even one technical support call a month it costs that much. And bandwidth is expensive and becoming more so due to rising backhaul prices and consolidation in the backbone industry. Don’t try to play “armchair quarterback” and set our industry’s prices for us. There is fierce competition in the broadband industry, and that’s reason enough for us to give users the best deal we can.

      • Stacey Leggieri

        The cable splitters in particular probably have nothing to do with the cable company. The U.S. Congress mandated a switch to digital television on or before June 13th. This rendered some cable receivers, converters, and splitters obsolete. Most cable companies and stations would have preferred to delay the switchover. It’s not up to them. The advantage to the switchover is that it frees up old analog TV frequencies for use by portable handheld devices.

        That said, I can understand the overall level of suspicion and concern. America has a history of both corporate dominance and attempted censorship of the internet. Personally, I feel the best compromise is ‘net neutrality.’ Charge me for the extra bandwidth if you must, but please don’t control what I can and can’t do on the internet.

        Digital TV info:

        Net neutrality:

  5. Krishna Baidya

    ISPs are trying hard to play their power here. when there are so much group on video and other related services are happening, more n more ISPs role have become just a dumb pipe provider. consumer wants “better n faster” service …. so, how else do you think ISPs would flex their muscle. what they should do is move up to the value chain and see the big picture beyond the connectivity to gain in future.

    • I’m sorry, it’s a bunch of users playing their power here …. it costs a LOT of money to build out infrastructure and purchase bandwidth for a small ISP.

      What people are asking for here, is the same as demanding unlimited flat rate electric service, so that we can convert all our cars to electric and drive as much as we want for $12/mo flat rate electric bills.

      Usage goes up exponentially, and the electric company either operates at a loss, or closes their doors.

      When a rural T1 costs $300-800/mo for a mom and pop ISP, to get less bandwidth than a city $30/mo cable/dsl flat rate account …. the rural customers are pretty much stuck sucking on a saturated over subscribed T1 at dialup speeds when you force flat rate unlimited service on every ISP.

      Nobody is going to buy this service at dialup speeds … and options become dialup again, or satellite again.

  6. Bob Zeryunkel

    Brett is right. Also, growing 339 percent since 2003 isn’t really saying much. Broadband growth in that same time period was substantially more and a viewing time of 6 min day vs 6hrs for TV is just nuts. I think that the conclusion proffered is a very distorted reality.

  7. Brett Glass

    ISPs aren’t “demonizing” video. Rather, consumers who want to download large amounts of video are demonizing ISPs when those ISPs simply ask those people to cover the cost of the bandwidth they use.