20% of All Peak Traffic Due to 3.5M Netflix Data Hogs?

24 Comments

Just how many Netflix (s NFLX) subscribers does it take to clog a broadband provider’s pipes? It’s probably less than you think, if you believe one analyst’s estimates for the number of Netflix streaming users that already make up 20 percent of all U.S. Internet peak data traffic.

Earlier this year, network management vendor Sandvine issued a report with the shocking revelation that about 20 percent of all data traffic during the peak hours of 8:00 p.m. to 10:00 p.m. was due to Netflix streaming. Well, in light of the ongoing dispute between Comcast (s CMCSA) and Level 3 (s LVLT) over the costs of Netflix traffic being sent to the cable network’s subscribers, BTIG analyst Richard Greenfield decided to do a little back-of-the-envelope math to determine how many Netflix users were probably streaming during peak hours.

Greenfield’s math starts with the assumption that approximately 6-7 percent of broadband users were streaming Netflix content during peak hours and that about 70 percent of broadband users, or 56 million, use their Internet connections during peak hours. From there, he estimates the number of Netflix subscribers streaming during that time — 3.5 million — which is roughly one-third of Netflix users who stream content, and only one-fifth of its total subscriber base of 16.9 million. If true, that’s an astonishingly small number of users driving an incredibly large amount of broadband traffic.

The implications for broadband providers are huge, especially since it seems like Netflix is just getting started. About 66 percent of Netflix subscribers now use its streaming service: a number which has grown from 41 percent a year earlier. Its users now watch more video hours of streamed content than they do hours of DVD rentals, and these numbers will continue to grow, especially as Netflix adds subscribers as part of its new, lower-priced streaming-only plan. The amount of data attributed to Netflix will also increase as more consumers buy and connect new TVs, Blu-ray players and other devices to the Internet for streaming and begin watching full-length movies and other content on them.

It’s no wonder Comcast isn’t thrilled about the amount of Netflix traffic crossing its networks, and not terribly surprising it might want to be compensated for the imbalance. Comcast has resisted the urge to charge its end users for the increase in their bandwidth usage, saying it has no plans for usage-based pricing and keeping a 250GB usage cap in place instead. Getting compensated for interconnection fees may be one way it can deliver content to the end user, without drastically raising their bandwidth bills.

Photo courtesy of Jim Champion.

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24 Comments

kandersen

Yea makes sense, 20% sounds like a fair figure. thats over 5Petabits of data traffic considering that each netflix stream is 1.5Mbits stream. The fallacy that internet bandwidth is free will soon come to an end. it has really nothing to do that comcast also provides cable tv. Its all about bandwidth usage. there is a finite cost for commercial bandwidth connections. that price is spread across multiple end use customers per meg. if you have each customer using a full time 1.5Mbit stream yet only paying 15% of the cost of that bandwidth well it doesn’t take many customers to plug the pipes and cause hate and discontent for everyone else.

Get ready to see that 20% cause rate hikes in all ISP’s or bandwidth caps to start to come down.

Ben

Wasn’t Comcast looking into a box recently??? kind of a double standard if you ask me… them netflix users eat up all the bandwidt but our box thats coming out will be ok to use and cheaper…. hmm

LBalsam

Streaming content to a single user at a time is a tremendous amount of usage as opposed to broadcasting shows and recording them on DVR’s.

The logical solution is to reduce the price of cable television while increasing the price of broadband usage via tiers.

The problem with this is that popular cable channels are extorting larger and larger fees for popular channels.

While it is hard to be sympathetic to the cable companies, they are seeing internet usage patterns rise, declining revenue as customers leave to go broadband only and increased costs for channels.

DrkSide

Cable television will NEVER get cheaper. Due to the fact that you stated as people are going to start streaming shows and the cable companies are going to see this as a threat, therefore raise prices because of shrinking viewers.

Also, usage tiers might be a good solution on paper (not really) but I pay for a certain bandwidth. Normally I don’t even get this speed from my isp because of the fine print of UP TO 55Mbps. They will only guarantee me ~2Mbps. But they don’t complain when I stream all day and night as well as bit torrent.

John

A couple of things here:

1. This “math” assumes that 1/3 of Netflix customers are streaming between 8 and 10pm. That seems a bit excessive to me. I know probably 20 people with Netflix, and they stream one movie every couple of days at most.

2. SandVine, the company that did the estimate, stands to DIRECTLY benefit financially if ISP’s start charging content originators based on the amount of traffic going over their networks. This article is *PROPAGANDA*. And it’s very likely PAID propaganda at that.

stephen

Surely no one expects the pipes to remain as they are? The answer is infrastructure, not constraining trade with higher prices.

Thenagman

What a bunch of misinformation! Peering has never meant traffic that dead ends on your network, it has always been traffic that traverses your network. Comcast is changing the definition on the fly in an attempt to make level 3 and Netflix look like the bad guys. HORSE PUCKY! Comcast you are delivering packets your end users have requested, and via bandwidth they have paid for. There is no other way for these packets to get to your users than your network. This is not peering it is delivery. You just know that if you tried to raise prices (again) that people with choice will walk, so you’re trying to go backdoor and double dip. Ryan, if you purport yourself to be reporting on “NewTeeVee” you should at least understand the market and industries you pretend to report on.

toast

Peering has always meant traffic that ends in your network (or technically in your customers’ networks). General rules of the road for settlement free peering have always been ‘roughly balanced’ traffic, although certainly not all networks enforce that. Transit means traffic that traverses your network, and is rarely settlement free.

Dave

First they blame the bit torrent users, now they’re blaming the legitimate streamers. Here’s an idea, don’t sell a service if you’re not willing or able to provide it.

Take some of those gigantic profits that you’re funneling into executive bonuses and lobbying against net neutrality and put them into infrastructure upgrades.

madmark

Yes, absolutely, they should charge those bandwidth hogs for using the traffic they were already sold! By all means, no one should be able to use the bandwidth they already paid for, without being charged more! Why should they pay 80$ a month for a 16mb/sec connection, and expect to actually get that amount of traffic? The nerve of some people!

oldmangeorge

Netflix sounds pretty bad. they should put a cap on that stuff. hip people watching junk nobody cares about sucking up the bandwidth disgusting.

yonder

Kudos for the lowest-brow comment on the entire website. You obviously have no clue what Netflix is. You make it sound like a foreign concept. People who watch Netflix are automatically “hip”? What the heck?
And yeah… the most used content = “junk nobody cares about”… that’s like saying pop music is junk cuz no one listens to it.
… and just when I was thinking to myself “you know what… the comments here have so far been pretty smart! I like this community”

Blake

TheOtherGeoff,

You’re saying that NetFlix is an ISP? If not, then using peering ratios to make your argument makes no sense. Also, tell me which ISP still uses a DIRECT 50:50 peering ratio and I’ll can almost guarantee I will a liar out of you. Any modern forward-thinking ISP already uses MEDs and selective routing to enforce an appropriate peer ratio so that the cost of packet delivery is not vastly greater than cost of low-size request (entire purpose for peering in the first place).

Essentially, Comcast and other major end-user ISPs are whining and bringing up outdated concepts like peering ratios to try and justify charging their costs back to their end users. These ISPs have continually refused to be forward thinking and continue to roll out vastly oversubscribed ISP services to their end users who are suddenly expecting to be able to use exactly what they are paying for, at least some of the time. You may be right in that they will introduce tiered pricing plans and per-MB usage plans and attempt to dig their heels in as hard as they can, but when it comes down to it, without adapting to consumers’ demands, every one of those ISPs will break and someone will step in to pick up the pieces.

This is not Netflix’s problem, it’s not the end-user problem, it’s not even the important backbone ISPs’ problem…this is the end-user ISP problem and while they have continuously eaten up profit that should have been reinvested in their infrastructure the world has moved on around them. While I am 100% certain that we, the end users, will feel the affect of this very soon, it will be temporary however long it lasts and will be met with FIERCE legal battles. These dinosaur ISPs are stuck between a rock and a hard place and you need to stop supporting the ‘well this is the lesser of two evils option so we might as well go with the flow’ bandwagon.

ghj gfhdsjk

Or they will do what US industries always do: buy off legislators, get government money, give it to their investors and quash any competition once the term ‘net-neutrality’ has been fully coopted by their PR minions and the US population brainwashed into believing that paying more for less is a good thing and the American way.

see the health care debate for the model in action.

Frankie

There is a very simple solution that Netflix could do to protect itself. Since they want to provide customers with streaming video and the ISP’s are trying to be greedy and charge Netflix or Netflix customers with the ‘extra load’ to their networks, well, Netflix should just buy lots of fiber or buy some IPS’s and offer their services via their own ISP, problem solved.

TheOtherGeoff

Chris,

All ‘peering’ contracts have a 50-50 balance ratio… Since the NetFlix is 99.99999-1 ratio, and has moved to Level3 as their primary service provider (vs akamai which uses a different contractual [ISP Lo-Ho] arrangement than a mid-tier connection, this is a dramatic shift in traffic.

I don’t agree with Comcast in general, because they are providing ‘internet services’ to their customers, which should accomodate their demands for bandwidth upstream and down.

The downside to this is that Comcast NOT getting it’s way with netflix/level3 will likely come at the cost of
– higher montly rates to ‘high-bandwidth’ usage customers
– throughput throttling on same users (no user gets more than .000x% of any mid-tier route)
– QoS priority routing, pushing netflix down (in favor of comcast hosted and delivered content).

I’m thinking that Netflix needs to develop a better downloading option for local caching of data for ‘off peak’ loading… this requires a smarter local client (app;-) and/or a box (appleTV) for example.

Finally, Comcast if they get what they wish for, will likely drive more people to P2P sharing… which in the end, will devalue their own content holdings.

James

I pay for my pipe and want full use! Keep investing in infrastructure and stop complaining. So we come to the time when cable/media providers are being moved a side, just like the media they supplanted all of those years ago. Again, you can continue to complain or realize that you are behind and need to reinvest and add more capacity and bandwidth.

chris

what this (possibly retarded, maybe just misinformed) writer fails to mention, is that nobody, NOBODY charges middle tier data networks for access to end users… as comcast wants to do. If I ask for something from, say, netflix, how in the world can comcast ask that network for money, when I, the comcast customer asked for that content. They want to charge for that content, so netflix has to increase their fees, so that comcast services seem more attractive. That is the long and short of what is really happening…. like Sylvan said, there are no such thing as data hogs, but comcast would like you to believe that.
What’s more of the truth? Other countries have passed us in bandwidth because the big companies refuse spend money of infrastructure… therefore, the networks will likely not be able to keep up with netflix damand… and they will blame it on users and netflix, rather than point that finger at themselves.

Robutt Deniro

With Netflix, Apple and all the Console video game makers pushing digital downloads the problem will only get worse. The Cable companies have been gouging their customers for years and used little of that money to upgrade their infrastructure. Just like the movie and music businesses, the cable giants were unable to see the future coming and now they want to fight change because they are unable to adapt. Someone will solve the problem using white space and they will leave all the dinosaurs behind.

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