AT&T’s New Bandwidth Cap Is Bad News for Netflix

TV Arts

AT&T’s New Bandwidth Cap Is Bad News for Netflix
By Janko Roettgers Mar. 14, 2011

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.
In Canada, those bandwidth caps will (hopefully) become illegal in
May.  American and Canada have falled from 2nd and 1st place in
internet service provision (speed, capability) in the mid 1990's to
something like 12th or 13th place today.  The telcos and monopolistic
cable companies need to be shown the error of their ways.
There have been several similar bills proposed in the US.  They seemed to
work out the more important issue, i.e. ISP's giving preference to some
sites over others.  I wonder what they will make about this "end run",
where AT&T will use bandwidth caps to protect its U-Verse against
competition from the internet.
Socialism is the best!
Favoring net neutrality is an odd stance for Rich. I thought all
conservaturds wanted business to be unfettered...

I'm either confused or drunk from green beer...

Beats the green moose piss Rich drank to come up with the post.


I like Canadian beers in general, but Moosehead, aka Moose Piss, is one 
of the worst beers I've ever had.  It reminds me of the Carling's Black 
Label some of the cheap guys used to drink when I was in college.

Way back when I was in college (and knew nothing about beer), I took a
road trip to MI with some friends and we visited Windsor. I asked a
guy at the currency exchange where I could buy Moosehead.

He gave me a puzzled look and asked me why. I told him it was popular
on campus, but cost about $5 a six pack and I thought I could get it
cheaper in Canada. He laughed and said it cost about $1 a six pack
there and was one of the worst beers he ever had.

He was right.