NEWS Subscribe
June 16, 2008
Will ISPs kill online video?

Everyone, it seems, is trying to find a way to monetize online video. But internet service providers are introducing a new wrinkle to the puzzle, and it has the potential to steer viewers away from online video, leaving nothing to monetize at all.

Time Warner Cable recently began experimenting with a tiered pricing model in Beaumont, Texas, where customers select a monthly plan and pay surcharges if they exceed their bandwidth. Other ISPs, like Comcast and AT&T, are looking into plans that would charge the heaviest web users more.

In the current trial, Time Warner offers customers the options of a 5-, 20, or 40-gigabye cap for monthly internet use. A Time Warner executive told The New York Times that most customers are "way below" 40 gigabytes a month.

While the caps may be fine for those who go online only to check email and poke a friend on Facebook, it could be trouble for those who rely on the internet for entertainment purposes.

An hour of video on Hulu eats up close to 200 megabytes, or one-fifth of a gigabyte, while watching a video through Netflix’s online rental program can consume up to five gigabytes, or an entire month's worth of internet access under Time Warner's plan.

"If all of a sudden our viewers are worried about some sort of a broadband cap, they may think twice about downloading or watching our shows," said Jim Louderback of Revision3, which produces shows like Diggnation.

Meanwhile, the ISPs warn that the current infrastructure can't support all this video streaming and metering internet access could pay for upgrades. Last year, Larry Roberts, an engineer who designed the predecessor to the current internet, said online video could destroy the web, because the platform wasn't built to carry that much data.

White Paper Library

View More Research »