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As Web Viewing Expands, Bandwidth Caps Emerge

2 minute read | April 2009

Brandon Eshman, Nielsen Online

If you think the internet can support unlimited content and you’ve been enjoying your all-you-can-eat web surfing… just wait. At the same time that consumers are increasing their use of the internet to view content at their convenience, some cable companies and ISPs are setting limits on how much content you can access in any given month – or risk paying a penalty for going over the limit the same way your phone company budgets your anytime minutes.

Comcast has levied a 250-gigabyte cap on its users, (that’s about 120 full-length standard definition movies or 65,000 songs). Time Warner Cable has a program of bandwidth caps that lets customers choose from several levels, ranging from 5GB to 40GB at prices that range from $29.95 to $54.90 a month, with the possibility of a 100GB tier in the future. Verizon’s FiOS service has said it has no immediate plan to cap bandwidth usage.

This boom in video streaming is just getting started. Case in point: the uber-growth of Hulu. Unique viewers to that site alone have increased just over five-fold from February 2008 to February 2009. From September 2008 through February 2009, unique viewers have grown 49%, while the time spent viewing has risen 54% (from 114.7 minutes to 176.9 minutes).

Not only are more consumers viewing video content, but they tend to spend increasingly more time on the numerous outlets (iTunes, Netflix, Xbox 360) consumers have for accessing content. YouTube has also just begun offering full-length TV shows and movies at youtube.com/shows.

Cable companies have a right to control their pipes as they wish, but smaller, more cost-effective caps may have a real effect on how not only individuals consume content, but also families with media-hungry kids and teens. Lower caps increasingly come in to play as the premise of caps move away from individual usage to combined usage as habits of downloading movies, video, music, and so on may change given the fear of overage costs, especially as personal and household budgets tighten.

At this point, it appears consumers are not yet willing to accept bandwidth caps.  Responding to consumer and political social media buzz, Time Warner Cable announced that it would halt current expansion plans for caps in additional cities.

How much extra will you as a consumer be willing to pay to see, read, watch or play something over the Internet? Will you change your viewing/consumption habits before you change what you pay for internet access?

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