Bandwidth and Over-the-Top Video
Three things are clear about video, in this last month of 2010.
One, it’s morphing from a service into an app. Two, size-wise, it’s gigantic when compared with regular Web surfing and phone calls. Three, the “over-the-top” iteration of it represents 15% to 50% of traffic running over cable’s broadband plant - up from about 10% two or three years ago.
The people whose work it is to manage Internet bandwidth used to freak out about peer-to-peer video. P2P isn’t exactly chump change right now, but streaming video is definitely the bigger ogre.
Over-the-top, under-the-bottom, call it what you will: Practically and tactically, it’s a tsunami of bits, clogging a network that someone else built. It rides “over the top” of the broadband infrastructure built not just by cable, but by wireless, telco or anything that moves Internet bits.
From that network-centric point of view, it’s fairly easy to agree on one thing: “Holiday punch” takes on a whole new meaning when you’re the guy handing in a budget request for doubled or quadrupled capital spending next year, just to make sure your CMTS ports don’t buckle under the extra load of overthe- top video traffic. (Oh, and don’t forget the part about the no return on investment!)
Here’s an analogy: Two options exist when a highway gets consistently clogged with cars: add a lane or car pool.
In cable, “add a lane” becomes “plunk another DOCSIS channel into the bond,” which presupposes DOCSIS 3.0.
The car pool equivalent is to lessen the number of cars that share the road. In tech terms, that means splitting the node - lighting up another strand of fiber so the available bandwidth is used by half the number of homes.
Here’s why the analogy breaks down, though, when it comes to over-the-top video: adaptive streaming. It makes over-the-top video behave like a gas, filling all available space. Doesn’t matter how much room there is; it’ll find a way through.
More bandwidth? Great! Higher-resolution stream. Less bandwidth? No problem. Lower-resolution stream. And so on, in real time.
Again: Streaming video, as a percentage of over-the-top Internet traffic, grew from 10% to as high as 50%, in three years. And Netflix streaming is just getting started.
This is why the whole hullaballoo between Level 3 and Comcast, and related to the surge in streaming Netflix traffic, is so necessary. Ugly, but necessary. It’s a question of who pays what freight.
Sure, I love free shipping. Who doesn’t? The merchants I buy stuff from often offer it as a perk. But I don’t expect it 100% of the time.
Man up, Netflix.
KENNETH R. HOEFLE commented:
Fred allegrezza comments bring a ringing clarity to pierce the clutter of discourse around the L3 / Comcast infighting. Everyone else, stand down.
L3 is doing their job to carry the HSD traffic Comcast’s customer wants. Nevermind it is Netflix - nevermind it is streaming - nevermind fingerpointing price modeling. It is the INTERNET Comcast - don’t like it get out of this business!
So fred is spot on and I say eveyone else stand down. Customers want…. what they want, when they want it and where they want it. There is no desire, nor tollerance for waking to the milkman’s footfall and the clang of glass milk bottles signaling delivery of what the customer wants. Suggestion….dump some of your self-serving, nobody wants or watches channels and make room!
MountainPeak commented:
Who pays for OTT internet usage is really not as complicated as everybody makes it out. In the end, HSD subscribers will pay for it one way or the other. It’s more a question of “who will be the bad guy”.
Will it be shared by all HSD subs irregardless of whether they use such OTT services? Doubtful but would be the least cost-increment for all HSD subs. Will it be metered so those who use it, pay for it? Seems like it will gain traction with some (read: those who don’t use it). Or will it come in the form of B2B costs which then (in turn) get pushed down to the subscriber on a service (or app) basis? I’m not sure the OTT app owner wants that as this makes their product less likely to appear attractive when compared to the incumbent operator’s offering.
But in the end OTT services will “cost” as much or more than what an incumbent can provide. The question I have…is whether the OTT video providers will be able to maintain a viable offering when they start getting into “real” content negotiations? Namely with content owners who know their content can make or break the OTT company. Negotiations are easy when you are bringing new eyeballs to the table…not so easy when you are moving them from one source to the other…the content owner doesn’t care & wants to be paid equally (or more) for each method.
MountainView commented:
Now that Xfinity is HSD connection nuetral. And Xfinity is trying to be NetFlix for Comcast video customers. Will Comcast be cutting a check Qwest, AT&T, Verizon, TWC, … to keep their bits flowing? Has Comcast got sour grapes that their OTT video product can not compete with Netflix?
As a side note no consumer grade Internet product is based on equal amounts of ingress and egress. DSL and DOCSIS are all based on 20 to 40 times the DS compared to the US. If the majority connections are asymetric you will never get equality.
Fred Allegrezza commented:
Leslie,
Comcast has 15M customers paying $40 per month for “High Speed Internet Access” That’s $7.2B per year. Customers are paying for “Internet” access. Not access to ComcastNet. Not access to Comcast only web sites. Not access to Comcast selected sites. Not access to Comcast preferred sites. Access to the “Internet” including Google, Yahoo, Hulu, YouTube, and yes NetFlix. L3 is doing their part by delivering all that video from the Netflix servers to the Comcast network. L3 is paying to carry that data, demanded by Comcast customer and not complaining. Comcast is trying to charge L3 for delivering the data that Comcast customers requested! Should L3 charge Comcast for the excessive demand that Comcast customers are creating? Comcast is claiming 15Mb/s download and they limit their customers to 250GB per month. This is reasonable. Comcast has all the network management systems in place to manage their customers and network. Comcast needs to man up and deliver on what they sold to their customers. So is this a contract dispute between the 15M Comcast HSD customers and Comcast?
MarcT commented:
No question OTT video traffic will continue to increase forever;it is disingenuous for Netflix/Level 3 to attempt to leverage the network neutrality politics in order to continue getting a free ride. The (Internet) age old unwritten rule for IP peering (i.e., no charge IP trafic exchange) presumed relatively equal amounts of ingress and egress (incoming vs. outgoing IP traffic). Comcast’s nearly 17 million cable modem subs, who are increasingly consuming Internet video, create a huge discrepancy of ingress over egress, making Comcast’s new policy of charging Level 3 (or others) not only reasonable but customary according to the unwritten laws of the Internet. Further, Netflix is surely paying Level 3 for its CDN services, why shouldn’t Comcast be able to charge in turn?
SoCalTechGuy commented:
Mark, as you point out Netflix expenses are going to go up no doubt. But what you didn’t calculate in the equation is the substantial cost savings associated with NOT having to pay shipping for each DVD when the content is streamed. Adding in their expense for internal handling and postage has to save them around fifty cents every time some one streams a movie versus having a DVD shipped.
Mark commented:
All roads point to increased costs for Netflix going forward (content licensing, CDN expense, usage based broadband), which means the days of Netflix being an unlimited, $9/mo product are gone. They’ve already increased prices, next will likely be a tiered access pricing of some sort ($8/mo streaming plan exists, but you don’t get Starz or Epix content on that - the better content will be available only on higher priced plans)
Netflix was built on a brilliant model - pay for a DVD once, then establish a subscription svc to rent that DVD over and over again. Not the case with streaming, where their costs will be more correlated with usage.