Some Americans are “cutting the cord”—ceasing to pay for traditional television services. But that certainly doesn’t mean they have turned their back on content.
According to recent figures from Sandvine, a broadcast networking company, the top 15 percent of those who get their over-the-top (OTT) content delivered via the Internet digest 213 gigabytes each month, seven times more than the typical user who consumes 29 GBs. Collectively, these cord-cutters account for 72 percent of all streaming traffic and 53.9 percent of all traffic on providers’ networks, according to the research.As broadband providers shift toward usage-based billing for data consumption, it will be important to anticipate consumer responses to potential price increases. AT&T charges users who exceed 250GB extra, while Comcast is considering the same treatment for those who consume more than 300GB of data. The usage in gigabytes of data will inherently increase as video quality improves. So, even when a high-OTT consumer’s content-watching habits remain the same, he or she will be digesting more gigabytes of data. In this light, providers will need to guard against the price point at which consumers might decide enough is enough and change their habits accordingly.
Another interesting angle to consider regarding these data limits is the way providers classify content type against usage. In 2012, for example, Netflix CEO Reed Hastings took to Facebook to knock Comcast’s video classification policy that counts content streamed from the leading OTT-providers, Hulu and HBO GO, against data usage but not through its own Xfinity app. In his post, Hastings said that if he were to watch an episode of Saturday Night Live! on his Xbox via Hulu, Comcast would charge him for consuming one gigabyte of his data plan. If he were to watch that same episode on that same device over that same Internet connection but through the Xfinity app, Comcast would not count it as data usage.
With the current debate surrounding net neutrality back in the limelight, proponents are loudly objecting to such instances that indicate a violation of its principles. In theory, if net neutrality is killed, Comcast could charge Netflix an even higher fee for access to the “fast lane” while also charging customers when they pass data consumption thresholds. Conversely, the company could encourage its customers to watch content via Xfinity, which would also be delivered via the “fast lane” but not count toward data caps. Only time will tell.
According to Sandvine, Netflix is responsible for more than one-third of all Internet traffic during prime time hours (34.2 percent). That number represents a 2.6-percent increase from the content provider’s report issued last fall. Additionally, the report indicates that OTT competitors Amazon and Hulu have also seen their traffic increase. But they each account for less than two percent of Web traffic.
Still, as streaming services continue to improve and consumers are treated with little-to-no buffering and higher-quality video, we expect that cord-cutters will consume even more bandwidth. It remains to be seen whether OTT providers will be asked to pay for that consumption.