Uncommon Wisdom

Feb 6 2009   1:48PM GMT

Cable access caps to stratify broadband users

Tom Nolle Tom Nolle Profile: Tom Nolle

Cable companies are increasingly interested in bandwidth caps, traffic management or both. Charter has joined the group, and now most of the major U.S. cable operators are in some stage of trial or deployment.

The trend is a critical problem for online growth, and yet it is also the fault of the industry for letting things get to this point. Broadband pricing is increasingly a tax on the underclass of technology users to support the elite. An operator told us that 80% of usage is created by a lot less than the top 20% of users. All of this is a byproduct of the monetization problems, of course.

At the same time, DOCSIS 3.0 interest is rising; Shaw is unveiling the first 100 Mbps service based on it. We also note that companies that are looking at bandwidth caps are also looking at DOCSIS 3.0 services with higher monthly rates, which would be immune from the caps.

Thus, it appears that broadband is going to stratify, with premium users paying more for faster no-cap services. All of this continues to focus investment on access and metro, and on things like CDNs, rather than the core. The fact that over a million Xbox users have activated Netflix streaming tells the tale: Traffic without revenue equals ROI problems, and thus caps on usage. Lack of logic is about to change the industry.

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