Will Video On Demand (VOD) Overwhelm the Internet? Force Consumption Caps? Drive ISP Pricing Sky High?

Posted by Richard Kastelein in Writers on November 29, 2010  |  1 Comment More from this author  |    |  Follow Richard Kastelein on: Facebook | LinkedIn | Twitter | YouTube

Right now. YouTube takes up 8 percent of prime time Internet traffic with 24 hours of video is uploaded every minute.

But that's not the big problem in the USA. No, the real problem lies here:

Netflix represents more than 20% of downstream Internet traffic during peak times in the U.S. — and is heaviest in the primetime hours of 8 to 10 p.m., according to a new report from bandwidth management equipment vendor Sandvine. As much as 43 percent of peak Internet traffic is eaten up by real time entertainment, mostly streaming video. As that grows rapidly, it imperils the ability to pipe entertainment to neighborhoods.

Is the stage for being set for ISP's to push back? With video streaming via the Internet pipes increasing dominance in bandwidth consumption, the Internet service providers might push back on at some point. The streaming video using the Internet Protocol (IP) business model into homes, relies on — essentailly — poaching bandwidth. And the Net Neutrality issue will simply exacerbate the situation. If you back net neutrality, it's a lose-lose situation. If ISP's are forced to grant Netflix free reign, the response will simply be to raise the price on your Internet service. That is, if they can't "tax" the outsized impack back to Netflix, they'll bill you for it whether you use it or not. Be careful what you wish for as you just might get it.

But it's not just Netflix. It's all the new connected devices coming off the shelves this holiday season. From Connected TV's to Tablets to more Smartphones to your Xbox, Your PS3, your Wii, your Roku, your Boxee box, your Set Top Box... all which are capable of streaming video from the Internet, all which are capable of streaming Video on Demand. Now consider what might occur in January... when the massive gadget-giving season is over — when it's all unwrapped and plugged in, and — perhaps 20 percent of the population start streaming video off the Internet.

The backbone of the Internet will not suffer lockdown anytime soon according to experts. No, that's not the problem. The trouble is the last stretch of the Net — the skinny pipes in the cable or telephone line to your house not built for this kind of traffic. Today it's easy to view an HD streaming movie. But the thin local plumbing could quickly become overwhelmed once all your neighbors couch down for watching the full series of Lost or all the Harry Potter movies in a marathon session streaming over the Internet to their TV. The ISPs won't just sit back and take it. The will also likely choose to go after more of the money that content providers such as Hulu, Netflix, Lovefilm and Google are running with. They want a piece of the pie and they happen to own the 'last mile' of wires into the home where bottlenecking is expected to occur.

Simon Calver, CEO of Lovefilm commented in IPTV News on Over the Top TV or TV via the Internet.

What in your opinion are the major advantages and disadvantages of OTT TV for a broadcaster?

Simon Calver: OTT TV doesn’t need a cable or satellite infrastructure, and it is flexible - it puts the customer in control. However, a lack of open standards makes the rolling out of services across multiple devices difficult; plus you need sufficient bandwidth to deliver quality OTT TV services.

And what happens when the BBC's iPlayer goes global on the web, internet Connected TVs, Game Consoles et al?