Comcast Planning to Cap Data Usage: Netflix Troubles Ahead?

Source: Getty Images

Source: Getty Images

While Netflix (NASDAQ:NFLX) is pushing for higher-quality video streams and more data usage, Comcast (NASDAQ:CMCSA) may be standing directly in the way, as news is out that the Internet service provider is planning data caps for all users soon. The caps may not seem like much right away, but data usage is likely to expand, and it could put a crimp on those services that send a lot of data to consumers — or on Comcast as upset users look elsewhere for service.

Digital Trends reports that Comcast Executive Vice President David Cohen announced during a MoffettNathanson Media and Communications Summit that the ISP would implement a data cap and usage-based billing for all of its customers within the next five years. This would be an expansion of the data caps it already as in place in Alabama, Georgia, Kentucky, Maine, Mississippi, Tennessee, and South Carolina, which stand at 300GB per month.

Cohen discussed the plan and the future of it, noting that it may start out at 350GB per month and eventually end up at 500GB per month after several years. However, he also claimed that the company didn’t want to implement a policy where the vast majority of “customers are implicated by usage-based billing and are all buying different packets of usage.” In other words, he wanted to be sure the data caps would be so high that the majority of users would be able to get by without needing to upgrade to a larger option. One issue is that these caps may be reasonable today and not cause much uproar, but by 2020 —  when the caps could be reaching 500GB per month — they could be far too tight.

Netflix has popularized the streaming of massive amounts of data in the form of video on all consumer levels. After all, binge-watching a TV series over the weekend consumes a lot of data. On top of that, Netflix isn’t alone, though it is one of the biggest player. According to Sandvine, a major monitor of internet usage and provider of intelligent broadband network solutions, Netflix accounted for 34.2 percent of downstream internet traffic during peak hours in the U.S., and it’s the second largest source of traffic during peak hours in the U.K. and Ireland.

In Sandvine’s 2014 Global Internet Phenomena Report, the group found that people exhibiting cord-cutter behavior — those people who had a significantly high amount of streaming media consumption — the average consumption amount was 213GB per month. This figure was for the top 15 percent of streaming media users. It’s worth noting that the typical users — those people in the 15-85 percentile for steaming media consumption — only used an average of 29GB per month.

The question is how much will streaming grow compared to the data caps. Netflix is growing as a media provider, adding unique content, and also making the move into ultra-HD 4K resolution offerings. This means two things: The number and amount of people streaming media will likely continue to grow, and the amount of data in each stream will as well. Digital Trends estimates that watching one thirteen-episode season of House of Cards on Netflix could consume as much as 200GB of data if streamed at the 4K resolution; adding on the five seasons of Breaking Bad at 4K would easily put users over the Comcast’s data caps — and the amount of 4K content available isn’t going to decrease either.

The number of users on Comcast’s network that stream a lot of content at 4K may prove small enough that most users still can ignore the higher data cap options and go with the standard offering, but the possibility is there. As Sandvine noted, the typical subscriber consumed nine hours of streaming media, which would be a large amount if it’s at 4K, and it very well could be by 2020.

If you’re interested in what Comcast is up to, you may like our earlier article on how it may delve into gaming with the X1 cable box. Check it out here:

Source: Thinkstock

Source: Thinkstock

A new challenger enters — or any phrase along those lines — would likely ring in the ears of gamers anywhere upon hearing that Comcast has plans to get a competitive place in the gaming universe by partnering with another big nameElectronic Arts, according to an exclusive Reuters report. The idea is to offer all the living room fun of a console with a lot more ease and what may feel like a lot less expense, but the reality might not be as planned.

According to the report, inside sources informed Reuters that Comcast was making arrangements with EA to stream certain video games through its X1 cable box — and yes, that is one word and a small shift away from sounding a lot like Xbox One, but it’s a long way away from being like one. It wouldn’t be the first company to pull a trick like this in the living room, but it’s doing it in a less common way, and with competitors nipping at it from all around, it had little choice.

The system would function by using cloud-gaming, since the X1 cable box is by no means a gaming machine with all the processing powers or GPU performance necessary to handle crunching modern game data, though it is powerful as far as cable  boxes go, offering more in the way of apps and functionality, according to Reuters’ sources. Cloud-gaming does all the processing in servers elsewhere, then streams the visuals and audio back to a screen for the player to see and respond to — it’s essentially like having a controller and screen that are wirelessly connected to a gaming console that is very far away from the living room.

For the past few years, high-speed Internet has offered an avenue for challenging TV as it had existed in the past. Netflix has taken opportunities to challenge it. Apple’s Apple TV and Amazon’s Fire TV are both on board. The major gaming consoles from Microsoft, Sony, and Nintendo have also all acknowledged the need to support these media platforms. It’s a threat Comcast and cable providers can’t ignore, or both risk losing the valuable living rooms across the country.

With all these threats and more, Comcast has struggled. One of its most recent defensive moves was to try acquiring Time Warner Cable, which would boost the cable company’s subscriber base to 30 million users, according to Forbes, and make it the biggest cable provider in the country if it receives regulatory approval. The company has already begun adding various movie rental and streaming services to try combating the encroachment of other media companies, and the video games will be a counter-offensive on another attack on the living room made by gaming consoles when they tried to become the centerpieces of home multimedia centers.

What may sound like a strong move by Comcast that could threaten all those that were seeking to steal the living room may not be such a big deal. For one, the service is likely to cost a premium, and those willing to pay it would seem more likely to fall in-line with the core gamer category that likely already have next-gen consoles or plans to get one. The game offerings appear limited, as only FIFAMaddenMonopoly, and Plants vs. Zombies were mentioned by name by Reuters’ sources. Meanwhile, Sony has already announced plans to offer cloud-gaming access to critically acclaimed PS3 titles on its gaming systems. Cloud-gaming as a whole has an uncertain future as input lag — the time between a button being pressed and the result appearing on screen – may be significantly longer when commands have to travel to a distant server and back, and even if it is fast, it may be compressed and lack visual quality.

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