ISP Bandwidth Caps = Net Video Tax

Think $4 for a Net movie rental is pricey? You could be paying a lot more if your ISP takes a liking to bandwidth caps.

Chris Null wrote yesterday about Time Warner Cable's experiment with tiered bandwidth caps, which (ostensibly, at least) would charge extra for the small percentage of users who—thanks largely to massive P2P file sharing—are hogging 50 percent of its bandwidth. Those who are just surfing the Web, sending e-mail, and buying the occasional song would pay a much smaller fee (exact rate plans are still up in the air).

Sounds reasonable, but check out this New York Times story, which puts the experiment in a different light. Until now, the only individual users downloading gigs and gigs of data were Kazaa and BitTorrent fanatics trading unaired episodes of "Battlestar Galactica" and movie bootlegs with their buddies. But what's a coming trend in Net usage that could change all that? Legal movie and TV downloads, starting with the likes of Amazon, Netflix, and Vudu, and culminating this week with the unveiling of iTunes movie rentals and a revitalized Apple TV.

Many are already groaning at the rental prices of Net videos: typically $4 for a new release, and $5 for a new HD movie. But consider this: the average SD movie comes in a 500MB file, and an HD movie can use as much as 5GB. So let's say you rent, oh, eight movies a month (or two a week). If you're sticking with standard def, that'll use up about 4-5GB of bandwidth a month—not including all your other Net usage. Gotta have your video in HD? Now we're talking 40GB a month.

As I mentioned before, TWC has yet to set specific rates for the bandwidth cap trial, but the Times talked to a spokesperson and learned that packages would "probably" range between 5GB and 40GB a month, with the 40GB plan costing about $50 or $60 a month. (As a TWC customer in Brooklyn, I pay $30/month for my all-you-can-eat Net plan.) So if you plan on buying eight HD movies in a given month, you could easily burn though all your monthly bandwidth—on the priciest available plan. And what if you go over the limit? The Times notes that Bell Canada, which is already using bandwidth caps, charges its customers more than $7 per extra gigabyte over your monthly allotment. Seven dollars times five for a 5GB HD movie...you do the math.

Of course, the TWC bandwidth cap trial is just that—a trial—and the spokesman quoted in the Times story is careful to say that the operator will make sure customers "feel like they are getting a good value" before going ahead. That said, the rise of widespread (and legal) movie and TV downloads represents a huge opportunity for your friendly neighborhood ISP (which, as the Times notes, pays an estimated "all-in" cost of less than 10 cents for every gigabyte you use). So if you think $4 to rent "Pirates of the Caribbean" over the Net sounds expensive...well, think again.

Related:
Time Warner: Download Too Much and You Might Pay $30 a Movie [New York Times]