Video services

Will OTT Video Swamp Rural Broadband?

Even though only a small percentage of rural broadband users are viewing streamed Internet video, that traffic represents a whopping two-thirds of all downstream Internet traffic in rural areas, according to a new U.S. Rural Broadband Report issued by broadband access gear maker Calix Inc. (NYSE: CALX), a dominant player in the U.S. rural market. (See Calix: Video Dominates Rural Broadband Traffic.)

The report is based on data taken from the Calix Compass Flow Analyzer software and reflects the actual traffic from 45 rural ISP customers in the fourth quarter of 2011. (See Calix Jumps Into SaaS.)

It's a clear indication that these rural companies need to be prepared for a much greater volume of video traffic as more of their customers adopt popular Internet video streaming services such as Netflix Inc. (Nasdaq: NFLX), says Geoff Burke, senior director of corporate marketing for Calix.

Calix found that only 5 percent of rural broadband users currently account for about half of all Internet traffic generated by their ISPs. These users, which tend to use broadband for over-the-top video, are consuming more than 50 gigabytes of downstream capacity per month.

"The heavy download of video is still isolated in a fairly small segment of the population," Burke says. "When that grows, and it will, these companies need to be looking a newer business models and new business opportunities."

Calix plans to continue releasing quarterly editions of its U.S. Rural Broadband Report that will track that bandwidth explosion. The company also is trying to influence its customers to encourage continued consumption, and figure out how to prepare for it, rather than react to the video streaming tsunami by trying to impose bandwidth caps.

"Rather than penalizing users with data caps, why not develop service packages that cater to their needs?" Burke says. This includes creating usage-based billing packages tailored around usage patterns.

Among other report highlights:

  • Giving users more bandwidth does encourage usage: Consumers on fiber-optic networks with greater bandwidth used 2.67 times as much bandwidth as those on copper networks.
  • No shock here: Business services consumed 53 percent of upstream bandwidth.
  • Regional differences exist in online behavior: Video streaming was much greater in the west; gaming was the most popular in the Southeast; Northeasterners like to shop; and us boring Midwestern types are big on business.

— Carol Wilson, Chief Editor, Events, Light Reading

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