A Cable 'Express Lane'?
Considering all the hubbub these days about cable's inevitable move to a consumption-based or metered billing model for Internet services, it was interesting to read Wilner's take on the topic in response to a reader's question about why an operator can't just hook up with studios and content providers and widen the pipe through some equitable business deals.
Our own Michael Harris took a stab at this idea in February as Net neutrality zealots started to circle Comcast Corp. (Nasdaq: CMCSA, CMCSK) for its peer-to-peer (P2P) network management policies, but Wilner resets and expands on the topic in the wake of Netflix Inc. (Nasdaq: NFLX)'s move into the world of broadband video distribution.
While most ISPs charge a flat monthly rate, they also have to provision their networks for bandwidth-eating services and must pay backbone providers for increased customer usage. "This is a fatal flaw in the residential ISP pricing model that someday, surely will break," Wilner writes.
It's not broken yet, but cracks are forming, as operators such as Comcast, Time Warner Cable Inc. (NYSE: TWC), Rogers Communications Inc. (NYSE: RG; Toronto: RCI), BendBroadband , and others test, launch, or prepare usage-based models. (See TWC Tees Up Metered Internet Trial and Comcast Caps Coming? )
Beyond that, Wilner wondered if ISPs and a potential partner like Netflix could build an "express lane" for the delivery of movies and other content that require lots of capacity. "The [ISPs] and the movie rental company would have an economic relationship to pay for the expressway. For a small premium charge, they even could offer a premium level of service guaranteeing even greater stability and speed."
Technically, this could be done with PacketCable Multimedia (PCMM), a CableLabs -specified platform that can apply QOS to just about any form of IP-based application. But using PCMM in this manner could raise the hackles of Network neutrality advocates.
And, as Wilner puts it, it's that "threat of regulation" that's holding things back. "Do we want consumers solely to foot the bill for necessary new infrastructure by being charged for usage or do we want to spread the costs by unleashing the forces of competition and innovation?" he asks.
Although broadband business deals between MSOs and content owners may hold some long-term promise, recent activity clearly indicates that consumption-based models will drive cable's near-term reality.
— Jeff Baumgartner, Site Editor, Cable Digital News