The other countdown...the consumer usage bomb

We have all seen the recent countdown to IPv4 address exhaust, but there is another set of events that are looming on the horizon.

With Netflix and other services beating down the High-Definition streaming video door to the houses of America, the usage caps that several consumer Internet Service Providers (ISPs) have established is another threshold that will soon have dramatic impact on broadband supplier economics.

Over the past several years, ISPs have established monthly bandwidth usage caps. As described by my ISP, Comcast (dated 2008), using more than 250 GBytes per month means that Comcast will view you as an "excessive user". Their description of what this means is that more than the cap is more than a "small business" would use with a dedicated T1 (approximately 1.5Mbps) to the Internet.

Unless you know something that I don't know, most small businesses do not (and do not want) their employees streaming hundreds of hours of video while they are supposed to be hard at work.

Comcast claims that 99% of their users do not have "excessive use", at least that is what they claim in their Frequently Asked Questions document about Internet usage. Above is a chart of my usage, as reported by Comcast over the past five months. The line represents a linear trend line over that period. As you can see, the usage has more than doubled over the period, and using the trend-line, I will reach the 250 GByte cap in December of this year. Once you hit the cap, you can be termed an excessive user and Comcast reserves the right to limit or even discontinue service.

My household should be a representation of the larger home use population. We have a Netflix account, and I, my wife, and my boys enjoy watching movies and other videos on our laptops. I suspect that many others, perhaps hundreds of thousands of other consumers are on the path of being tagged by Comcast (and other ISPs with similar policies) as excessive users sometime in the next year or two.

So, what happens next? Clearly, the demand model for the Internet continues to change, and how it gets paid for will also likely to change. The struggle has already started with some Tier 1 providers arguing over settlement-free peering. Someone has to pay for the infrastructure build-out required to meet booming demand. So, soon we may have millions of consumers confronted with nasty notes from their ISP about excessive usage which will eventually translate into increased ISP consumer costs or increased cost for Internet-delivered services such as Netflix.

We are running out of IPv4 addresses, and we may also be running out of the current Internet business model. The trillion dollar question is whether the industry and the market determines the course, or will the government intervene and institute a new regulatory regime?