Future of TV – Will Data Caps Squash Online Video Watching?

On Tuesday the NY Times wrote about internet service providers offering low cost internet options that restricts your monthly data usage, similar to most smart phone plans. This obviously has huge issues for online video content creators. What’s the first thing people are going to stop doing if their data is limited? Cut bandwidth heavy videos.

Yesterday there was a House hearing on whether current laws address the demands of new technology, and the NY Times article was brought up.

Represented were Netflix, Roku, Hearst TV, Dish Network, the National Cable and Telecommunications Association, and others. Here are some interesting points:

  • 1:17:30 – The committee asked about the article and restricting data. The general reply was it boils down to competition. If someone offers unlimited at a fair cost, people will subscribe to that. One executive said this was a blunt solution to handling demand peaks. If she’s backing up data at 3 AM, demand is at a minimum, but that’s counting against her quota.
  • 1:55:00 – Debate about the Dish’s Auto Hopper feature, which lets you skip ads on recorded programs (it can also lower the audio on commercials on live broadcasts).
  • 2:09:45 – Pretty much split vote on if they thought customers were offered enough choice to watch content whenever and wherever they wanted.
  • 2:17:00 – A showdown between Dish and a congressman over the Auto Hopper feature when the congressman didn’t seem too happy that someone could skip over his political ad in November.

Giving up my unlimited iPad data plan to go to Verizon, I can say data caps are extremely annoying, having gone over them twice. And even AT&T is a pain, sending me text messages that they’re going to start throttling my ‘unlimited’ iPhone data (thanks to Spotify). But I don’t think limited data, especially at the home, will last for long. People won’t put up with it and the market will sort it out. Google already has fiber optic internet that’s 100 times faster than broadband.

The Auto Hopper debate is interesting. They’re arguing that it takes the three steps a consumer is already doing to skip commercials and boils it down to one. But studies have shown that people still remember commercials while fast forwarding them. I have no problems with commercials, especially on the web, like with Hulu. But that’s because I understand the economics of why they’re necessary. I find a few minutes of my time fair payment to watch something for free online. Maybe the commercial break needs to be redesigned to highlight the economics behind it and how it pays for the programming you’re about to enjoy.

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