Netflix: Bigger than cable. Too big for the Internet?

Netflix: Bigger than cable. Too big for the Internet?

Summary: Netflix is now bigger than any single cable company. What does that mean for the Internet and your ISP bill?

SHARE:

According to the DVD and online video rental king Netflix's last quarterly report, Netflix now has more subscribers than Comcast, the largest cable U.S. TV operator. 7% of all U.S. citizens now subscribe to Netflix. That's great for Netflix but what about the Internet, on which it increasingly relies for its video transport?

Back in October, Netflix, and other video content were already taking up more bandwidth than any other single Internet service Gaming, Peer-to-Peer (P2P) file sharing, and Web surfing were all falling behind. It's only gotten worse since then. When I recently looked at how much traffic IPv6 was transporting on the Internet, I found that Netflix, all by itself, was taking up 20%--the largest single share-of all Internet traffic.

There's nothing wrong with that, but is there enough bandwidth on the Internet to support this if this video trend continues? I doubt it.

Internet Service Providers (ISPs) are capping their monthly services, ISPs, like Comcast, are also trying to charge Content Delivery Networks (CDNs), the high-speed Internet traffic backbones used by video services, such as Level 3 extra charges for their traffic.

The cable companies are in the odd place of having their comparatively low-revenue ISP services starting to eat their far more profitable cable TV services. On top of that, to supply the need for more and faster bandwidth, they need to upgrade their backbones to IEEE 802.3ba, the standard for 40 Gigabit Ethernet (GigE) and 100GigE Ethernet.

100GiigE may sound fast--and it is--but it's not fast enough. Some people are already demanding, not mere Terabit networking, but 1.4Terabit networks. In the meantime, ISPs are still struggling to get 802.3ba up and running. And, let's not even talk about how much trouble it is to get decent broadband in the last mile from the ISP to your home or office.

So what does all that mean for you? Well, it means you can expect to pay more for broadband and get less of it thanks to bandwidth caps. Someone is going to need to make up the revenue cable companies are starting to lose to Internet video and that someone will be you and me. On top of that, someone is going to need to pay for the network infrastructure and that means, again, we're going to get stuck with the bill. Adding insult to injury, I expect we're also going to need less reliable service as the existing Internet bends under the ever heavier demands of video watchers and mobile users.

If we're lucky the Internet won't break. But, I can certainly see Internet "brownouts" as a real possibility in 2012.

Lucky us.

Related Stories:

Netflix reports strong Q1 earnings; approaching 25 million subscribers

Netflix anticipates TV Everywhere to be biggest competitor

Netflix may begin offering family plans with multiple simultaneous stream options later this year

The Internet belongs to Netflix

Google TV, Apple TV, & Roku's Biggest Enemy: A lack of Internet Bandwidth

Topics: Browser, Hardware, Networking, Telcos

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

30 comments
Log in or register to join the discussion
  • RE: Netflix: Bigger than cable. Too big for the Internet?

    Cable ISPs will use this complication to "squeeze" services like Netflix because the cable monopolies aren't competitive with their own offerings.<br><br>The only thing too big is the pants those cable ISPs wear. Drop the cable monopolies and the network will expand and flourish...bandwidth and speed will increase...and prices will drop as the newbies court your business!
    James-SantaBarbara
    • RE: Netflix: Bigger than cable. Too big for the Internet?

      There's only one cable company to choose from in my area thanks to franchise exclusivity agreements made with the local government. And because of this sweetheart deal, there's no incentive for Comcast to upgrade their network to fiber optics. Why should they? They have a steady stream of income, guaranteed.
      blind obedience
      • RE: Netflix: Bigger than cable. Too big for the Internet?

        @blind obedience
        fyi this happens all over the US, I have not lived in the same address for more than 2 years over the last 16 or so, sometimes moving as often as 6 times a year (maybe once or twice, normally 2-3 times), and I have only lived in 1 place where cable tv was offered by more than one company, not including satellite, and not including those silly companies that think they can buy service from the cable company and then sell it to you at a higher price, because they "offer better customer service" or occasionally a slightly lower price, because they get a discount for buying the service in bulk from the cable company...
        aiellenon
      • RE: Netflix: Bigger than cable. Too big for the Internet?

        @aiellenon
        That's what you get where there's [b]no[/b] competition. They could get away with it back in the 80's and 90's before broadband when they were smaller companies and customer service was better and they didn't nickle & dime you to death. Now people are starting to complain about it and call them on their lies.
        blind obedience
    • RE: Netflix: Bigger than cable. Too big for the Internet?

      @J Hartsock
      reminded me of the good old (evil) AT&T, when you could not connect your own fax machine to your telephone line. thanks to anti-monopoly law, they got busted and the internet flourish. hope they will go after these new monopolist to free up the super-highway.
      kc63092@...
  • Is netflix bigger then all provider combined?

    Yes they have more subscribers then Comcast, yet Netflix is provider independent, meaning that they can work on FiOS, Warner, Cox, ect.<br><br>What is Netflix's subscriber rate compared to all delivery avenues combind? 2%? 10%.<br><br>That would be an interseting comparison, as a metric to gauge overall user interest in the Netflix service (which I am a customer of).<br><img border="0" src="http://www.cnet.com/i/mb/emoticons/plain.gif" alt="plain">
    Tim Cook
    • Good question

      @Mister Spock
      I wonder what percentage of overall cable/satalite, ect users are netflix subscribers?
      John Zern
  • RE: Netflix: Bigger than cable. Too big for the Internet?

    Now that NetFlix is relying more and more on internet bandwidth, IMO, they are doomed. It's inevitable that eventually there will be low bandwidth caps that will hurt NetFlix. And consider that they are using 20% for low quality video. I personally don't get these customers watching this low quality stuff. 1080P TVs but they just want to watch something they've most likely already seen before in lower quality. No wonder this country is getting so fat.

    I have to say I'm up in arms over whether or not ISPs should be allowed to throttle. It IS their infrastructure after all. Nobody is stopping the wireless providers from doing stuff like this with their wireless networks. I personally can't believe it hasn't come to home internet access already. I think it eventually will.

    No issues for ATTWireless offering unlimited calls to other ATT phones. So why would ComCast have a problem offering unlimited access to ComCast movies? The goverment doesn't force ATTWireless to offer unlimited calls to/from outside phones for free.

    Time will tell....
    happyfirst
    • RE: Netflix: Bigger than cable. Too big for the Internet?

      @happyfirst low quality video?? compared to what - bluray?
      if so, I can understand your point of view, but honestly dvd quality videos that I get through netflix is very very adequate considering I am only paying 8 bucks for.
      As far as saying it is for stuff you already seen... says who? Don't buy the service then if you happened to already seen the thousands and thousands of movies offered for streaming. I know I haven't seen them all so it is worth it to me.
      brad1000
      • RE: Netflix: Bigger than cable. Too big for the Internet?

        Low quality video doesn't begin to cover it. Not only do they use about the worst compression I've seen (the Starz section is especially bad) but I've yet to see one of their movie streams make it more than 20 minutes in without developing a terrible case of hanging/buffering.

        Frankly, I can't understand all the Netflix hoopla. They'e got to have the crappiest overall streaming quality of anything on the Internet. And they want to introduce multi-family streaming? Give me a break!

        If you want to see streaming done right (and looks spectacular even on a 1080P set) check out the 2nd Gen Apple TV/itunes. This is apparently a secret the masses have yet to discover, and it's what Netflix should really be worried about. Yes, you're locked into Apple's box/infrastructure, but don't knock it 'til you've tried it.
        BetaMark
      • RE: Netflix: Bigger than cable. Too big for the Internet?

        @BetaMark<br><br>I won't knock the Apple's box/infrastructure because I have no intentions of buying an Apple TV.<br><br>The beauty of the Netflix approach is the low barrier to entry. Chances are it works on a device that you already own and they are always doing promotions for 1 month of free service. <br><br>I typically watch on PC devices so I rarely see the "hanging/buffering" issue described. When I do it usually opens once.<br><br>Of course, I am completely content watching 'old' stuff because there is a lot I haven't seen. I realize that I am not in the majority by any stretch.<br><br>I wish that web titans like Google, Facebook, Netflix, Amazon, etc would team up to figure out how to break the stranglehold the ISPs/Carriers have on the pipes.
        Rich Miles
      • RE: Netflix: Bigger than cable. Too big for the Internet?

        @BetaMark [b]Low quality video doesn't begin to cover it. Not only do they use about the worst compression I've seen (the Starz section is especially bad) but I've yet to see one of their movie streams make it more than 20 minutes in without developing a terrible case of hanging/buffering.[/b]

        And yet somehow I manage to watch a few hours of streaming Netflix over the Wii with no hanging/buffering issues. Then again I have FiOS... perhaps the hanging/buffering issues are caused by the ISP and not Netflix?
        athynz
  • Which is why I don't buy bandwidth from a cable company...

    "Someone is going to need to make up the revenue cable companies are starting to lose to Internet video and that someone will be you and me. "
    Maybe someone should consider moving to a service that does not use network technology that's only found on cable networks and history books aka bus networks. I may have just missed it but I don't see VZ talking about the same restrictions and additional fees that Comcast has been pushing for years starting well before Netflix was an online service. Or to be blunt Comcast is a crooked company anyway this is just an excuse.
    ITSamurai
    • I here all this talk about band width and wonder is everyone just

      sitting around watching movie's, instead of living life?

      I agree that Comcast is nothing but a bunch of whores and is why I switched years ago to Direct and never looked back. I also get 10/12 movie's sent to me via MAIL from Netflix. I guess I'm lucky because I get one day turn around time where I live.
      Over and Out
  • RE: Netflix: Bigger than cable. Too big for the Internet?

    I would have netflix but since my only broadband option is mobile broadband that has caps Netflix has not use to me.
    MLHACK
  • RE: Netflix: Bigger than cable. Too big for the Internet?

    I just started using Netflix and was surprised at how little buffering there was. I told a friend who was interested in the service it took about 30s to load a movie and when I went to demonstrate this I was wrong it took 15s to buffer the movie started and played continuously. Even with the Sony PSN network down I have no issues with Netflix.
    S1NN3R
  • RE: Netflix: Bigger than cable. Too big for the Internet?

    Here's the thing: I used netflix/hului exclusively for a year. I got sick of not being able to see all the shows I wanted so I got cable. Do I think cable will die out? No I do not. It is an entirely different story for onDemand though. And if I pay a little more because the cable companies want the same revenue they get now, that's fine, so long as I get the bandwidth promised me by the company, otherwise they get dropped like a noob after Ryu's shinruyken.
    KBot
  • RE: Netflix: Bigger than cable. Too big for the Internet?

    I don't see what the issue is here. Netflix is paying for the bandwidth to broadcast movies and people are paying for bandwidth to watch the movies. If the infrastructure needs to be upgraded to accomidate the amount of bandwidth being used, then the ISP should be making enough money to upgrade it. If not then they have two choices, upgrade it on their own dime or charge Netflix more for the bandwidth they are using on the streaming side. The cost should not go to the user end because we aren't using any more bandwidth than we already pay for. In other words Netflix is streaming more and more movies but we only watch one at a time(most of us at least :) So who does Netflix pay for bandwidth anyway???
    IndredKold
    • Yes, that's how it SHOULD be..

      @IndredKold <br>...but if there's one dominating factor is that the big companies are greedy. Why should they spend the enormous amounts of money on infrastructure upgrades when they can cap and stick it to the customers who have no other (real) choices to go to? The people making the decisions value their pay/bonuses above all else and if that means you get shafted because spending money on upgrades lowers their bottom line, why should they care? It's not like you have anyplace to go...<br>Yes, it's cynical, but it's how it is. Creating a hard (landline) network is extremely expensive and cost prohibitive for small companies, so start-up competition is locked out before it even starts.<br>Our only hope is big companies like Google or Amazon, or maybe even Netflix themselves getting into the network business to compete and offer alternatives.
      Zorched
      • RE: Netflix: Bigger than cable. Too big for the Internet?

        @Zorched
        Even for big companies, the costs of adding capacity is a lot.

        There's another way to look at it - should the person who uses little internet bandwidth be made to pay for the one who uses a lot?

        That's the outcome we have now with unlimited use pricing. If Comcast has to add capacity for the Netflix video users and can't charge that user or netflix, then they need to spread that cost to everyone else.

        Why should you have to pay for my Netflix (or bittorrent) use when it requires network upgrades to keep an acceptable level of service for everyone?
        mattnad