Why are the biggest U.S. Internet service providers, like Time Warner Cable (TWC), AT&T (T), and Comcast (CMCSA) trying to change the way they sell high-speed Internet service from all-you-can-eat to pay-per-use? In part, because Web video is only starting to take off, and the amount of bandwidth used on the Internet could jump sixfold in the next five years, according to a Cisco (CSCO) projection summarized in today’s Wall Street Journal.
Cisco, the network gear maker, projects Internet traffic will soar from 7 exabytes per month — the equivalent of two billion DVDs — last year, to 44 exabytes per month in 2012, says the WSJ. A big part of that growth: Web video, which Cisco expects to increase from 30% of today’s traffic to half of it by 2012. (This is good news for Cisco, of course, which wants to sell as much network gear as it can. So we won’t pretend that this is an unbiased report. But we still think it could be directionally accurate.)
Much of the growth Cisco expects will come from greater Internet penetration in emerging markets like Latin America. But as Web video quality — which means bigger file/stream sizes — increases, U.S. broadband subscribers will probably be using a lot more bandwidth every month, too. Which is why it makes sense for ISPs to try to change their pricing models as soon as they can — like they’re working on now.
Note: We’re not suggesting these changes are good for consumers, or that we like them. But from an ISP’s perspective, it makes sense to try. It’s not like we have many other options if our cable and phone companies both raise their rates.
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