Giz Explains: How Broadband Usage Caps Will Kill Internet VideoS

NBC's scheduled coverage of the 2008 Olympics is absolutely breathtaking in its scope: It's broadcasting over 3,600 hours of the world's greatest athletes performing feats that reveal how shapeless and amoebic the rest of humanity is-that's 1,000 more hours than the last 12 Summer Olympics combined. The internet is a huge component of their nearly omniscient coverage. You can even download and watch full-length events. But NBC has a fat red warning on the page: If you've got metered or capped broadband, you might want to think twice before downloading. It's the first shot by major media in the next great battle for the internet's future. Here's why you—and most media companies—should be worried about the new wave of internet pricing.

This might seem like an odd topic for Giz Explains, our weekly "WTF is that?" series, but a bunch of comments last week revealed a need to plainly explain the tussle going on between internet service providers, the Federal Communications Commission, content providers and you, and how it's shaping the way you'll use internet over the next couple of years. First, a quick primer.

Comcast was caught slowing down BitTorrent traffic last year by the Associated Press. It (re)sparked cries for government-mandated net neutrality-treating all internet traffic equally, whether it's email, Skype or a bootleg of The Dark Knight over torrent. While that didn't happen, a complaint against Comcast went through the FCC, which ruled against it last week, saying that slowing down BitTorrent was a naughty thing to do, and that they must disclose all management practices to subscribers.

In the meantime, a different network management trend started to emerge among the major ISPs: metered broadband, aka data caps. It's like dial-up service or wireless data: After reaching your alotted amount of data for the month, you pay extra, maybe through the nose, as our northern neighbors in Canada are familiar with. Conveniently, it's "net neutral," since it doesn't discriminate against particular kinds of traffic, and it's fully disclosed to subscribers so it satisfies guidelines discussed by FCC Chairman Kevin Martin. In case you're looking to file a complaint, Electronic Frontier Foundation Senior Staff Attorney Fred Von Lohmann told us, "There's certainly nothing to stop them from pricing that way if they want to."

Time Warner was the first major to float the plan, which is currently in testing, with a 40GB cap at the high-end. Comcast is considering a metered approach as well, its spokesman has confirmed. AT&T is the most recent major ISP to jump onboard, and it'll be testing caps in the fall. Not to mention Cox Cable and a whole mess of regional ISPs already implement them.

Here's the rub: The P2P apps ISPs point to as pillaging their networks are increasingly a nonexistant bogeyman. Video is now the actual bandwidth monster, and it's only getting hungrier and hungrier.

The thing about all that video is that it competes with what your ISP is probably delivering to your other screen in the living room. Why watch 30 Rock on your couch at specific time when you can grab it on demand on your laptop with Hulu, or on a Netflix Roku box? That awesome Vudu box you bought? Pulling in Transformers in HD uses your cable provider's pipes, but it doesn't see a dime from the transaction.

Suppose you decide to be pseudo-green and opt for an all-digital approach from Vudu or Apple TV, and you have a moderate habit of two movies a week. A 90-minute movie running at a constant bitrate of 2.5 megabits per second (you're talking HD here) will swallow 1.69 GB. If you've got a 40GB cap, eight movies will eat over a quarter of it. And that's just your rental habit, with today's specs. The 1080p flicks they'll be streaming tomorrow will be even more bandwidth intensive.

More importantly, today's geek frontier is tomorrow's mainstream playground. Like game demos on Xbox Live? Or games-for-purchase on Steam? Those are a gig or two a pop, and as more and more games are distributed digitally, the gigs will add up. Which is also part of the problem as far as the ISPs are concerned: AT&T's tech chief glibly notes that "traffic on our backbone is growing 60 percent per year, but our revenue is not."

While I wanted to tell you that data caps will destroy the internet as we know it, really video is what's actually facing the greatest threat. Time Warner has openly said content providers can't have it both ways. And the EFF's von Lohmann told us that while he hasn't "seen any evidence that [metered broadband] will radically change the internet" he is "worried that companies that have their own video they're delivering over the same pipe they deliver internet service will have an incentive to reduce caps" and it's a "valid concern worth watching." It would effectively have us paying twice for video delivered over the internet. Most people can barely stand paying for it once.