• by Ross Fadner , May 21, 2012

Comcast’s decision to start charging users based on data usage could mark a significant turning point in the evolution of streaming media -- especially if other Internet service providers follow suit.

Last week, the cable and Internet service provider said it was scrapping the 250 GB data cap it imposes on Internet subscribers in favor of a new, usage-based pricing model, which would begin testing in certain markets. As part of the new plan, Comcast said it would increase the minimum cap for all subscribers to 300 GB.   

If usage-based pricing becomes an industry standard, the most obvious and immediate change would be that consumers can no longer stream as much content as they wish.

As TechCrunch’s Ryan Lawler points out, the idea of usage-based pricing comes at a tricky time in the evolution of online video.

For starters, online video consumption is ramping up steadily. According to comScore’s just-released online video rankings for April, Internet users consumed nearly 50 percent more video last month than they did the year before -- a total of 21.8 hours on average compared to 15. Of course, this total pales in comparison to the 150 hours of television that Nielsen reports the average person consumed per month.

Given that monthly online video consumption is still relatively low, data usage might not look like much of an issue -- at least not now. For example, Lawler says the average video on Netflix uses about 1 GB of data per hour under its normal setting, or 2 GB of data for its highest-quality setting. This means that if consumers could stream all of their TV content online on Netflix’s highest-quality setting, they would just hit Comcast’s 300 GB cap.

But what happens as video quality improves? Lawler points out that higher-quality video will result in higher bit rates and more data streamed per piece of content.

Another point of consideration is the fact that most television sets are not yet connected to the Internet. What will happen when connected TVs are in every household and consumers expect to seamlessly watch HD-quality content over the Web?

As Lawler says: “Comcast, of course, says that its new, usage-based pricing policy is pro-consumer, and to a certain extent it is. The average broadband subscriber -- those who only use up about 8 GB or 10 GB of data a month — shouldn’t necessarily pay the same as those whose usage goes above 300 GB in the same period of time.”

“But in the future, if I have to pay an additional $10 for every 50 GB of video I consume over a 300 GB limit…then I’m not so sure it’s worth it. That’s the world we’re about to enter.”