Commentary

Will Cable Companies Thwart New HBO, CBS Services With Data Caps?

Yesterday, HBO shook up the cable industry by announcing a new standalone Internet service. Today, CBS rolled out its own new streaming service.

The company says it will offer “CBS All Access,” a new $5.99 a month video-on-demand service that will offer shows from 15 current series, including “The Good Wife,” and “Survivor,” the day after they air. The service also will offer past seasons of eight recent series, as well as old shows like “Star Trek” and “Cheers.”

The impact of those new services remains to be seen, but both could deal a blow to cable companies by encouraging people to cancel pricey cable video subscriptions. At the same time, it's worth pointing out that cord-cutters had plenty of options before this week -- including purchasing episodes from services like Google Play and the iTunes store. And older programs have long been available on DVD.

Of course, cable companies that are really worried about cord-cutting could themselves try to discourage people from taking advantage of the new online offerings. One way would involve throttling online video to the point where people can't stream it smoothly. Currently, no net neutrality rules appear to prohibit broadband providers from doing so.

Even if the Federal Communications Commission enacts net neutrality rules, Internet service providers might be able to thwart people from watching online video. The most obvious way involves increasing the cost of broadband.

Several years ago, Time Warner tried to move to a pay-per-byte billing model that would charge users between $15 a month for 1 GB of data and $75 per month for 100 GB. Faced with widespread opposition -- and threatened legislation -- the company quickly backed away from that plan.

Other companies, however, have moved forward with data caps. Comcast, for instance, currently caps some users at 300 GB of data per month, with each additional 50 GB costing an extra $10.

Advocacy group Public Knowledge, which has asked the FCC to investigate data caps, says that people who want to replace cable video with streaming offerings in HD will need at least 684 GB of data per month.

So far, the FCC doesn't seem particularly troubled by data caps imposed by wireline providers. Whether that will change remains to be seen.

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