End of Unlimited Bandwidth Internet in U.S.?

Comcast today announced a deal with BitTorrent saying that they will not limit BT specific traffic.

However, an additional detail can be found in the article, which may provide a hint of things to happen in the U.S. internet.

Rather, Comcast said it will work on reconfiguring its networks so that, by year’s end, it manages data in a “protocol agnostic” way. Comcast has confessed to “delaying” uploads to the BitTorrent protocol at peak congestion times, but the new process would apparently involve managing traffic based on how much bandwidth consumers use, rather than what sort of applications they’re running. [Cnet]

The key implication from this statement is that bandwidth will no longer be unlimited. This can have dramatic effects on the innovative environment in the U.S.

First off, this will most likely create a market for “premium” broadband service – or service that is unlimited, and providers will create limits on “standard” users. This is a fair business model that is practiced in regions outside the U.S., so its adoption in the U.S. appears sensible for internet providers.

However, this will have an effect on internet use. Bandwidth heavy websites like Youtube, Hulu, and BitTorrent will clearly be against such measures. Consumers with limited broadband will use these websites less, creating less traffic, leading to lower revenues. Therefore, what makes business sense for Comcast may be detrimental to many innovative internet giants.

Cheap, (nearly free) bandwidth is what essentially drove pirated media to the internet, which then drove legal media to the internet. Chris Anderson has argued that the cheapness of bandwidth (among other things) is driving many internet things to be free.  Much of the new “free” media isn’t drive by the large content providers, but by startups creating innovative business models that monetize what appears free to consumers.

The piece that links all of this together is that this “free” content is often also bandwidth heavy (for example, movie downloads).  If Comcast starts creating limits on bandwidth and charging a premium for unlimited bandwidth, the “free” services are no longer free, not because of content providers, but because of distribution (E.g., you would have to pay Comcast a premium in order to download unlimited movies).  The notion of limiting bandwidth essentially eliminates one of the key drivers of free content that Anderson predicted.  It creates a barrier to content distribution, and therefore creates a barrier to startups trying to come up with the business models that monetize free content for distributors.

To be clear, what Comcast is doing isn’t wrong, but it is not conducive to innovation.  They obviously have a business need to manage traffic, but something should be done to protect not only the consumer, but companies (both startups and giants) from the limitations that this may impose.  I can forsee Apple working out a deal with Comcast once they get their movie store together to ensure that users’ bandwidth isn’t limited if they want to download movies.  However, it will be much easier for Apple to share revenues than it will be for the next innovative startup.