How Cablecos Plan to Hurt Netflix

The insatiable demand for Web-based entertainment – i.e. movies and TV shows courtesy of Netflix, Hulu and their brethren – is eating up the bandwidth pipes controlled by the big corporations that are chiefly responsible for sloth in America: Comcast, Time Warner Cable and others that deliver entertainment to our living rooms.

Netflix alone comprises nearly 33 percent of peak downstream traffic on fixed networks in the U.S., according to Sandvine, a provider of intelligent broadband network solutions for fixed and mobile operators.

Hence, I wasn't all that surprised when Bloomberg reported today that U.S. television operators are mulling over whether to charge Internet customers for the amount of data that they consume. Sanford C. Bernstein & Co. analyst Craig Moffett told the news organization that Cox, Charter or Time Warner Cable may be the first to do so next year.

"Cable companies see usage-based billing as a way to limit the appeal of online services like Netflix and Hulu LLC," wrote Alex Sherman of Bloomberg, "and reduce the threat from new entrants like Amazon.com Inc. and Google Inc."

I don't have a problem with usage-based billing – at least in theory – because it's a rational measure of network costs, and Americans are accustomed to paying for what we consume. Go to the grocery store if you need a reminder. If pay-TV operators raise their rates partly to discourage consumer interest in services like Netflix, that's their right. Disgruntled consumers are free to go elsewhere for their Internet and TV needs. (Granted, I acknowledge options are fairly limited).

And if my cable operator one day decides to stick me with an exorbitant bill for streaming a few flicks (if I actually get around to subscribing to Netflix) to my iPad (if I ever buy one), I'll be giving DISH Network a call. And if the satellite companies decide to get greedy, the high-speed 4G wireless operators like AT&T and Verizon Wireless will hopefully save us from buying a gym membership.