As a cable internet subscriber I was outraged by the FCC ruling on net neutrality in Comcast’s favor over Netflix. A few weeks later I agreed with the Arizona PSC (Public Service Commission) when they sided with utility companies instead of residents that were going to install solar panels. How can I be on the side of the consumer when it comes to the FCC ruling and against the consumer on the PSC ruling?
I thought about the solutions available to both problems and came to an entirely different conclusion; Netflix doesn’t have to deal with any of this. They are missing out on using an available solution that the utility company wishes they had. Storage.
In the past two years Solar City and others have exponentially increased the amount of solar energy being pushed onto the grid during sunny hours. Netflix (90% market share) and other streaming video services have pushed large amounts of data onto the internet during typical “TV” viewing hours. Sandvine estimates that up to 33% of all internet traffic to residential customers can be attributed to Netflix alone. The industries have a similar problem – Comcast has to send out too much data at once and the utility companies have to absorb too much power from residential solar panels at once.
The utility companies and Comcast are adhering to Economics 101; they are going to charge people more for the stuff customers want when there is less of it to sell. What the utility companies are really fighting is the fact that the electricity that customers with solar panels are selling to the grid, goes onto the grid at a time when there is less demand than supply (due in part to solar power generation owned by utilities). Those watts are worth less than the blended flat rate charged to customers, and therefore the utilities want to pay less.
What Comcast is really fighting is the fact that the Streaming Video content that customers request occurs at a time when traffic is at its highest point. They feel (and many from Adam Smith to the FCC agree) that a byte of data should cost more, when that request comes at the same time that traffic is at its highest point.
The utilities could be rid of these customers if they would install a large enough battery to get off the grid. But batteries money and the technology to make them cost effective is not available.
This leads to the question – “Is there a battery that could solve the Streaming Video problem?” There is; it’s called a hard drive.
Just over 70% of US households have broadband internet with cable being the choice of approximately 50% of households (per IHS). But for streaming video, Comcast and other cable internet providers are king. A lack of speed and lower data limits prevent competing technologies from being considered viable for customers who would like to be users of a Streaming Video service. See tables below for comparison of services in the DC metro area.
- 105 Mbps
- 300 GB
- 6 Mbps
- 250 GB
- 10-15 Mbps
- 4-6 GB
The solution to push more data when demand exceeds capacity is to add lanes to the digital highway. Comcast plans to get the money from Netflix to build more bandwidth (and is in talks with Apple to build a special toll road for Apple TV subscribers). But remember streaming video is 33% of the demand. Unlike having 1/3 of all commuters leave for work at 2:00 am it is feasible for this traffic to be moved to hours with lower demand.
Utilities always strive to balance the load. The power plants produce electricity most efficiently when they operate at a constant capacity – of course the demand varies. Wind and sun vary also. Utility companies know storage is the answer; the promise of a better battery and a more efficient fuel cell is always a decade away.
Unlike the utility companies, the streaming video industry has the perfect tool to flatten the demand curve. They just aren’t using it. The speed customers experience is highest when there is the least amount of traffic.
One could easily combine a hard drive built right into a DSL or Wireless Network Router. I propose that the drive hold 6-10 hours of Streaming Video content. A standard protocol could quickly be built where users would schedule the content they would like to consume and in which priority. This content would programmed transfer slowly during off peak hours when space on the drive is available. It would be just like Netflix’s DVD delivery system, except instead of mailing back a DVD the new program would begin downloading when a previous one is removed. With limited storage users would be motivated to watch and remove content so that new content could viewed. The argument I hear against this concept is: “I don’t know what I want to watch later, what if I am not in the mood for what I downloaded” or “Who has the time to tell the machine what to download, I will want to pick this when I am about to watch it.” Ask any DVR user how this is different from what they do now. The difference is that when you are busy at work or falling behind because of other obligations, your DVR doesn’t fill up – your digital que is the holding place for the content you plan to view later. You still have 6-10 hours ready to go and hundreds of hours ready to fill in when needed.
This would free up the network during peak times and provide service to more customers with less infrastructure. DSL customers with a media storage router could continue to pay less for internet service AND be customers of a Streaming Video service. With tiered service those that can’t be bothered with scheduling their viewing can pay more AND receive the benefit of reduced traffic from those that participate in a storage based model described above.
The customers that help you balance your network should be rewarded by paying less. At the very least, 4G subscribers could be offered a plan with much higher data caps at a fixed lower speed of service.
Cost-effective storage is not available to the utility companies; they will work with big users to flatten their demand and hope liquid metal batteries or a better fuel cell bail them out one day. To solve the Streaming Video problem, all the parts are there. The company that can put it together first and market it the best will win. Don’t even bother giving me credit, just please make it happen. I have a cord I would like to cut.