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Do Internet bandwidth caps affect Internet marketing?

The big story last week surrounded Comcast’s imposition of a limit on the amount of data that its subscribers can transfer across the Internet each month. Comcast’s bandwidth cap is set at 250 gigabytes each month, which is far higher than the three gigabytes that the average Internet user downloads and uploads each month. So there won’t be any effect on Internet marketing, right? Not so fast. The end of all-you-can-eat pricing has subtle effects that we shouldn’t overlook. Don’t focus on Comcast’s practical limit—you need to watch what other player are doing, and more importantly, how a cap of any kind might affect consumer behavior.

While Comcast’s 250 GB cap seems ample, it’s not the only cap talk around. While Comcast is the only notable ISP to set a system-wide cap, Time-Warner is running an experiment in Beaumont, Texas that allows only 5 GB a month at the low $30 a month rate, charging $55 to get as much as 40 GB a month. In addition, AT&T calls a bandwidth cap “inevitable.”

Let’s look more closely on what the caps mean. Comcast’s cap has little practical effect on anyone’s Internet usage. Unless you are downloading dozens of HD movies, you won’t get anywhere near the cap, but Time-Warner’s cap is very different. Now, it’s only a test, so we must wait and see what Time-Warner and AT&T (and other ISPs) eventually roll out system-wide, but a 5 GB cap could affect many heavy users. A 40 GB cap would affect few users today, but might affect many down the road.

Here’s why: Surfing Web pages and sending e-mail uses precious little bandwidth. Even uploading and downloading images doesn’t spike the bandwidth meter. But once you start looking at video, all best are off. If you begin using your Internet connection to download standard definition movies, at 1.5 GB a pop, or high-definition movies at 6-8 GB each, you can run out of capped bandwidth in a hurry. In addition, other services, such as Internet storage that is used for backing up your computer can chew up bandwidth if consumers are making full image copies of their 200GB hard drives a few times a month. Are you a heavy Slingbox user? Perhaps you won’t be if it bangs into your bandwidth cap.

So, we’ll see what the ISPs do, but a Time-Warner-style cap will have big impact now, while a Comcast-like cap will not have much impact on usage today. It seems that any kind of cap will likely slow adoption of new bandwidth-intensive services.

But we need to think beyond the practical impact of a cap to the more subtle behavior changes that it might cause. Few people will take the time to become savvy about how much data 250 GB is. Instead, I expect consumer behavior to polarize around two easy-to-understand models: all-you-can-eat or a la carte. Consumers have learned to use the Internet as an all-you-can-eat service. They’ve learned to use television the same way. But they don’t acquire consumer electronics the same way. They don’t download songs to their iPods the same way. Why? Because most things in life are not all-you-can-eat. You pay based on how much you use.

Don’t you think that Internet usage would be far different if we paid for how much we used? Well, you don’t have to guess, because our cell phones already tell us the answer. Web usage is far lower on mobile devices, which is no surpise, because wireless phone providers in most countries charge for what is used. This is gradually starting to change, but consumers have been taught to be careful how much they use, so they use very little.

If consumers begin to get the idea that their computer-based Internet usage is capped by their ISP, they can easily change their behavior to their other model—watch how much you use. What is unlikely is that they’ll take the time to understand how big their cap is and to monitor their usage each month. Cell phones are again instructive. Most people are careful about how much they use their cell phones even though they rarely exceed the minutes in their monthly plans. In fact, most people will try to buy more monthly minutes than they will really need, so that they won’t exceed them. Because it’s too complicated to monitor, they’d prefer to make the complicated decision of how many minutes to buy once, so they can think about their everday cell phone usage as all-you-can-eat (and therefore not think about it at all).

I believe that people gravitate toward all-you-can-eat models when affordable, while minimizing usage when all-you-can-eat is unaffordable. So, how people perceive these Internet bandwidth caps are critical to deciding whether they will affect Internet marketing. If people believe that they’ll never reach the cap (which might be true for a while with Comcast’s) or they believe that they can afford to pay for whatever tier of service is all they can eat, then the caps will have no effect on Internet marketing at all. If, however, people believe that their usage is really affected, they might start prioritizing how they want to use their bandwidth.

Obviously, priorities will include anything we do now and exclude anything we don’t. So, if you’re not downloading movies today, you won’t start. If you don’t currently back up your computer into the cloud, you aren’t about to make the switch. But if people start actually hitting the caps (highly possible in the Time-Warner test), they might be forced to prioritize many more Internet tasks.

The biggest effect on Internet marketing might be with YouTube. As many Internet marketers are thinking about how to get their video messages to “go viral,” what would happen if watching videos is the first casualty of bandwidth caps? It’s clear to me that watching video is one of the least-entrenched online behaviors at the moment, and it is bandwidth intensive. Regardless of whether it’s reasonable or not, those folks on that $30 a month Time-Warner plan in Beaumont might hit those caps a few times and suddenly decide that they need a simple rule that ensures they don’t end up hitting their cap again. “No videos” seems like a simple rule that would be guaranteed to work.

Just at the point where we were all hoping that wireless providers would be relaxing their caps so that the average cell phone user might start using the mobile Web, now the specter of caps on computer Internet bandwidth makes us wonder whether video’s time has not yet come. Watch the stories over the next few months to see what the impact of bandwidth caps might be on Internet marketing.

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Mike Moran

Mike Moran is an expert in internet marketing, search technology, social media, text analytics, web personalization, and web metrics, who, as a Certified Speaking Professional, regularly makes speaking appearances. Mike’s previous appearances include keynote speaking appearances worldwide. Mike serves as a senior strategist for Converseon, an AI powered consumer intelligence technology and consulting firm. He is also a senior strategist for SoloSegment, a marketing automation software solutions and services firm. Mike also serves as a member of the Board of Directors of SEMPO. Mike spent 30 years at IBM, rising to Distinguished Engineer, an executive-level technical position. Mike held various roles in his IBM career, including eight years at IBM’s customer-facing website, ibm.com, most recently as the Manager of ibm.com Web Experience, where he led 65 information architects, web designers, webmasters, programmers, and technical architects around the world. Mike's newest book is Outside-In Marketing with world-renowned author James Mathewson. He is co-author of the best-selling Search Engine Marketing, Inc. (with fellow search marketing expert Bill Hunt), now in its Third Edition. Mike is also the author of the acclaimed internet marketing book, Do It Wrong Quickly: How the Web Changes the Old Marketing Rules, named one of best business books of 2007 by the Miami Herald. Mike founded and writes for Biznology® and writes regularly for other blogs. In addition to Mike’s broad technical background, he holds an Advanced Certificate in Market Management Practice from the Royal UK Charter Institute of Marketing and is a Visiting Lecturer at the University of Virginia’s Darden School of Business. He also teaches at Rutgers Business School. He is a Senior Fellow at the Society for New Communications Research. Mike worked at ibm.com from 1998 through 2006, pioneering IBM’s successful search marketing program. IBM’s website of over two million pages was a classic “big company” website that has traditionally been difficult to optimize for search marketing. Mike, working with Bill Hunt, developed a strategy for search engine marketing that works for any business, large or small. Moran and Hunt spearheaded IBM’s content improvement that has resulted in dramatic gains in traffic from Google and other internet portals.

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Discussion

  1. Avatar Jim Novo

    Mike, good write-up on caps.
    Video over the web could become a threat to the basic business model of the cable providers (consumers paying for video pipe) if the hardware interfaces became friendlier.
    The cable ops can’t pay for their infrastructure on (current) Internet access fees alone; they have to either choke the web video or get paid for delivering it.
    (former cable guy)

  2. Avatar A Tucson SEO

    Money making wars between phone and cable co.are heating up we should be seeing some pricing shake ups. Maybe the consumer can gain something from this.

  3. Avatar Mike Moran

    That’s an excellent point that I had not considered, Jim.
    Besides full disk image backups, I struggled to find any app other than video that hogged enough bandwidth to trigger even a 5 GB cap. Even multiplayer games and Second Life are relatively efficient in bandwidth usage compared to video, and fattening up the client (as JavaScript apps in the browser tend to do) is possible to save bandwidth for almost any app–except video.
    You might be right that this is a veiled attempt to control their existing business. If that’s true, however, it would seem to be an opportunity for AT&T and Verizon to continue all-you-can-eat. It will be interesting to see what shakes out.

  4. Avatar seo-manager

    An average Internet user won;t use more than 5Gb per month… if he is not using TV on demand and youtube daily. So, I don’t think that it is a big problem.

  5. Avatar Adine

    Thanks for such a great and informative article. I found every thing in this article which i am looking for. Thanks once again 🙂

  6. Avatar Jesmi

    Comcast said that to use 250 GBs of data, a customer would have to do one of the following: send 50 million emails at 0.05 KB per email; download 62,500 songs at 4 MB per song; download 125 standard-definition movies at 2 GB per movie; or upload 25,000 hi-resolution digital photos at 10 MB per photo.

  7. Avatar Mike Moran

    True, Jesmi, but throw in a couple of dozen HD movies and then see how a family might hit the cap. But as i say in my piece, it’s not Comcast’s cap but the lower ones being tested that will cause the real behavior changes. And the idea of a cap itself can cause change, as it does for cell phones and other capped services.

  8. Avatar jjsjjsva

    Here’s the big differnce that’s missing. Cell phones don’t survive from advertisement (bad example to use), but most every web sites must use ads to survive. Cap the users access which reduces consumer online time and you will see ad revenues drop. Web sites will close and thus less incentive for people to go online. Then IP wil raise costs to cover lost revnues and more will drop service. It’s a downward spiral feeding of each other. You save a dime and lose a dollar. Not a smart move to place caps.

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