For two years now, satellite radio critics have warned of the threat posed by online music services such as Pandora, and for two years now I have written article after article explaining why the threat was empty. Aside from content being the ultimate differentiators between Sirius XM Radio (NASDAQ: SIRI) and any competitor, I have reported on the reality of everything from cell phone battery life to internet radio’s lack of a proprietary content delivery system. I have warned on multiple occasions, that bandwidth issues would prevent internet radio from becoming a realistic threat to satellite radio.
Despite the Federal Communications Commission attempts to force broadband providers, to supply the bandwidth needed for the benefit of any and all Internet businesses that need the bandwidth for their own gain, the federal courts ruled that broadband providers could block access or charge fees for applications that used excessive amounts of bandwidth. Let’s face it. It’s one thing to load a webpage such as the one you opened to read this article. It’s quite another to tie up phone lines, and slow down the Internet for all users due to the constant streaming of online applications that hog bandwidth.
Earlier this week, Comcast (NASDAQ: CMCSA) starting charging Level 3 Communications (NASDAQ: LVLT) due to the volume of streaming done by NetFlix (NASDAQ: NFLX) users on Comcast’s infrastructure. Of course, Level 3 claims this constitutes an issue regarding anti-competitiveness, which is a bad word as far as the F.C.C. is concerned. This follows several actions by cell carriers which have already or have announced plans to institute various fees for data usage.
Finally however, someone other than myself is looking at the reality of the situation. Radio Survivor writes:
While streaming a Netflix movie consumes anywhere from 5 to 10 times the bandwidth of listening to an online radio stations, a victory for Comcast in this matter might cause the company to start looking to hit up services like Pandora or last.fm–which each have significantly larger audiences than Netflix–for additional fees. Such fees could seriously affect the ability of these services to continue to offer free options, or raise the cost of their pay service.
Based on all available facts, the Comcast victory has already been won. The U.S. Court of Appeals has already ruled on the matter, and as I reported several weeks ago, all 97 congressional candidates that supported net neutrality, lost the election, and twelve sitting members including net neutrality’s strongest partner, were unseated as well.
Data caps are here to stay, and the cost of streaming anything online will cause sticker shock to cell phone owners everywhere. PC Mag reports that ”Verizon’s new 4G LTE network is so fast that you can use up your entire 5GB, $50 monthly allotment in 32 minutes.” THIRTY TWO MINUTES!! Gizmodo asks: "What were those overage charges again?"
Disclosure: Long SIRI