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Adding to Netflix's (NFLX -5.6%) woes today could be a Bernstein note suggesting cable operators...
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Wednesday, November 30, 2011, 2:47 PM ETAdding to Netflix's (NFLX -5.6%) woes today could be a Bernstein note suggesting cable operators such as CHTR and TWC might respond to the heavy bandwidth usage of Netflix customers by implementing usage-based Internet access billing. Bandwidth expenses only represent a small portion of broadband ISPs' operating costs, but they could prove a good excuse to make life more difficult for a competitor. (earlier)
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That said, I think the pricing models can converge on a reasonable balance.
I recently had to give up my unlimited mobile data plan, which I got specifically because overage charges used to be outrageous. I thought I would end up paying more, but looking at my data usage over the past couple of years, a medium-weight capped data plan is really fine for me, and even if I go over, the overage charges are nearly linear now (where they used to be nearly exponential!). And I'm paying a little less per month. No big deal.
ISPs are essentially a utility in this day and age, so it will not be long before the start usage-based charging like most other utilities.
Something Netflix might do to preempt the fallout from the coming price model change is to implement optional tiered video quality, so users can stream at lower bit-rates to save their bandwidth if they want to. Does anyone really /need/ to stream Arrested Development in super-crisp high definition?