Google's Dead Wrong If It Thinks Broadband Caps Won't Hurt Game Streaming

Predictions

from the do-not-pass-go,-do-not-collect-$200 dept

For a decade we’ve pointed out how broadband providers have increasingly imposed arbitrary, confusing, and punitive usage caps and overage fees to cash in on the lack of competition in US broadband. Not only have industry executives admitted these limits aren’t technically necessary, they’ve increasingly been abused anti-competitively. AT&T, for example, doesn’t impose the limits on its broadband customers who use its streaming video service (DirecTV Now), but will impose the added charges if you use a competitor like Netflix.

For years, ISPs have slowly deployed these unnecessary limits, hoping consumers wouldn’t notice they’re the frog in the slowly boiling pot of water. But as higher-bandwidth services like 4K video streaming have arrived, consumers have started to notice the unnecessary limits in greater numbers. But, however tight caps may become with 4K Netflix, that’s nothing compared to what’s going to happen as companies like Google begin pushing game streaming services like Stadia, which eliminate local game hardware, move all processing power to the cloud, and then stream everything to the end user.

Early analysis suggests that at full 4K, users will burn through Comcast’s monthly 1 terabyte usage cap in a matter of just three days. Many ISPs have far lower caps; AT&T for example imposes a 150 GB monthly cap on the majority of its DSL customers, who then have to pay $10 per each additional 50 GB of data consumed. It’s fairly obvious that as game streaming expands, users are going to be looking at some significant sticker shock (which, from the ISP perspective, was the whole point).

Enter Google executive Phil Harrison, who this week in an interview was asked about the impact broadband caps will have on the company’s game streaming ambitions. Harrison suggested the company isn’t worried, though his justifications for that confidence are laughable:

“ISPs are smart [and] they understand that they?re in the business of keeping customers happy and keeping customers with them for a long time.”

LOL, what? US broadband providers have the worst customer satisfaction ratings of any industry in America because they lack real competition in most of their markets. When you consider that means toppling the likes of the airlines, banking, insurance, and medical sectors, that’s no small feat. ISPs don’t have to “keep customers happy,” because there’s no penalty for not doing so. These customers usually have no alternatives to switch to, and rampant regulatory capture means there’s no real penalty from regulators for bad behavior either.

Harrison’s theory rests entirely on the false idea that ISPs will be shamed into raising usage caps:

“The ISPs have a strong history of staying ahead of consumer trend and if you look at the history of data caps in those small number of markets–and it?s actually a relatively small number of markets that have [data caps]–the trend over time, when music streaming and download became popular, especially in the early days when it was not necessarily legitimate, data caps moved up. Then with the evolution of TV and film streaming, data caps moved up, and we expect that will continue to be the case.”

Harrison’s wrong here too. Comcast is the country’s biggest broadband provider, and is increasingly nabbing a monopoly in more and more markets thanks to telcos that refuse to upgrade aging DSL lines. In the last decade, Comcast has raised its usage cap exactly one time since it was implemented, from 300 GB to 1 terabyte in 2016. Numerous other ISPs, with caps as low as 50 GB, have been just as stubborn. US ISPs already charge some of the highest rates in the developed world. Usage caps and overage fees are just double dipping on captive customers.

It’s like Harrison is basing his entire argument on a reality that doesn’t exist. To stay ahead of game streaming, ISPs like Comcast would need to raise their caps exponentially to 10 terabytes or even higher. But that would defeat the entire reason ISPs imposed these limits in the first place (read: make even more money off of emerging new services). You can’t shame natural monopolies into doing the right thing. Even if the inevitable stories blasting usage caps do force ISPs to raise caps, the new limits are going to be chosen based entirely on how to make the most possible revenue from captive customers.

Harrison also tries to claim in the interview that this will all work out thanks to 5G, which ignores that 5G isn’t some competitive panacea, is barely available, and in most instances will cost users significantly more money, while bringing some obnoxious, creative restrictions (Verizon already bans 4K video on its “unlimited” wireless data connections, for example). That’s before we even get to net neutrality, a concept Google hasn’t actually supported in any meaningful capacity since 2010 or so. Most ISPs are busy testing their own game streaming services and, like video, are likely to exempt those services from caps while still penalizing competing services like Google Stadia.

Harrison may just be naive, or he may believe that Google is big and powerful enough to buy ISPs off should they try to get in the way of Stadia. But, either way, consumers are inevitably going to be seeing some bandwidth sticker shock as they blow through their usage caps. And with little competition and no meaningful oversight, “public shame” isn’t likely to have nearly the impact Harrison seems to believe it will.

Filed Under: broadband, broadband caps, competition, game streaming, gaming, phil harrison, stadia
Companies: google