The slow-video blame has taken a new dimension after Google Inc. (NASDAQ:GOOG)’s YouTube joined Netflix, Inc. (NASDAQ:NFLX) in accusing Internet Service providers (ISP’s) of slow internet speeds. The recent problems have already highlighted the reason YouTube is trying to get into the ISP business according to former Collegehumor CEO, Paul Greenberg, in an interview on Fox Business news.
The ISP’s in a retaliation of the allegations are already planning to charge more, on people who use them heavily.
“The ISP’s don’t want to be seen as a utility and just seen as dump pipes. So they have decided they are going to go out and start to charge the people who are using them the most heavily” said Mr. Greenberg.
Netflix, Inc. (NASDAQ:NFLX) signed a deal earlier this year with Comcast Corporation (NASDAQ:CMCSA) as it looks to protect itself from the side effects of ISP’s, in terms of slow internet speeds.
This form of charging structure is going to result in unfairness between big companies with lots of cash, such as Google Inc. (NASDAQ:GOOG) and smaller video providers who cannot afford to pay to reach the end customers. Mr. Greenberg believes that the situation will end with the end consumers suffering, because they will have to pay more in order to enjoy fast and reliable internet speeds.
YouTube, according to Mr. Greenberg, will be charged heavily by internet providers like Verizon Communications Inc. (NYSE:VZ) and Comcast Corporation (NASDAQ:CMCSA) and consequently will pass down the charges to the end consumer. Consumers will also have some issues with their Internet connection, because ISP’s have also installed bandwidth limits and will force them to incur more costs on surpassing a given bandwidth limit.
“Unfortunately the ISP’s are also double dipping. If I, as a home user, go above my certain number of megabytes per month, Comcast Corporation (NASDAQ:CMCSA) is going to charge me. But then YouTube is going to charge me to access YouTube. So the consumer is going to end paying a lot more” said Mr. Greenberg.
Considering Netflix, Inc. (NASDAQ:NFLX) accounts for 30% of all internet traffic at peak hours, many customers are set to feel the pinch of double charging.
The implication of ISP’s charging consumers for surpassing a certain amount of allocated megabytes is a reduction in YouTube audience as no one would wish to exceed their allocated bandwidth in a month. Consumers streaming videos and movies on Netflix, Inc. (NASDAQ:NFLX) will also be kind of protective in how they do the same to avoid exceeding their bandwidth limits.