Netflix accounts for 20 per cent of downstream, wired Internet: Sandvine

A new report from Sandvine Inc. says popular video streaming service Netflix Inc. accounts for 20 per cent of all wired downstream Internet traffic in North America—and is being touted as a “wake-up call to ISPs” using monthly bandwidth caps. “One thing that we’ve noticed for maybe the last two reports is this trend toward real-time entertainment,” Tom Donnelly, Sandvine’s executive vice-president of marketing and sales, said in an interview. “The big contributor to fixed-line traffic, historically, has been file sharing.” The Sandvine report, released Oct. 20 and called The Fall 2010 Global Internet Phenomena Report, says real-time streaming content from legal services such as Netflix has now surpassed the total bandwidth dedicated to downloading peer-to-peer content, which often infringes on copyright. The report found that the popular peer-to-peer (p2p) file sharing protocol BitTorrent accounted for 8.39 per cent of downstream Internet traffic in North America. Gnutella, another popular p2p network, is responsible for 2.12 per cent of downstream data. The report said p2p networks still dominate upstream traffic, with BitTorrent accounting for 34.31 per cent of the total North American upstream traffic and Gnutella for 11.18 per cent. Netflix accounts for 4.34 per cent of all upstream Internet traffic in North America, the report said. Still, Netflix traffic makes up for 20 per cent of downloading. Duncan Stewart, director of research for technology, media and telecom at Deloitte Canada, told The Wire Report he was surprised when he heard that Netflix traffic accounts for such a high amount of bandwidth. “If you had asked me to guess, I would have guessed two or three ,” Stewart said. Tom Copeland, chair of the Canadian Association of Internet Providers (CAIP) and president of ISP Eagle.ca, told The Wire Report that the success of legal streaming services like Netflix could influence the usage-based billing debate in Canada. In a CRTC decision last month, the commission said Bell Canada and Bell Aliant can charge usage-based billing to their wholesale customers like Distributel, Primus Telecommunications Canada Inc. and TekSavvy Solutions Inc. If Bell proceeds to charge its wholesale customers on a usage-based model, the move will effectively cause third-party ISPs to implement usage-based billing for their retail customers. Bell has said that usage-based billing functions as an economic Internet traffic management tool and encourages users not to surpass their monthly bandwidth caps. Internet providers warn customers when they approach or exceed their monthly limits. “I think there will be a lot of people who will get a very nasty surprise in a few months in their bill,” Copeland said of customers who sign up for over-the-top video services and exceed their monthly bandwidth limit. John Lawford, council with the Public Interest Advocacy Centre (PIAC), said in an interview that Netflix’s success changes the traffic management debate “quite radically.” “It really puts the companies to the test to only throttle when they have network issues,” Lawford said. Stewart said that Netflix, which launched its streaming service in Canada on Sept. 22, continues to represent only a small percentage of television watched in Canada and the United States. “It’s less than one tenth of one per cent of all the TV watched,” Stewart said. “When you actually see that almost nobody does this , and it’s still close to breaking the network, that’s a big deal,” Stewart added. Netflix provides HD streaming, and Stewart said HD movies can eat into bit caps by as much as 2 Gb per hour. Stewart added that Internet service providers should continue to invest in rolling out fibre optic cable to cope with the growing demand for high definition content over the Internet. “You can’t really run these sorts of networks at anything over about 60 or 70 per cent of capacity,” Stewart said. “By the time you hit 80 , the networks become essentially unusable except for data traffic that is indifferent to delay.” But Carmi Levy, an independent technology analyst in London, Ont., said in an interview that Canada’s Internet service providers have the necessary resources at their disposal to meet growing demand for high bandwidth applications. “The question is how much bandwidth is ultimately profitable for the ISPs and how fast can they build out that capacity while still maintaining profit margins,” Levy said. He added that growing demand for high quality streaming video content could mean Canadian ISPs will offer more competitive home Internet plans. “This report really is a wake-up call to ISPs. They are going to have to keep their pencils sharpened on their rate plans to make sure that the bandwidth caps that they incorporate into them are realistic given the very rapidly evolving uses of these services,” Levy said. Donnelly said that Canada’s ISPs have done a good job keeping up with consumer and technological demands, offering high network speeds. “I think every service provider understands that they cannot succeed simply by offering a walled garden type service, like the AOL model , where provided 100 per cent of the content that their consumers used,” Donnelly said. The Sandvine report also said that consumers are using wireless Internet in much the same fashion as wired connections. “Consumers are increasingly not differentiating their behaviours or their expectations of quality depending on how they’re connecting to the Internet,” Donnelly said. Levy said capacity constraints for high bandwidth services will be magnified on wireless networks. “The constraints that consumers complain about so bitterly on conventional broadband Internet are that much more strict in wireless,” he said. Stewart said wireless networks have as little as one-hundredth the capability of conventional fixed networks to transmit video content. “You will experience significant network congestion at all levels of the network, but it will be worse on wireless than it will be for wired,” Stewart said. But Donnelly said social media is the fastest growing application on mobile networks, “and that is not quite as bandwidth intense as watching a movie is.” jmigneault@thewirereport.ca

Netflix accounts for 20 per cent of downstream, wired Internet: Sandvine

News | November 8, 2010

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