Comcast to limit bandwidth use for Internet customers

Video download users might be affected

By Danny King -- Video Business, 9/4/2008

SEPT. 4 | Comcast next month will start imposing limits on how much bandwidth its high-speed Internet customers can use each month, as more subscribers of home entertainment companies such as Blockbuster and Netflix are using the Internet to download or stream movies and TV shows.

Meanwhile, Comcast quietly launched its own video download service during the Labor Day weekend. Announced last year, Fancast offers movies and TV shows for sale and rental.

The No. 1 U.S. cable company said on its Web site that, starting Oct. 1, Internet customers will be limited to 250GB of usage per month. Comcast estimated that limit equated to downloading 125 standard-definition movies per month.

The limits won't hinder demand for Blockbuster's Movielink download service, which the company acquired from the five major studios last year and began beta-testing on its Web site in July, Blockbuster spokesman Randy Hargrove said.

"The 250GB a month cap that Comcast proposed still represents a very large amount of information consumers can access," said Hargrove. "We don't believe this will limit their ability to download media content from Blockbuster.com."

Some financial analysts agree, saying that the limit is unlikely to affect the companies' efforts to build digital-delivery sales, which are expected to more than double in the U.S. over the next five years to about $3.6 billion as DVD revenue flattens.

"I think it is something that will limit downloads, but ultimately, I expect Internet service providers to migrate back to an 'all you can eat' format," Wedbush Morgan analyst Michael Pachter said. Sterne Agee analyst Arvind Bhatia said Internet limits would direct customers back to DVDs, which would benefit Blockbuster and Netflix anyway.

In May, Netflix introduced a set-top box allowing customers to stream to their TV sets content from an inventory of about 10% of Netflix's 100,000 titles. The company said its video-streaming services would double its subscriber base within a decade. A Netflix spokesman said the company won't comment on the Comcast announcement.

Still, the Comcast announcement elicited some concerned responses. One blogger estimated that high-definition movie watchers would be limited to as few as a dozen streaming titles a month by the cap, while another wrote that it was "time to switch to AT&T DSL."

Comcast has been compensating for a flattening base of cable subscribers by increasing its high-speed Internet customer base. The company said in July that it boosted its high-speed Internet user base 12% from a year earlier, to 14.4 million customers, and that revenue from that service rose 9.8% from a year earlier, to $1.79 billion.