ISPs should look at peak-pricing models for consumers: Sandvine report

Internet service providers (ISPs) should look at peak-pricing models as their networks become increasingly inefficient with heavy users straining them at just a few peak hours of the day, a new report from Internet technology company Sandvine Inc. says. The report, released Wednesday and titled “Global Internet Phenomena Report: Fall 2011,” said that, in North America, peak usage time has become more concentrated and pronounced. It shows that Internet traffic reaches a low at about 5 a.m. but slowly climbs throughout the day and spikes between about 7 to 10 p.m., mostly due to real-time entertainment streaming. The heaviest 1 per cent of upstream users now account for almost 43 per cent of total upstream usage, and the top 1 per cent of downstream users account for 15.2 per cent of downstream traffic, the report said. The lightest 60 per cent of Internet users account for 10 per cent of total traffic. Sandvine said the way people use the Internet at peak times is inefficient, with large portions of the day free of network congestion. ISPs' attempts at solving the problems with monthly data caps for users are not addressing peak usage, the report said. “This shift in behaviour is a worrying trend for providers, who must engineer their networks for peak bandwidth. If we assume that a subscriber’s perception of value is directly tied to his or her monthly usage, then this trend means that it now costs more for service providers to deliver a constant value to the end consumer, and the network itself is increasingly inefficient,” the report said. “To increase network efficiencies and decrease network capacity costs, many service providers are looking for ways to incent subscribers to move usage 'off peak'.” The report suggests ISPs should set different data charges for peak and off-peak times, encouraging users to engage in heavy uploading and downloading, such as cloud backups or transfers, in off-peak hours. “If users had 200 GB per month to use at peak, but unlimited usage at other times, then they would be more inclined to change their behaviors. As an added benefit, the user would perceive a higher value of service (again, if ‘value’ is directly associated with data consumption) due to increased overall usage, without the network operator incurring additional cost to deliver the off-peak bytes. Higher subscriber value and flat operator costs? Sounds like a classic win-win.” The suggestion is similar to time-of-use electricity rates that have been implemented in jurisdictions such as Ontario. Ontario Hydro charges higher “peak rates” for electricity usage during the day in the summer and in the mornings and early evenings in the winter. Sandvine reported that entertainment streaming is the largest source of peak data traffic, now accounting for 60 per cent of downstream traffic and 55.3 per cent of aggregate utilized bandwidth at peak times. That number has climbed since 2009, the report said, when real-time entertainment accounted for 29.5 per cent of peak aggregate traffic. In the U.S., online streaming service Netflix accounted for 32.7 per cent of peak downstream traffic in the fall of 2011, up from 20.6 per cent in fall 2010, the report said. Behind Netflix were http applications at 17.5 per cent of downstream traffic, YouTube at 11.32 per cent, and BitTorrent at 7.6 per cent. In an email to The Wire Report, Sandvine spokeswoman Sacha DeGroot provided additional data about Netflix in Canada, saying the service now represents about 7.5 per cent of peak downstream traffic. The company noted that Netflix Canada's default settings run the service at a lower bit rate than the U.S. (by about one-third). At 7.5 per cent, Netflix represents the fourth-largest source of peak downstream traffic in Canada, behind http, YouTube, and BitTorrent, DeGroot said. According to Sandvine's report last year on Internet usage, Netflix usage in Canada accounted for 13.5 per cent of peak downstream traffic. DeGroot said the drop to 7.5 per cent this year is attributed to Netflix's switch in March to a lower default bit rate. The company said the move was an effort to ensure Canadian users do not pass their monthy bit caps, which are lower in Canada than in the U.S. Following the switch, Netflix's data consumption dropped to about 4.5 per cent of peak downstream traffic, DeGroot noted. The service's subscribers in Canada have also grown from about 800,000 last year to more than one million today. “Subscribers are watching Real-Time Entertainment on an increasing number of screens. In many households you could very easily find a laptop or desktop computer, a smartphone, a tablet, and a TV with direct (smart TVs) or indirect (via a game console or set-top) Internet connectivity,” the report said. “With so many screens available in a household it is also easy to imagine a situation where multiple streams occur simultaneously, like one individual watching a high definition Netflix movie on the primary television while another is flipping through YouTube clips on a tablet.” Sandvine added that 55 per cent of streamed entertainment is watched on Internet TVs, televisions connected through set-top boxes or game consoles, or on mobile devices or tablets. The other 45 per cent of video streaming is watched on desktop and laptop computers, many of which may be connected to TVs, the report said. “Game consoles are powering this phenomenon, through manufacturers partnering with content producers,” Sandvine said, referring to the Microsoft Xbox 360 and its partnerships with studios and content providers. The CRTC noted in a recent report that, with the growing consumption of content provided on over-the-top services, Internet and wireless networks “may encounter capacity constraints.” Sandvine reported that social media accounts only for 2.1 per cent of peak overall traffic. BitTorrent applications account for the largest portion of upstream peak traffic in the U.S., at 47.55 per cent. For mobile networks in North America, the report said real-time entertainment represents 30.8 per cent of peak traffic demand and social networking accounts for 20 per cent. “Facebook accounts for more than 30% of upstream traffic on North America’s mobile networks, typically through frequent photo uploads. HTTP, largely associated with mobile apps, accounts for 26.2% of traffic, and SSL (used for secure applications like online banking) makes up slightly more than 6%,” the report said. news@thewirereport.ca

ISPs should look at peak-pricing models for consumers: Sandvine report

News | October 26, 2011

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