Netflix are launching in the UK which is good news for TV and film addicts but is going to cause some headaches at the Internet Service Providers. Some report put Netflix usage in the US at over 30% of all bandwidth, or to put it another way, it adds half as much again to current Internet traffic volumes.
Whilst this isn't in itself an insurmountable problem for the backbones, the crunch will come when subscribers realise that the £5.99/month Netflix fee doesn't change the contract on their home broadband connection. Most broadband connections in the UK are provided by BT and their cheaper tariffs have usage limits.
It's the same story with BT's resellers and with LLU operators. Charging for usage has been accepted as the status-quo, perhaps because until now there haven't been compelling Internet applications that use lots of bandwidth.
The second problem comes with the so-called "unlimited" tariffs where they are offered. All the providers have "fair usage" policies which reserve the right of the ISP to limit Internet speed for those users deemed to be using more than their "fair share" of the Internet and, more worryingly, for applications which the ISP deems to be using higher bandwidth.
This gives them the ability to rate-limit Netflix which will make the service unusable.
The crux of this matter is net neutrality which is the principal that ISPs should treat all network traffic equally. Without net neutrality we have the potential of vested interests taking over. Virgin Media could throttle Neflix to encourage their subscribers to use Virgin's own Video-on-Demand services for example.
The spectre of Netflix's "excessive bandwidth" could be the cover that the multi-play providers are looking for to sneak in their divisive policies.