ISP Data Caps Won’t Affect Apple Cloud Services

Various ISPs have been invoking monthly data caps. The caps aren’t likely to affect average Apple customers, but they will put a stop to unlimited TV viewing so that the ISPs can better compete with their own TV services.

As we’ve grown up on the Internet, we’ve become accustomed to the ISP policy of unlimited data usage. It was a good marketing approach in the early days of the Internet and, in any case, ISPs had no way to measure your usage anyway.

Internet World

Flash forward to 2011, and it’s a whole new ball game. We have: cord-cutters, Netflix, Hulu, Apple TV, Boxee, YouTube, MobileMe, DropBox, pervasive Wi-Fi in the home, Microcells, and many other services that have become part of our Internet life. Our usage has skyrocketed.

In addition, the major ISPs like Comcast Xfinity and AT&T’s U-verse are finding that customers are increasingly moving to Internet television in a way that harms their own TV & movie offerings. (That’s because companies like Apple and Netflix have made the buying and watching experience superior to what’s been traditionally offered.) Plus a few users with unlimited privileges can, in some cases, reduce the quality of service for their neighbors. Finally, IPv4 addresses are exhausted and moving to IPv6 and adding massive fiber capacity is expensive. There are emerging good reasons to place caps on residential customers in the minds of the ISPs. The size of the caps reveal what the ISPs are thinking.

Some questions we face are why these data caps are being invoked now and whether some kinds of emerging cloud services would somehow be harmed by these caps. To take the argument even further, one might fantasize that Apple’s long term, one billion dollar investment in a data center at Maiden, North Carolina could be in peril due to these emerging caps.

I don’t think that will happen, and I think this needs some deeper analysis. We have to isolate routine cloud services, some data backups, data syncing, and even streaming music from video.

We Already Have Part of the Answer

Let’s take Comcast as an example. Comcast’s own web pages that show your monthly data usage make it clear that 99 percent of its customers fall well below the 250 GB limit. That’s an important statement in itself. It reflects the realities of the current usage by its 20 million customers.

So the first question to ask is whether any new cloud services will push users to their cap limits. That depends on the nature of those services. I think we already know part of the the answer: a good fraction of those 20 million customers are already using Apple’s MobileMe, iTunes and Apple TV/Roku/Blu-ray players with Netflix, etc. and they’re not routinely approaching their caps. In my case, I use the Internet extensively in the daytime plus my wife and I are watching a few Apple TV or Netflix movies each week and not nearly getting into trouble with Comcast. It’s doubtful that the (rumored MobileMe replacement) iCloud, whatever services are supplied, will dramatically increase usage because Apple is aware of customer habits and the limits of the Internet.

Cap Motivation

It’s one thing for customers to browse the Internet, e-mail photos, watch a few movies, buy some music and back up a few GB of important data. It’s another thing when Internet TV services compete with the ISP’s own TV offerings. (The federal government should never have allowed that conflict of interest to emerge with ISPs, but we’re stuck with it now.)

Continuing with the Comcast example, I am sure the company is aware of and concerned about the competition for TV services, the so-called cord-cutters. While the numbers of cord cutters are low now, it’s a new and alarming trend that could get out of control. Unlike data or music, video is huge in terms of data sizes. For example, a full length movie in HD is about 2-3 GB and a 42 min TV show in HD is roughly a gigabyte. So if your TV habits on the Internet start to mirror the average household’s habits of 6 hours of TV per day, it would be easy to approach or exceed your cap. All things being equal (and they aren’t) that could result in many more than one percent of its customers getting in trouble as they naturally move to watching more and more TV on the Internet.

Will Comcast raise the cap over time? Will cord-cutters start to complain, vocally, to the federal government? Will Comcast get off the hook by claiming a lack of capacity? We don’t know yet.

What we do know is that usage caps effectively throw cold water on the idea of customers duplicating, on the Internet, their historical TV watching of 6 hours a day. For example, with Comcast, if a user has been consuming 30-50 GB per month and adds 180 GB (30 x 6) of Internet TV, that user would be right up against the Comcast cap. I suspect the 250 GB number is cleverly set in that regard.


These new caps likely won’t affect our routine operations in the cloud. Even the best Internet speeds are only adequate to back up a few GB of data. We’ll continue to work with iTunes and music purchases, MobileMe, some movie and TV watching (from our favorite sources), whatever iCloud turns out to be, maybe music & TV streaming, just as we have been doing for the past few years. What the caps do is help the ISPs manage growth and costs, but also put a stop to the allure of unlimited, wholesale Internet TV — so that the ISPs, who have vested interests in delivering their own content, can better compete. As for typical Apple customers, I think we’ll continue to be hardly aware of the caps.

As an aside, why would one want — or not want — to make that big switch? Cut the cord? That’s the subject of my next analysis.