Streaming video revenue's $3.2B jump a rallying cry for OTT providers in broadband speed battle

Revenue from streaming video services jumped 175 percent between 2010 and 2013, from $1.86 billion to $5.12 billion. That massive rise in dollars being thrown at online video is part of the reason why raising the broadband speed bar in the U.S. to 25 Mbps is absolutely essential to continued economic growth, according to Internet Association President Michael Beckerman.

The Internet Association includes Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG), Netflix (NASDAQ: NFLX) and Yahoo among its members.

Beckerman's statement, reported by The New York Times, is part of the kerfuffle that has been ongoing since Thursday, when the FCC drastically raised its benchmark definition of what constitutes broadband Internet service--from 4 Mbps downstream and 1 Mbps upstream, to 25 Mbps down and 3 Mbps up.

The National Cable and Telecommunications Association is one of the organizations that immediately protested the new definition, calling it "arbitrary and capricious" and basically unnecessary.

But online video players don't see it that way at all. A continual increase in demand for high-quality over-the-top video means adequate bandwidth is needed to stream HD and increasingly, 4K (or Ultra High Definition) video to consumers. Netflix and Amazon already have limited 4K streaming available, and other providers like Vimeo have 4K videos available for download, with streaming planned in the future.

4K/UHD streaming requires at least 25 Mbps, according to Netflix, whose CEO, Reed Hastings, applauded the FCC's move. In addition, with all the other online requirements of a modern home--videoconferencing, online games and home monitoring--25 Mbps "is kind of baseline for the next five years as opposed to the past five years," he said during a fourth-quarter earnings call.

Broadband speed benchmarks are just the tip of the iceberg in the net neutrality debate. This Thursday, Chairman Tom Wheeler is expected to submit his latest net neutrality proposal to FCC commissioners, and will likely propose that it be regulated as a public utility. (He may also include wireless operators in the proposal, which should go over like a lead balloon.)

Doing so, Wheeler likely believes, is the only way to ensure that data streaming over the public Internet is treated equally. While some feel that Title II-style regulation is too heavy-handed an approach, others  like Columbia Law professor Tim Wu see it as an appropriate safeguard.

More clearly defined net neutrality rules could also help smooth out ripples in the interconnect and backbone provider segments of the Internet. For example, Cogent Communications is one of the providers transporting Netflix's content to interconnect points with ISPs like Verizon (located at what's often called the network "edge"), but it had trouble sending streaming data past Verizon's routers until Netflix worked out a fee-based deal with the ISP.

"How smoothly a Netflix video stream of 'House of Cards' plays on a subscriber's screen, for example, reflects the performance of all the network operators that have transported the digital bits of that hit program," the Times' Steve Lohr noted.

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Related articles:
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NCTA calls 25 Mbps broadband definition excessive in FCC filing
Netflix's Hastings agrees 25 Mbps should be the broadband definition
Amazon, Vimeo announce 4K options for online video
Qualcomm leading push for 4K