Bandwidth Caps Threaten Future of Cloud Computing

Last month, we covered AT&T's decision to impose caps on its previous unlimited Internet service plans. An estimated 56 percent of Americans now pay for bandwidth-capped service, almost always at the same price point that once allowed them unlimited bandwidth.

Now, toss in the fact that you can't swing a dead cat two feet without smacking into another company eagerly talking about 'cloud services.' The offers are varied, the promises inflated, and the terminology uncertain. In virtually every case, today's cloud services are nothing more than what we used to call 'web storage' or 'sharing content across a network / the Internet.' The difference between these services of yesteryear and today's cloud services amounts to a paint job and some vague lip service to the idea that the individual receives a customized set of content/capabilities that somehow reflects the user's personality.

This is what happens when you grab a bunch of clouds and shove them all together.

The real threat to cloud computing, however, has nothing to do with vague marketing speak. The growing number of ISP's who've introduced monthly data caps is a serious problem. Customers who might once have wanted to adopt some form of cloud computing strategy could find that they can't afford to pay the overage charges they incur. The scope of the problem depends on the company in question and the amount of bandwidth they provide by default.

It's quite possible that the telcos and cable providers see third-party cloud services as a threat to their own businesses. Large ISPs, like AT&T and Comcast, may be planning to launch their own cloud services with an eye towards using them as part of an upsell strategy.

One of the reasons both cable and ADSL providers are resisting high bandwidth applications is that neither side wants to be what's referred to as a dumb pipe. The phrase 'dumb pipe' refers to a situation in which "an operator’s network being used simply to transfer bytes between the customer’s device and the Internet. The use of the term “dumb” refers to the inability of the operator to restrict services and applications to its own portal and primarily just provide simple bandwidth and network speed.

Cable companies have always relied on their ability to provide premium content as a means of attracting customers. AT&T's U-Verse product is marketed as a premium service that purports to offer best-in-class TV, wireless, and Internet speeds. There's no proof that AT&T or any other company is limiting / capping wired Internet access because of load issues--the sort of limits that make at least some sense on wireless devices mean nothing here.

The same restrictions that could cripple the adoption of cloud computing have already had a significant impact on the practical usefulness of a GoogleTV. The TV industry reacted very poorly when they thought GoogleTV could damage existing revenue streams--which, to be fair, were already under fire.

This situation is almost guaranteed to get worse before it gets better. ISPs have already attempted to claim that YouTube, Google, or Netflix owe them money for the privilege of moving data across network pipes. The telcos and cable companies could strike back by launching their own services while opting to classify data transferred from an AT&T customer's PC to an AT&T cloud service doesn't count against the monthly bandwidth maximum. That's a simple idea, and it's just one of a number of ways existing ISPs could make life difficult for nascent cloud-based companies.