Saturday, January 01, 2005

Bandwidth costs and Internet broadcasting

I was researching the cost of bandwidth recently. Some interesting numbers I uncovered: backbone transport cost is $100 per month per Mbps, or about 30 cents per GB. ISPs and hosting services charge a bit more than this per GB, but as little as $.50 per GB. The bandwidth cost of servicing a typical residential cable or DSL broadband subscriber is only about $2 per month, so potential margins are large.

Mailing a DVD (4.8GB of data for the cost of a postage stamp) is still a cheaper method of data transfer than the Internet - albeit slower! When will NetFlix's inventiory management innovations become redundant due to Internet delivery of movies? Now that 50% of US Internet users have broadband, it will only be a few years before a similar business can be built around delivering movies directly over the wire. At 100kbps sustained, it takes 10^5 s - about a day - to download a movie.

What about running your own TV or radio station from your Web server? Even if bandwidth costs drop another order of magnitude, we'll still need distributed P2P like BitTorrent to make it affordable for individuals. BitTorrent stores copies of a file on multiple (volunteer) servers, and distributes the bandwidth burden by allowing a user to download via multiple streams. (It has been reported that BitTorrent alone currently accounts for about a third of all bandwidth usage!) Very soon, content distribution will be revolutionized by distributed P2P, with indie TV shows distributing their product via the Internet.

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