Is Google Right About Data Caps?
Cloud gaming is starting to look like the future of video games. While console leaders like Sony and Microsoftare not ditching their beefy hardware just yet, both are pivoting in a way that suggests that they see the writing on the wall: At some point, games' software will primarily live on remote servers, not compact discs or your hard drive. But there are still some obstacles to a full cloud gaming revolution, despite how much Alphabet(NASDAQ:GOOG)(NASDAQ:GOOGL) and other companies with cloud gaming interests might wish it were otherwise.
Chief among those impediments is the state of America's broadband internet infrastructure: There are still 19 million Americans without access to broadband connections. Even in areas well covered by broadband, the behavior of internet service providers (ISPs) could present a problem for cloud gaming as ISPs can do all sorts of things to punish heavy bandwidth users, including throttling connection speeds on specific sites, apps, and services. Crucially, ISPs can also cap the amount of data customers can use before steep fees kick in. That's a real issue for cloud gaming, but Google seems loath to admit it.
Image source: Getty Images. Google's zen attitude toward data caps In a June interview with GameSpot, Phil Harrison, vice president and general manager of Google, was asked about data caps and the threat they pose to Stadia, the company's fledgling cloud gaming platform. That sounds pretty optimistic -- and perhaps not entirely accurate.
What constitutes a "relatively small number of markets"? Data caps are standard for some of the largest ISPs, including Comcast and AT&T. Those ISPs have monopolies in smaller cities and significant market shares in larger ones. Will ISPs loosen data caps? The idea of ISPs raising their data caps isn't completely unreasonable. They have done so before. In 2016, for instance, Comcast more than tripled its monthly data cap from 300 gigabytes to 1 terabyte (TB). But 1 TB is already starting to look too restrictive. As consumers use their internet connections for more things, like streaming movies,and for more taxing things, like streaming video in 4K instead of 1080p, they burn through more data faster. In early 2019, one study found that the number of U.S. households using 1 TB of data in a month had doubled year over year.
while consumer agitation may get their attention, ISPs still won't happily endure steep costs just to help streaming companies cash in. In the past, ISPs have gotten more money from streaming services by threatening to throttle their users' download speeds, and the demise of net neutrality put that strategy back in play. Data caps may be raised again, but there is no reason to assume that Stadia will dictate the schedule. Improving broadband access and speeds costs ISPs money.
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