Sony Postpones Plans for Virtual MSO, Launches Further Discussion on Caps

Last fall The Wall Street Journal reported that Sony had plans to launch an Internet-based video service. Now there’s word from Variety that the company is holding off. Apparently it’s not the content licensing deals that Sony’s worried about, but bandwidth caps. At an industry conference yesterday, Sony VP and GM Michael Aragon noted: “These guys have the pipe and the bandwidth. If they start capping things, it gets difficult.”

So here we are, storming into another battle over bandwidth caps. Sony isn’t the only one complaining. Netflix and several others have also raised a red flag because Comcast has said that use of its Xfinity app on the Xbox won’t count against users’ 250GB broadband cap. In contrast, any other video streamed over the web does count against the cap. Critics are calling this a net neutrality foul, and Comcast is countering that Xfinity streaming is different from other services because it’s delivered over a managed network rather than the Internet. It just so happens that both networks are IP-based.

There is a serious discussion to be had here, but it’s a difficult one, and it’s complicated by many factors most people aren’t aware of – like how cable networks are evolving. As a first step to untangling the problem, I have one wild suggestion. Let’s start monitoring how much bandwidth cable companies are devoting to managed IP services versus public Internet service. I’m not saying we should regulate that ratio… at least not yet. But let’s monitor it. We don’t want the Internet side of the pipe to get shortchanged, and if there’s more bandwidth available for public Internet service, there should be less pressure to cap usage.

I want to be clear that I’m not saying cable companies shouldn’t be allowed to offer managed IP services that don’t count against bandwidth caps. That would pose serious difficulties given the fact that cable operators are migrating (albeit slowly) to all-IP video delivery systems. However, as the lines between content programmer and content distributor continue to blur, we ought to be taking a closer and more-informed look at checks and balances, whether they’re written into law or market-driven.

So that brings us back to Sony. I don’t know if caps are really at the heart of Sony’s decision to postpone its video service plans, or if there are other factors in play. The video business is hard. Just ask Microsoft. What I do know is that Sony is harping on an issue that needs more thoughtful discussion. It’s not as simple as “caps are bad!”. But as cable moves to IP video delivery, we need a clearer understanding of how bandwidth is being divvied up.

32 thoughts on “Sony Postpones Plans for Virtual MSO, Launches Further Discussion on Caps”

  1. In Comcast’s case, i think it’s the fact that Comcast owns both production (Universal) and distribution (Xfinity) elements that worries people.

    Sony is a competitor of Universal and therefore Comcast.

    Comcast could place a “Universal” server inside their network and say that streaming all Universal movies and TV series don’t count towards the cap. Technically that wouldn’t violate network neutrality as it’s defined, but it still wouldn’t be right.

  2. I’m so tired of US regulators letting “market forces” determine everything. We should either fire everybody who works at the FCC and other regulatory agencies or they should do their job and regulate the industry they are in charge of. The Europeans have this one right I’m afraid.

    If I were in charge Comcast would be forced to allow others to sell internet service using its wires, along the lines of how BT was forced to do this in the UK, which brought down internet service pricing dramatically, and improved service.

    However, since we live in the real world, how about the FCC just strengthens the definition of network neutrality so that this “in network” crap is irrelevant. If Microsoft can’t use its desktop dominance to force IE down users throats then why is it okay for Comcast to use its (granted by communities) dominance to crush Netflix and other inventive OTT services under its thumb? Or Sony. Or the next great internet-based idea.

    Its not.

    If there’s a last-mile contention issue which justifies Comcast deploying caps to keep its network humming, then if the XBox Xfinity traffic travels over that same network (hint: it does) then it should be counted against that cap or Comcast shouldn’t have a cap.

  3. “I’m so tired of US regulators letting “market forces” determine everything … If I were in charge Comcast would be forced to allow others to sell internet service using its wires”

    Go further.

    The only way this really gets fixed is if we get the modern version of the 1948 United States v. Paramount Pictures case.

    That decision said that studios couldn’t own theaters. In modern terms, Comcast shouldn’t be able to own both content and wireline. Pick one or the other. Content and distribution together create incentives for vertically integrated conglomerates to skew the playing field against the public interest.

    If content companies were forced to separate from wireline companies, (along with robust wireline net neutrality enforcement), the whole playing field would look different.

    There’s nothing wrong with letting market forces work, just as long as the rules of the road are properly shaped.

  4. Glenn- I agree. In theory at least, Comcast should have to sell access to its lines. Barring that, I think the in-network/out-of-network issue has to be addressed. But imagine if Comcast did count its own services toward the cap. Then subs would be paying for Internet service, TV service, and they’d get charged for overages. Big outcry then too. “Comcast is charging us for everything!”

    I’m willing to compromise as long as a sizable portion of bandwidth is dedicated to the open Internet. Comcast can’t keep most of the bandwidth for its managed IP services, and then charge ridiculous fees for a limited resource (aka Internet service) on the other side. And at the moment, I don’t think anyone outside of Comcast has any idea what the roadmap is for the company’s bandwidth allocation. That strikes me as a problem.

    One more grenade to throw in the mix- I’m sure Xcalibur won’t count toward users’ caps either. (I wonder if you’ll have to buy Internet and TV service to get Xcalibur…) But the more bandwidth Comcast spends on the new IP TV service, the less is available for Internet service.

    Chucky- Ideally distribution companies shouldn’t also be content companies. But that ship has sailed. Comcast owns NBCU. Game over.

  5. Mari –

    My understanding of the Comcast-Xbox deal is that they are actually provisioning additional capacity for that service. If you have a 20MB connection for your broadband, and sign up for Xbox, the Xbox traffic is actually carried on an additional, say, 10MB stream.

    Because of the way various services are separated on the wire, it’s no different than your telephone service. That is carried on the same wire, but doesn’t count against your cap. Your linear television is carried on the same wire, but doesn’t count against your cap.

    Xbox won’t slow down your other Internet traffic, and actually exists separate and apart from it. That’s why it doesn’t count against your cap. It is in addition to, not over the top of, the bandwidth you are paying for to access the net.

  6. Michael- I get that. But Comcast only has that additional capacity because of initiatives like its analog reclamation. It’s new bandwidth, but that doesn’t mean we shouldn’t consider the bandwidth for other applications too, especially as Internet usage continues to climb. How much of Comcast’s total bandwidth capacity should go to managed TV or managed voice versus Internet service? I don’t know. But it’s something we should be able to examine.

  7. “Ideally distribution companies shouldn’t also be content companies. But that ship has sailed. Comcast owns NBCU. Game over.”

    In 1947, Paramount Pictures owned lots of theaters. In 1949, they didn’t. The ship had sailed, but then the Feds made the ship turn around. Proper antitrust prosecutions can accomplish a lot. Comcast can pick which of the two they sell.

    (And it’s worth reiterating that Comcast being both a wireline provider and owning NBC – Universal is pretty much exactly what the 1948 case was all about.)

  8. “How much of Comcast’s total bandwidth capacity should go to managed TV or managed voice versus Internet service? I don’t know. But it’s something we should be able to examine.”

    Sorry, I guess I don’t get why “we” get to examine their use of the network. That seems to imply that our lease of the line gives us some sort of shareholder voice.

    If I rent a house, I don’t get to remodel the house to suit my needs. I don’t get a voice in whether the owner decides to sell the property. I can’t even paint the walls without express permission.

    Yet for some reason I get a say in Comcast’s business model?

    If you want a say in what Comcast does, buy stock while it’s still a publicly traded company.

  9. “Yet for some reason I get a say in Comcast’s business model?”

    Yup. That’s why the FCC (correctly) implemented a broadband net neutrality policy.

    The public interest gets an say in how railroads run their business models. Folks figured this out over a century ago.

  10. @Michael,

    First, the XBox Xfinity traffic is traveling over the same DOCSIS QAM channels as any other IP traffic. There is no ‘private’ QAM assigned to just the Xfinity IP traffic. As such it will compete in the local loop with other IP traffic (say my neighbours trying to watch Netflix). Comcast never said different. They just said the traffic ‘travels over their private network’. By which they mean that the origination servers and the cable modem in the users house are all within Comcast’s network.

    Second, if local governments were prepared to allow lots of companies to dig up their streets and string fiber and Comcast and Time Warner were competing for my business then that would be a fine approach.

    But they’re not. And that fact is why this whole discussion is happening as far as I’m concerned.


    I don’t buy it. Comcast’s 250GB cap makes in non-viable for people to drop cable and just watch OTT services. Lets say somebody delivered HD video at 7.5Mbps using h.264. Comcast uses 15-20Mbps for their HD, and Vudu HDX uses up to 10Mbps, but hey AT&T U-Verse delivers HD using 7.5Mbps encoded with Cisco/SA hardware encoders (not optimal really) so lets use that number. 250GB (bytes) @ 7.5Mbps (bits) is 74 hours. In a 30 day month that’s 2.5 hours a day. On one TV, not the 3 or so a typical family has. With no other internet activity at all.

    Sure it might be enough for some people, the current cord cutters who don’t have families or don’t consume a lot of TV, but it won’t work for the typical family. It isn’t real competition.

  11. Glenn- I think the 250GB cap was reasonable a couple years ago, but it’s probably time to re-visit. Most people – let alone heavy TV-watching households – don’t want to switch to all OTT. Nonetheless, we’re looking at OTT watching that will only continue to go up.

    As for the DOCSIS QAM channels, it’s my understanding that Comcast may actually have set aside specific channels for IP delivery at this point, just for simplicity’s sake. But that will ultimately change, with Comcast folding IP video delivery into the same channels with Internet service.

  12. Mari–

    That’s certainly possible. I don’t know what kind of extra QAM space they’ve got with their current HD load, On Demand takeup and so forth after the great analog reclamation (they can get rid of all the SD digital channels too as far as I’m concerned).

    But I’ve never been clear how they’re going to move to IP any time soon. Certainly the vast majority of boxes they have out in the field aren’t IP capable. Cable companies love cheap, so even the DCT 2000 was about 50% of the boxes at Comcast up until about 5 years ago–Motorola shipped the 10 millionth one back in 2000 or so. Only in the last couple of years have they shipped any boxes that support IP. The only people that got them at first were the ones asking for 3D support. I think nowadays its a little broader, but its almost certainly still pretty low.

    As long as Comcast isn’t willing to obsolete old boxes and force people to trade them in for new ones (costing them a bunch of money obviously), I don’t see how they get to an IP delivery any time soon. Too many people wouldn’t be able to watch the shows, so they’d have to offer dual versions–MPEG-2 on QAM and say h.264 on IP. Wouldn’t double the bandwidth but probably approach 50% more bandwidth for the channels they chose to offer both ways. Hard to see how they get to a cost savings this way either, as long as they have to keep doing both.

  13. @Glenn

    Mari is exactly right. Comcast has set aside channels specifically for the Xbox traffic.

    However, you are also right in that heavy traffic at the node will still cause issues. You won’t conflict with yourself, but your neighbor can still mess you up.

  14. This is a bullsh*t excuse by Sony. It is up to Sony to build a content distribution system. It is up to the cable subscriber to deal with the caps. Is Sony afraid we won’t use a service we paid for if we hit our caps? He’ll no, most services are provided assuming you won’t use them 24×7, including your internet connection.

  15. @Michael,

    Any evidence to back up your claim that Comcast sends the XBox traffic over a separate QAM? I certainly can’t find any. As far as I can tell Comcast has even removed their original claim that the traffic wasn’t counted against your claim because it was routed over a ‘private network’ from their FAQ here where the claim no longer appears:

    If your claim were true, you’d think they wouldn’t have made the adjustment.

  16. Glenn, Michael may have additional insight given his industry connections. (He used to work for the NCTA.) So I’m willing to take it at face value. Regardless, our municipalities give these guys the right to operate their network and therefore we and our reps have some say in the matter. It’s a super innovative service, but they’re getting a pass while the competition does not. Brian Dietz of the NCTA tweeted to me me that the Xbox is just another set-top for Comcast television services. Yet how come one must also then have Comcast Internet services to receive it?

  17. Dave,

    Spoke to someone technical about the possibilities here and I think its highly unlikely Comcast has a separate QAM channel for the XBox IPTV traffic. In DOCSIS they bond adjacent channels together, including the guard bands. And DOCSIS 3.0 modems aren’t capable of handling multiple independent QAM channels. And they can’t widen the bandwidth for some and not others.

    They might be able to do some kind of shaping to support the ‘private channel’ idea, e.g. streaming data at my modem at my subscribed 8Mbps PLUS any XBox IPTV traffic, suitably prioritized. But all of this data would conflict with the traffic my neighbours were sending. They can certainly prioritize the XBox traffic so it WINS, but my neighbours could definitely experience slower internet traffic as a result.

  18. And more evidence:

    Bryan Berg sniffs the packet traffic for a variety of different OTT services, looks at where they were coming from, the priorities assigned etc.

    As I speculated Comcast is giving traffic from their Xfinity service a higher priority than other OTT traffic. But Bryan also points out that the Comcast traffic in his case actually originated FARTHER AWAY from his home than the CDN’s serving up the traffic for the other services he looked at (HBO Go, Netflix, etc).

  19. Glenn- Looks like this just blew up on Techmeme too because of a similar post by Dan Rayburn:

    The prioritization issue here is the big thing. But as far as caps go, my understanding is that we’re still talking about separate QAM channels. The QAM channels being used for the Xfinity app are provisioned separately. At least that’s how it’s been explained to me.

    But again, prioritization is another serious issue. If at any point the traffic is traveling over the same network – as is the case here *in the last mile*- it should be delivered with the same level of priority.

  20. “But imagine, given the controversy, they’ll have nothing to say publicly.”

    The screenwriter of the underrated film One More Saturday Night is questioning from his perch in the Senate whether Comcast’s shenanigans violate the conditions of the acquisition of NBC by Comcast. Good on him.

    “The prioritization issue here is the big thing. But as far as caps go, my understanding is that we’re still talking about separate QAM channels. The QAM channels being used for the Xfinity app are provisioned separately.”

    But isn’t the “provisioned separately” concept highly questionable at the very least just because of the prioritization issue?

    Comcast is trying to get around wireline Net Neutrality rules by doing what seems like fake accounting to reflect something that isn’t true in the real world.

  21. Chucky- I see them as separate issues. There’s prioritization of delivery, and then there’s overall bandwidth allocation. I think both need to be addressed.

    Here’s my current thinking:

    1. We should be monitoring the ratio of bandwidth dedicated to managed services versus unmanaged Internet service.

    2. We should divorce video from Internet service. If Comcast wants to deliver video over IP, customers should be able to subscribe using anybody’s broadband service. In other words, Comcast should make it possible to port the app to someone else’s IP network. (The practicality of this needs to be studied…)

    3. We should keep a closer eye on content availability and content tiering from owners that also own distribution networks. Take the dispute over the Tennis Channel. Comcast shouldn’t be able to prioritize its sports content on a basic service tier and then shove the Tennis Channel off on a more expensive package. This gets very, very tricky very very quickly.

    4. ISPs shouldn’t be able to prioritize their own traffic in the last mile if everything is coming down the same pipe.

  22. Mari,

    I agree the prioritization is one problem. But I also think the ‘separate QAM’ theory is bunk. Happy to hear evidence to the contrary, but I don’t think its technically possible.

  23. Okay,

    I’ve been reading the DOCSIS 3.0 specification here:

    and it looks like the information I was given is incorrect. The individual downstream QAM channels (6MHz bands) are NOT bonded physically, only logically.

    Individual Ethernet packets are carried on a single QAM channel, not encoded over multiple channels. So if some of the Cables Modems (CMs) were to use 3 channels they might only see normal Ethernet traffic, while others might include 4 channels and also see the XBox Xfinity traffic that is confined to the remaining channel alone.

    This would work with normal cable modems, which can individually be configured which channels to look at. I don’t know anything about the CMTS portion, and whether this approach is viable or not.

    Comcast typically sells internet speeds up to about 105Mbps. With individual North American QAM channels at 6MHz offering about 38.8Mbps in QAM256 mode (typical), this seems like a reasonable number to achive (subtracting overhead) with three QAM channels. And since all CMs are required to support at least 4 QAM channels (within a window, not required to be adjacent), this is technically doable with standard CMs.

    So: Comcast COULD be carrying the XBox Xfinity traffic over a separate QAM channel from the regular internet data to the cable modem in your house. Are they? I suspect we’ll find out in short order as lots of people are looking at this now.

  24. Glenn- I’m going to reverse course. I know channels are only bonded logically, but what are the odds Comcast has set aside 1 QAM channel in every market for managed IP video? Some markets still probably only have 2 QAMs total for DOCSIS. I’m beginning to wonder if the channels are provisioned separately farther upstream, but then traffic is combined by the time everything hits the edge and the last mile. Hmm.

  25. Mari et al (and anyone else still reading this old thread)…

    A little more digging. Here’s a partial screenshot from my cable modem on Comcast:

    Note that this is only the downstream. Its from a Motorola DOCSIS 3.0 SB6121 (highly recommended by others on this board, have nothing but good things to say about it). You can get to yours by going to:

    and entering the URL suggested into your web browser.

    Anyway, I *don’t* have an XBox myself. And I’m still assigned four channels downstream.

    As I understand it these are in two groups–the primary channel at 705 and the secondary block starting at 735. That block is three adjacent 6MHz bands. The first block is separate because of backwards compatibility with pre-3.0 modems. So older modems would get all their IP traffic on that channel. The other three channels are adjacent and CAN use the guard bands to get a little more data through, so they have to be used together.

    Anyway, even in a non-XBox household I’m assigned 4 channels, and you can’t count on having more than 4 channels. And the one separate channel is used by pre-channel bonding cable modems that are probably still deployed. Also all of the configuration and signalling is done over this “primary capable” channel.

    So I think that again its unlikely Comcast is doing anything for XBox with a separate QAM…

  26. For those still following this thread, Bryan Berg has posted more analysis:

    – Xfinity traffic is on the same QAM channels as everybody else
    – Xfinity traffic is assigned a higher priority than internet traffic
    – Xfinity traffic doesn’t count against your bandwidth cap (mostly, he found one case where they’d screwed up and some traffic was)
    – Xfinity traffic doesn’t count against your rate limit either (so if you have an 8Mbps service you might get 14Mbps while streaming a movie on Xfinity)
    – Xfinity traffic is prioritized higher and that priority is what is used to decide whether it should count against your cap or your rate limit

  27. “For those still following this thread, Bryan Berg has posted more analysis”

    Keep ’em coming, Glenn. I’m following.

    I’ve reached the conclusion that if the FCC doesn’t step in here, wireline Net Neutrality is dead.

  28. Glenn, Chucky, et al- Comcast has a new statement out denying that it is prioritizing traffic. See here:

    Baumgartner has started out with a piece on it over on Light Reading Cable, and I’ve written something that I have to tweak now that Tony Werner has responded. Will keep you posted on that front.

    Meantime- I see two very interesting points in Werner’s post. First, he talks about DSCP markings being used for applications other than traffic prioritization, but he doesn’t offer evidence as to what Comcast might actually be using them for.

    Second, and this is really interesting to me, Werner talks about provisioning separate bandwidth (which I’m sure is exactly what Comcast has done by freeing up analog spectrum), but he doesn’t specifically say that the Xfinity traffic travels down a separate QAM channel from other traffic, just that it uses a separate “service flow.” So it sounds to me like Comcast has added bandwidth to serve the Xfinity app, but that it’s still taking up space on the same channels (more of them now) as regular Internet traffic.

    That’s my first take.

  29. Mari,

    Yes that’s basically correct.

    The “Xfinity” traffic travels over the same 4 QAM channels as the internet.

    HOWEVER, the Xfinity traffic is not counted against your burst speed by your cable modem. Your CMTS is provisioned so that the Xfinity traffic is part of a separate “service flow”. If I’ve paid for an 8Mbps tier, I can get 8Mbps of internet traffic and also 6Mbps of Xfinity traffic. See the graphs Brian posted.

    So, is the Xfinity traffic “separate” from the internet traffic? It depends.

    I will never see any conflict between MY internet traffic and MY Xfinity traffic. But if the local loop is maxed out, what will happen? Will my Xfinity traffic cause problems for my neighbours internet? My answer is YES IT WILL. But that has yet to be proven by an actual test.

    If you follow the comments on Bryan’s blog you can see the tension here. Some anonymous poster is making the case that hey its just traffic management and there’s no evidence that any Comcast customers are running into such collisions. Others have pointed out this isn’t true but don’t have data showing how prevalent it is. Just anecdotal stuff.

    And certainly Comcast CAN provision more QAM channels. A given set of CMTS’s can only handle 4 QAMs maybe, but you could split the modems up into two pools logically and given them each a different block of 4 QAM channels. Assuming you have them available. Which you might or might not. Comcast might want to sell other packages of HD channels over those channels or allows for increases in VOD viewing or … with those other channels. And of course you can split a loop physically into two or more by installing more hardware.

  30. “I’ve reached the conclusion that if the FCC doesn’t step in here, wireline Net Neutrality is dead.”


    The DOJ enters the fray…

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