Netflix raises prices

Submitted by acohill on Thu, 07/14/2011 - 09:54

Netflix has raised prices. I got my notice via email yesterday. They have unbundled streaming from the traditional DVD via mail, and you now can buy one service, the other, or both. The DVD service is still more expensive than streaming, which suggests that the cost of mailing DVDs remains significant compared to the cost of buying bandwidth to drag streaming content across the Internet. The pricing change also suggests that many customers have largely transitioned away from DVDs to streaming content, and Netflix is giving those customers, that don't care about getting DVDs, a break on price.

Services like Netflix, Roku, and Hulu are going to continue to put tremendous pressure on the providers of "little broadband:" the DSL, cable, and wireless providers. These old systems are running out capacity, and it's a race to the bottom for these firms. They can keep trying to upgrade the old systems, but the more they spend, the faster their customers use up the bandwidth.

Don't believe that? Take a look at the cellular data services market. AT&T and Verizon have abandoned their unlimited data plans and have put bandwidth caps on their services because they can't keep up with customer bandwidth usage otherwise. This makes the concept that rural communities will all get their broadband via the cellular providers rather silly, unless you subscribe to the notion that rural folks should be relegated to what amounts to the 21st century version of dial-up.