P2P is "starting to see a lot more legitimate uses," says Frank Dickson of MultiMedia Intelligence. He's talking about his company's new report on P2P growth that projects a 400 percent increase in such Internet traffic over the next five years. But more surprising than the growth rate, which has been in decline now for some time, is the fact that it's P2P's lawful uses that are seeing the biggest growth.
For small content providers, especially companies involved in video, paying for a content delivery network can eat up a significant chunk of revenue. Done right, P2P distribution can save valuable cash for these providers, which is why Dickson sees P2P's lawful uses growing 10 times faster than its illicit uses.
Some of this is no doubt due to the "law of small numbers"; P2P's legal uses (transferring Linux ISO files, etc.) have always been dwarfed by its usefulness as a distribution mechanism for music and now video content. Thus, when legal applications begin to boom, it's much easier for them to rack up big percentage numbers.
ISPs aren't necessarily crazy about this shifting of the video burden from company servers (or CDNs) onto a network of decentralized users, since this can strain the network, especially when it comes to upload links. But it's not as though P2P is the only system straining ISP networks; as users hunger for their Hulu and their YouTube, streaming video has begun to consume shockingly high amounts of bandwidth, too—though almost totally downstream.
ISPs could simply throttle all this traffic, but that doesn't go down well with either the users or the FCC, which has made it clear that nondiscriminatory approaches are the way forward. So ISPs like Comcast are considering bandwidth caps at, say, 250GB/month. While not all customers have been thrilled with this approach, either, it does have a tangible benefit: ISPs no longer care so much about trying to "rein in" video content, whether delivered by P2P or through direct streaming.
The real problem for ISPs, Dickson says, is that they now face a future in which several of their revenue streams are at risk. Most ISPs, including cable companies, AT&T's U-verse system, and Verizon's FiOS, couple data access with pay-TV sales to boost total revenue per subscriber. As Internet delivery of data becomes the norm (or far more common, at least), a certain percentage of households will begin to defect from pay-TV packages. We may already be seeing something of this trend in the news that 20 percent of terrestrial TV viewers may simply skip TV altogether after the analog shut-off in Febuary 2009.
But what happens when people routinely start bumping up against the usage caps due to Internet video, while pay-TV packages continue to offer unlimited access to shows all month long? The data and pay-TV sides of ISP operations may start to look increasingly like competitors, and the caps may start to look a bit anticompetitive.
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