How Netflix, entertainment and changing usage patterns are affecting networks

Trends divined from just September's Internet traffic, according to the latest Global Internet Phenomena report from Sandvine, are expected to shape the Internet landscape and its stakeholders, said the firm. These include changes in network use, the amazing demand for entertainment, increasing numbers of mobile form factors per household and the overwhelming impact of a single video-streaming company, Netflix.

Three notable findings in the report, relevant to the North American market, are:

1. Network use, both fixed and mobile, is becoming more concentrated.
Peak usage hours shrank in September to a duration of just two hours, though gigabyte usage remained flat, suggesting users are performing the same activities, just in a narrower window. This is consistent with a recent ByteMobile report finding users' daily video consumption to occur in a single sitting. (CP: Video accounts for up to 60% of carrier data traffic, says report.)

The trend is a worrying one for providers, which must engineer their networks for peak bandwidth, said the report. "If we assume that a subscriber’s perception of value is directly tied to his or her monthly usage, then this trend means that it now costs more for service providers to deliver a constant value to the end consumer, and the network itself is increasingly inefficient."

One suggested fix is to offer unlimited data at off-peak times and caps during the peak. If users equate data consumption with value, the offer would doubly be a win for providers, as users would perceive it as a higher-value service.

2. Entertainment is driving the Internet
While entertainment-geared traffic accounted for nearly 30% of traffic in 2009, it's now closer to 54% of aggregate utilized bandwidth and 60% of downstream traffic.

Moreover, 55% of entertainment bytes are now headed for smart TVs, tablets and phones than laptops or desktops, now seeing just 45% of that traffic. As Sony demonstrated this morning, manufacturers, content producers and service providers are now concentrating on a "three screen approach." (Sony, notably, is shooting for four screens.) (CP: Sony buys Ericsson out of Android smartphone partnership.)

3. Netflix, missteps or not, is increasingly impacting the industry.
With a television, smartphone, tablet, laptop and smart TV in most homes, entertainment is being viewed on multiple screens. Netflix currently allows two concurrent streams and has considered "family plans" that would allow more.

Increasing concurrent streams, said the report, "has the potential to severely disrupt network capacity planning models and service plan design and price. With Real-Time Entertainment usage focused during an ever-shrinking peak period, network planning that fails to account for simultaneous streaming will manifest
as a poor video quality of experience visible to every subscriber in the home."