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Mobile bandwidth caps challenging Web TV

Usage limit imposed by AT&T inhibits rise of Internet TV, forcing media providers to work directly with the carriers to offer content, iSuppli says.

AT&T's move to jettison its unlimited mobile data plan and charge more for heavier use puts a roadblock in the plans of media providers trying to push Internet TV, according to a report released Tuesday by iSuppli.

Faced with more people grabbing more data, AT&T recently switched to a tiered pricing plan in hopes of limiting the strain on its 3G networks from devices like the iPhone and iPad. And Verizon is likely to follow suit.

But those caps pose the question of how providers will satisfy the growing demand for streaming media without the support of the wireless carriers to allow unlimited content to pass through their networks.

"iSuppli believes that most of the emerging streaming Internet models are mistaken in postulating that they could displace, over time, traditional television and movie delivery mechanisms without paying for related network costs," William Kidd, director and principal analyst for financial services at iSuppli, said in a statement.

Streaming media in particular presents unknown risks to the broadband carriers, Kidd added, and will likely force more of them to set up caps to limit data usage. To make the leap to Internet TV, consumers may expect the content to be comparable in both quality and entertainment value to what they get now with traditional TV. But to reach that level, such content would end up being extremely bandwidth heavy and could bend or break the caps put in place.

As examples posed by iSuppli, people could bump up against a cap by viewing low-quality streaming content on a wireless device for three hours or by watching standard-definition streamed content on a wired network for 25 hours. But caps could also be reached by streaming a high-definition signal in just seven hours over the network of a cable provider like Comcast.

"These new-media business models imagine that they don't have to pay the network through which their data traverse," Kidd noted. "However, such a theory is directly at odds with the ambitions of cable and satellite-TV operators, which increasingly are unwilling to provide heavy data access through their networks for free--especially if a way can be found to monetize ongoing data traffic into viable revenue streams."

As a result, the current methods under which providers are able to offer streaming content may soon no longer be feasible. Providers will have to learn to work more directly with the network and broadband carriers if they want to get more of their services, especially their premium services, off the ground, believes iSuppli.

The limits on broadband access come as the number of mobile broadband subscribers is expected to hit 63.5 million this year, a jump of 8.4 percent from 58.5 million last year. And the demand for Internet TV will also play out in the home as more consumer devices like TVs, Blu-ray players, and set-top boxes come with built-in Internet.

The new "Quarterly TV Design and Features Report" from DisplaySearch finds that Internet access has become a key feature on TVs this year. Eyeing brands from all the leading manufacturers, DisplaySearch found that 55 percent of all TVs across Japan, North American, Europe, China, and India are eqiupped with Digital Living Network Alliance (DLNA) capability, which lets people stream media to different devices in their homes.

Overall, 45 million connected TVs are expected to flood the market this year, said DisplaySearch, followed by 119 million in 2014.

"The Internet video battleground will take place in the living room, with all facets of the TV supply chain trying to stake claims, Paul Gray, DisplaySearch's director of TV electronics research, said in a statement. "As a result, the competition is creating attractive new viewing choices for consumers, which underpins the value of the TV's network connection."