Is Netflix about to be a real problem for the UK’s mobile operators?

I signed up for Netflix this morning after reading Matt’s post over at The Next Web. It’s just £5.99 a month. I’ve used the service in the States a few times and was very impressed.

Today’s UK launch is rightly generating a lot of excitement — and given there’s a 1-month free trial (you do need to give your credit card) there’s little excuse for having a wee look.

For far too long I’ve been limited by Apple’s pretty rubbishy iTunes TV/Movie range so it was brilliant to see a whole load of fantastic content available when I signed in to Netflix. Bring it on!

I then thought I’d check it out on my iPhone — I swiftly downloaded the app, signed-in and then looked for something to test out. I quickly tapped on Armageddon. 10 seconds later the movie was playing.

Now — this is wonderful from my personal perspective.

It’s pretty shitty from a network perspective, though.

I was streaming on my new iPhone 4S from 3. Their coverage in Richmond is sublime. I couldn’t help but think that whilst I was having a nice time watching the movie, what effect was I having on the local 3 cell capacity?

I’d expect 3 to be able to handle this kind of traffic. Their data network is most definitely robust enough to take the strain. That is, until every single one of 3’s iPhone customers starts doing the exact same.

It’ll be even worse on the big standard networks. How’s o2 or Vodafone going to cope?

I broke out in a sweat after 10 seconds of watching the opening Armageddon credits because I knew I was using up a significant amount of bandwidth unnecessarily on Monday morning for anyone else using 3 in the area. I stopped the streaming.

Unfortunately, it looks like Netflix is most definitely about streaming. I don’t think you can temporarily store movie content on your phone in offline mode like you can with the likes of Spotify. (With Spotify, I occasionally download music ‘real time’ over the data network but mostly I use offline mode when I’m out and about.)

Streaming — and especially video streaming — is going to be the bane of the UK networks for a long time to come.

I hope that 3G demand for Netflix doesn’t force the UK networks to decide to lower their inclusive contract data allowances to 50mb a month….

That, seriously, has been their response to burgeoning data demand in the past.

I wonder if we need to have that ‘app’ conversation again — that is, you buy super-fast access to a raft of apps on top of your standard monthly fee. For instance, I might opt to pay £6/month extra to get ‘gold level’ access to Netflix, Spotify and iPlayer via my 3G connection. However I’d want to be sure that the operators had put some proper equipment in place to make sure that I actually got decent service most of the time.

It’s such an arse, though, this whole problem. Netflix is hardly likely to want to see operators charging more money to consumers to access it’s service. If anything, Netflix is likely to want a cut. But then, if Netflix 3G usage skyrockets over the next few months, it won’t be long before we see operator CEOs bleating about wanting Netflix to pay access fees to them.

It’s going to be an interesting year.

By Ewan

Ewan is Founder and Editor of Mobile Industry Review. He writes about a wide variety of industry issues and is usually active on Twitter most days. You can read more about him or reach him with these details.

7 replies on “Is Netflix about to be a real problem for the UK’s mobile operators?”

I think we are going to see a natural evolution to tiered service levels and pricing with increasing LTE/4G deployments. Getting on to these networks will be the “gold level” we’re looking for. I don’t expect the operators to offer the folly of *unlimited* again, allowing them to both service high quality video streaming, and make revenue by volume from it’s users.

I for one would be happy to quadruple the £15 per month I pay for 2x 3G SIM cards for a reliable data throughput with per MB billing. 

To alleviate this problem I seriously recommend giffgaff. Tenner a month for 250 minutes, unlimited text and best of all – unlimited data. Runs off O2’s network. Been with them for a month after switching from Orange (who could only offer me 100mb a month for £10) and extremely impressed.

iPlayer used to be the main target of complaint for ISPs, particularly those that resold BTs service. As the cost of bandwidth has continued to fall, the problem has solved itself. The same will happen with mobile, the cost of base station backhaul will continue to drop, and the over the air bandwidth will continue to increase with more efficient technologies (lte) and a greater amount of spectrum allocated to mobile (the analogue TV spectrum as a start).

The operators will moan and complain, in party to ensure that more spectrum is freed up, and in party to justify their prices.

I switched to GiffGaff a couple of months ago too when I upgraded to my 4S – in terms of value the “full service” operators can’t match it.

They have their own APN too which I think works faster than the standard O2 one – perhaps because O2 is throttling the standard iPhone APN?

But maybe they will be less able to deal with the traffic spike as a MVNO than the main operators will – I guess it depends on the deal they did with O2.

hey hey! i signed up to netflix this evening with my htc flyer. thought id watch a doctor who episode. 45 minutes used about 47MB of my data. feel like i just abused 3’s cell site. but hey… im sure it can cope! time to watch something else.

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