Netflix Sucks…Our Bandwidth Dry

The streaming video giant may have lost 800K subscribers, but that hasn't stopped its remaining users from devouring a ridiculous amount of bandwidth. At roughly two gigs for an HD movie stream, it's no surprise that Netflix NFLX consumes 32.69% of U.S. bandwidth at peak times. The news comes from Business Insider, which cites a revealing report by Sandvine, an “intelligent broadband networks” company that specializes in policy control solutions. “This report, the tenth in an ongoing series of comprehensive traffic analysis studies first issued in 2002, identifies and confirms a number of trends that will significantly shape the Internet landscape and all its stakeholders,” Sandvine wrote on its site. “The Global Internet Phenomena Report: Fall 2011 is based on September 2011 Internet traffic statistics voluntarily submitted by a representative cross-section of Sandvine's customer base, which includes communications service providers in more than 85 countries, who collectively serve hundreds of millions of end subscribers.” Sandvine said that its overall study examined Internet traffic in September 2011 from five regions:

• North America
• Latin America
• Europe
• Asia-Pacific
• Africa

This is an interesting development considering my concerns that a data-hogging broadband cable service from Apple AAPL could inspire Comcast CMCSA to raise its monthly Internet rates and/or impose new penalties for users who go over the data cap. With Netflix users already at the peak of data consumption, I'm surprised Comcast hasn't already taken action. ACTION ITEMS: Bullish: Those who believe that Netflix will increase the value of broadband Internet providers may want to consider the following trades:

• Comcast is the obvious winner here.
• Time Warner Cable TWC, AT&T T, DirecTV DTV, Verizon VZ, and Dish Network DISH may also benefit from our ever-increasing Netflix data demands.

Bearish: On the other hand, if you don't think broadband providers will use this as an excuse to raise their rates, then you might want to consider this alternative:

• In the aforementioned report, YouTube came in third for broadband data usage (behind Netflix at #1 and a vague listing for HTTP at #2). Unlike Netflix, Google GOOG isn't in the toilet. YouTube is booming, and Google may soon have what it takes to overtake Netflix with a Hulu acquisition. (Even without Hulu, Google is still very strong.)

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