A leading market research company iSuppli, has said that AT&T’s recent decision to setup Capping Its Bandwidth and charge an extra fees for the heavy data usage on wireless devices could present a barrier to upcoming competition from Internet TV.

AT&T stopped its phone plan which has allowed subscribers unlimited Internet access. AT&T is seeking to limit the heavy data usage of smart phones such as Apple iPhone, and the iPad tablet. iSuppli has said that “The caps will make it difficult for any high-quality streaming application hoping to become a true TV substitute to get off the ground without the support of wireless operators”.

“By implementing caps now that don’t impinge on the way subscribers use the Internet today, cable and telco operators are able to create for themselves an advantageous situation,” William Kidd, director and principal analyst for financial services at iSuppli, said. “Under these circumstances, emerging media competitors must work more directly with the network owners before getting their services off the ground—as opposed to around them, as they may have previously hoped.”

New broadband subscribers around the world are expected to rise by 63.5 million in 2010, thats a rise of 8.4% when compared to a additional subscribers of around 58.5 million in 2009, this confirms the ongoing strengths of the broadband access market.

“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,” Kidd said. “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.”

Although the broadband caps help to correctly price an access service for the small percentage of subscribers that take up a disproportionate share of network traffic usually through their heavy use of data streaming media presents unknown risks.

The vast majority of data subscribers on a broadband network, caps will only become relevant if users viewed low quality streaming media say, a 200kbps stream on a wireless device for three hours, or if a standard def TV signal on a wired network was streamed for approximately 25 hours. By the same token, streaming a high-definition TV signal could put a user in cap trouble in just 7 hours on the wired network of Comcast., the largest U.S. cable operator and Internet service provider for the home.

Additionally, consumers who consider the Internet as a true substitute for their big-screen TV, content would need to be comparable in both technical quality and entertainment value. And to achieve the same level of value, such content necessarily would be extremely high in bandwidth.

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