Piracy Is Killing Capacity – Sandvine

Pirated set-top boxes consume more than a terabyte of network bandwidth every month to deliver content that no one is watching, according to a new report from networking technology vendor Sandvine Inc. Not only are these service affecting subscription of legal services and costing the industry billions, they are also using up "phantom bandwidth" -- bandwidth dedicated to services that continue streaming, even though no one is watching.

According to the company's 2017 Global Internet Phenomena report, released earlier this week, illegal streaming services are earning $840 million from their subscribers. These services, typically priced at $10 per month, have an estimated 6.5% of north American households as subscribers. Sandvine estimates that costs the video industry $4.2 billion in lost revenue.

A recent Nagra study found that if one in every four people currently accessing video illegally were to pay for it, the industry would generate an additional $7 billion in revenue. That's a worldwide figure though, while Sandvine has focused just on North America.

Both estimates seem to assume that if these pirated options didn't exist, people would sign up for pay-TV services. That's probably valid for some people, but perhaps not for others. Basically, it is a very difficult variable to account for -- some might read a book or go outside if they had no TV, for example. (Only joking -- of course they wouldn't!)

In any case, the lost revenue is only half the story. Sandvine also estimates that operators are losing out on network capacity due to piracy. This is because legitimate services such as Netflix build technology into their client apps to stop streaming after a set period if the viewer doesn't act (i.e., change channels, raise volume, pause live TV etc.). That's to stop streaming at times when no one is watching anymore but hasn't turned off the set-top box, or has walked away, or dozed off in front of the TV. It helps network operators avoid wasting bandwidth, but also helps streaming services manage their own transit and other content delivery costs.

Pirated platforms do not have a similar automatic streaming kill switch. They keep streaming until someone actually turns the set-top box off. This results in what Sandvine calls "phantom bandwidth" -- data that is transmitted but not viewed, and wastes increasingly precious network bandwidth. The vendor estimates that a typical pirated stream uses up 4000 Kbit/s, and if the user doesn't turn off the set-top box, that box will stream video 24/7. Over the course of a month, that adds up to an extra 1.1TB.

Ironically, this hurts the pirates too -- they are paying streaming and content delivery costs for content no one is watching. But it is more likely to hurt operators trying to manage bandwidth and consumers on fixed data plans.

Put bluntly, new technology is facilitating piracy, with major sporting events most likely to be streamed illegally. For example, video content protection provider Irdeto Access B.V. identified 239 illegal streamers that reached almost 3 million viewers for the highly anticipated boxing match between Floyd Mayweather Jr. and UFC champion Conor McGregor this August. Two-thirds came via traditional pirate streaming websites, but the ability to live stream via social media outlets resulted in 165 of those streamers originating off Facebook, YouTube, Periscope, Twitch and others. Legitimate subscribers just set their phone up in front of their TV and live streamed the entire fight. It's that easy. (See Showtime Punched for Sloppy Streaming.)

But the even greater danger is the spread of illegal set-top boxes, which according to Sandvine, are responsible for 95% of illegal streaming views. A recent UK study pulling together data and analysis from a number of sources including the UK's Intellectual Property Office (IPO), FACT, City of London Police, Police Intellectual Property Crime Unit (PIPCU), Police Scotland and Entura International estimated that more than 1 million illegal set-top boxes had been sold in the UK in the previous two years.

The providers of these boxes and services aren't just picking up illegal subscriptions, they are also using banner ads and pop-ups to generate new advertising revenues, and providing a platform for malware and scams. Some charge users subscription fees for channels they already pay for, or work with others to download malware on sites or even hijack customers' computers. The report states that these result in payments of "tens of millions to hundreds of millions of pounds" every year. (See 1 Million Pirate Set-Top Boxes Sold in the UK.)

Just pay your TV bills, folks. You'll be better off in the long run.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation