An interview with OnLive CEO Steve Perlman on OnLiveFans.com discusses the possible impact ISP bandwidth caps could have on OnLive's streaming games service. He seems pretty blasé about this, though DSLReports notes that Netflix also whistled past this graveyard in the past before they ended up having worse problems with caps than Bababooey (thanks Ant). Here's a bit of what Perlman says about this:

“I think that the ISPs have these bandwidth caps, number 1, and they enforce them; some of them enforce them more strictly than others, but also I think some of them don’t enforce them if they see it not happening. They don’t feel like the person is really abusing their network. If they see that it’s a normal user, they are going to have normal patterns of usage, they don’t want to lose you as a customer. I think it just hasn’t come up.”

“The other thing you got to realize, is that the bandwidth requirements for OnLive are actually going down because as our technology improves, the algorithm improves, our bandwidth requirements for a given resolution TV is less. ISP bandwidth keeps going up, and bandwidth caps will keep going up. In the long term, it’s not going to be something anyone even thinks about.”