1. 256Kbps is the minimum
connection required. At this bitrate the quality would be nigh on terrible. As most home connections have 256Kbps at present it would a bottleneck for most people. Also, to enjoy streamin video, really you need 512Kbps or more for a decent quality stream.
2. Data transfer limits. Nowadays, so many companies are capping the amount of data their users can transfer, that these caps would make the service impractical. Also, the more services like this are used, the more that companies will have to cap users.
All in all, its a very good concept in theory, but put into practice in current industry conditions, it wont work. Maybe in the future it will have more of a chance, but now its not so good a chance.
It will be interesting to see how it goes though