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Update: British Telecom is quickly distancing itself away from the BBC iPlayer bandwidth demand controversy, reports The Register. “Whilst we’ve been fingered as ‘part of the gang’ in certain press reports, BT is not complaining about or discussing the implications of iPlayer with the BBC.” BBC’s […]

Update: British Telecom is quickly distancing itself away from the BBC iPlayer bandwidth demand controversy, reports The Register.

“Whilst we’ve been fingered as ‘part of the gang’ in certain press reports, BT is not complaining about or discussing the implications of iPlayer with the BBC.”

BBC’s controversial iPlayer P2P video client is drawing the ire of Internet service providers in UK, many of them including Tiscali and Carphone Warehouse threatening to either use traffic shaping or boycott the service all together. Their reasons: BBC’s web video service could bring down their networks.

[qi:004] Their arguments sound hollow — on one hand they urge subscribers to sign-up for faster download plans, and pay premium prices. And yet, they complain when subscribers finally find an application that puts their web speed to work.

The reason the broadband ISPs in UK are bemoaning the BBC iPlayer is because it can cost up to $2 billion to upgrade the networks, and they don’t seem to want to spend that money. And that would eat into their gigantic profit margins.

This is a situation not unique to United Kingdom. Here in the US it is a much-debated issue as well. Every so often someone or the other comes up with a report that talks about enormous strain web video puts on the network, only to be refuted later. And if web video does put strain on their infrastructure, upgrading the network should be viewed as cost of doing business.

What are they charging us $45 a month for? The bottom line is that broadband service providers came up with the current pricing plans to lure customers to sign-up for their service. They didn’t count on the web video explosion, which means now they have to spend money and upgrade their networks to keep customers’ happy.

  1. It’s not better in France! Neuf Telecom, one of the broadband service providers, estimates that their subscribers use too much bandwidth on DailyMotion. They seem to have limited the access to the video sharing website slowering the download speed or with no download at all…

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  2. UK broadband providers’ profit margins are hardly “gigantic”… Carphone’s profits fell 16% last year, mostly due to £72m losses from the upfront investment in local loop unbundling while simultaneously offering one of the cheapest telecoms packages in the UK (even if it’s not as “free” as they advertise). I’m not condoning the behaviour, and doubtless their broadband business will be more profitable when they’ve got more people on their own network, but in this context it’s not that surprising. UK broadband is a bloodbath right now.

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  3. Only revenue sharing may solve the issue.

    ISPs are seen as the bad guys here, but frankly, ISPs put billions to upgrade and maintain their networks (wireless, wired, fiber, submarine cables), and in exchange, their revenues go down.

    The whole telecom industry survives thanks to telecom operators, and everybody wants them dead. What will be the conclusion?

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  4. [...] Om Malik:  Their arguments sound hollow — on one hand they urge subscribers to sign-up for faster download plans, and pay premium prices. And yet, they complain when subscribers finally find an application that puts their web speed to work.   [...]

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  5. There has been the same problem in France between “Neuf cegetel” and dailymotion.com

    Sorry it’s in french :

    http://fr.techcrunch.com/2007/08/11/vers-un-duel-neufdailymotion-voire-plus/

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  6. The only place true broadband exists seems to be between customer and ISP. In my case that means I have true, honest to goodness fast, fast broadband between my home and Comcast, but for everything else…not so much.

    I do not reasonably expect Comcast to allow me to cancel ~$100/mo. worth of cable TV content so that I can “steal it” for free via the $45 I pay for broadband internet and I certainly don’t expect them to increase bandwidth between Comcast and the Internet to improve that experience.

    I do expect that sooner or later (ok, later) they will try to charge me $10 a month to give me similar services that really are broadband (between Comcast and my house) and won’t require any infrastructure upgrades.

    Some ISPs absolutely did count on the Web video explosion (which has not even remotely occurred yet), but with the reasonable expectation that they could profit from it.

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  7. The ISPs have known that the internet video explosion has been coming for a few years but what they don’t want to hurt the IPTV services they also want to provide down their pipes .

    Its the same lame excuse they have had regarding p2p for years and they cried about VOIP also Boo Hoo.

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  8. [...] when there isn’t a lot to do with it. The ISPs’ “arguments sound hollow,” writes Om Malik. “On one hand they urge subscribers to sign up for faster download plans, and pay premium [...]

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  9. @TTR
    “revenue sharing” equals death of “network neutrality” equals death of many things including one small: internet.

    They should just stop overselling their traffic, buy more traffic, raise prices or whatever LEGAL business decision they find appropriate. Banning sites is legal maybe just in China.

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  10. [...] increase revenue without increasing network capacity. As GigaOm cites, it could cost UK ISPs up to $2 billion to upgrade their capacity to match increasing [...]

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