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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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  11. [...] 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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  12. The real issue at hand here is purely financial. Service providers being publicly traded companies can’t afford to just throw more money at the problem only to get smalle returns. Anyone can understand that. (not that it is anyone’s fault…)

    The challenge they are in is that they have not priced their current offerings (and margins their investors have come to expect over the years…) in a manner that reflects the SIGNIFICANTLY increased costs of supporting the kind of usage patterns that the video explosion has created.

    Say what we want but at the end of the day, rational economics always win in the long run and that means consumers will end up paying more as they use more via one means or another. The relationship is not linear as service provider costs continue to go down over time but nevertheless, the consumer will pay more.

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  13. [...] 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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  14. [...] 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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  15. @Stoicho
    I understand your point but “network neutrality” is just not possible. It will stay a great ideal idea. That’s it. And believe me, I’m very sorry to say so.
    It is not compatible with the telecom business which need huge investment on a day basis.

    Nobody talks about site banning, but how to handle traffic priority following the QoS negotiations…

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  16. The issue here is that it’s P2P technology, which pushes the cost of delivery from the originating network to the delivery network. All reports I’ve heard of the iPlayer is that it, like most P2P networks (see Joost) doesn’t work very well due to congestion in the backchannel.

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  17. [...] réseau. Comme le souligne GigaOm, cela coûterait aux fournisseurs d’accès anglais près de $ 2 milliards pour améliorer leur capacité afin de satisfaire la demande. Un tel effort doit-être fait aux [...]

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  18. Lo temevo…ISP vs BBC

    Partendo dal pressupposto che quanto riportato da ArsTechnica e GigaOM sia verosimile, provo a dire la mia sulla questione.
    La fairness sul trattamento dei pacchetti che molti auspicano venga applicata dagli ISP si scontra con la realtà dove esistono pro

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  19. My recent information is that the UK has got 100% provision of 8Mb ADSL from just about all BT’s telephone exchanges. That’s 8Mb from the DLSAM to the consumer’s DSL device. If the ISP’s exploiting BT/OpenReach’s LLU provision are discounted from the discussion then it’s important to remember that everyone else uses BT’s IP connectivity cloud to backhaul from the exchange DSLAMs to the ISP’s networks. I expect that those nets, for the most part, will join straight onto the peering points at LINX etc. So what’s the bottleneck? To me it looks like the backhaul provided from the DSLAMs into the ISP networks that’s part of the wholesale service charged to the ISPs by BT. Most mere mortals suffer contention for that backhaul at 50:1 while paying £15 to £30 a month. To take that to 20:1 the charge rises to about £55. Contention’s fine for browsing the web, audio streams, the occasional 30 seconds of youtube but iPlayer’s demands are a bit more consistent and if a few of your neighbours are using BBC iPlayer, or 4OD, that contention will start to be felt more keenly. The good thing is that the consumer now has a well defined expectation of his monthly broadband subscription and believes he can have the whole Internet for that, nothing less. It’ll be interesting to see who takes the squeeze. Of course, there’s always the option of sticking with Sky+.

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  20. [...] Higginbotham, Wednesday, January 30, 2008 at 6:00 AM PT Comments (0) Regardless of what you believe about the current state of IP networks’ ability to handle online video, delivering video and [...]

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  21. What we need is ‘win-win’ platforms between media owners and telcos.

    A company in New York, MediaMerx, has developed a platform to deliver high quality video over broadband to markets that suffer from international bandwidth bottlenecks.

    ISPs can create customized video players, source content from around the web, add local content and license premium content.

    ISPs and broadband providers can sign up for a trial here: http://www.mediamerx.com/index.php?section=betaprogram

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