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Who's going to pay for the internet?

Posted on 12 Mar 2009 at 10:26

Quite what the licence payers - barred from top-quality streams because they have a physically poor ADSL connection - and the BBC Trust would have to say on the subject is another matter, but broadband subscribers are already receiving different levels of service depending on how much they're willing to pay. Indeed, Virgin says that more then half of new subscribers are taking "premium services of 10Mbits/sec or more, compared with 20% a year ago".

The inequality in bandwidth costs could also impact consumer decisions on how they receive broadband or television in future, especially if ISPs pass on higher costs to customers on expensive delivery networks. "In the UK, there are three classes of ISP delivery networks: cable, LLU [Local Loop Unbundled] and IPstream," Rose said in an interview with the European Broadcasting Union (EBU). "The cost of reaching the end user with cable is very low. In the case of LLU, the ISPs invested a lot of money in equipment in the local exchange, resulting in a very low cost-per-bit. The third class, so-called IPstream, is a rented bandwidth from BT Wholesale.

"For cable and LLU the cost is relatively low, while for IPstream the cost of bandwidth is very high," said Rose. "Virgin Media is happy with the iPlayer and higher bandwidth consumption. Other ISPs that offer an IPstream service are less happy because the iPlayer traffic is costing them more."

Finding new ways to pay for all this higher-speed bandwidth will be critical for all web constituents, and ISPs will have to address issues surrounding quality of service before the web is seen as a viable paid-distribution mode. The quality of stream is critical to getting premium content providers such as the Hollywood studios on board. "Warner is happy to use a download model but not happy with streaming, because there's no quality-of-service guarantee," said Barry Flynn, principal consultant at television technology specialist Farncombe Technology. "As bandwidth and compression advances then they could give a QoS guarantee, then there's the basis of business model; you pay £2.95 and some of the money goes to Sky or your ISP, and some to the studio."

In this case, neither the ISP or the content creator pays for the extra bandwidth, you do.

Delivery dilemmas

One solution to managing the tidal wave of video content and reducing costs for both business and consumers is to move the content from central servers out into the ISP networks by "edge caching". The theory is that bandwidth-heavy content is stored nearer to the potential downloaders, so traffic doesn't need to be piped around the world every time someone in Basildon requests a stream from the YouTube servers in California.

In theory, it should offer savings for both ISPs and content providers (although set-up costs can be high), and mean faster access times for consumers. However, putting expensive servers at strategic nodes around the country is unpopular with critics, who claim it gives large players an unfair advantage.

Google recently announced edge-caching plans for speedy delivery of video, but came under fire from critics claiming the concept threatened net neutrality - the idea that every bit is treated equally and without privilege. Google denies the charge. "Some critics have questioned whether improving web performance through edge caching violates the concept of network neutrality," said Richard Whitt, Google's Washington telecom and media counsel, in a statement. "This myth is based on a misunderstanding of the way in which the open internet works.