iPlayer Causes ISP Net Neutrality Backlash in UK

IanFogg | August 13, 2007, 12:31 PM

Ms Turner [CEO, Tiscali UK] said that unless they could agree a strategy with the BBC to share network costs, Tiscali would have to restrict users’ access to the iPlayer.

A senior insider at BT added: "It is certainly a live debate between ISPs [internet service providers] and the BBC. If the BBC gets the numbers it wants for iPlayer then network capacity could become an issue."

I don't usually do this, but I told you.

(and more background: iPlayer and ISPs, Broadband as a Trojan Horse for ISPs, or broadband quality and net neutrality, more here on ISP broadband revenues).

What iPlayer, 4oD, Joost, Babelgum and a number of other peer to peer content distribution networks are doing in essence is: they are lowering the cost of online video distribution by transferring a large part of that cost from the publisher onto the ISP (or on to the consumer if the consumer is on a metered broadband package).

If ISPs had healthy margins for broadband, this wouldn't matter anything like as much. But European consumers are highly price sensitive on broadband access, so ISP margins are poor. ISPs have done an atrocious job of explaining why a consumer should pay more for a higher quality broadband service.

Plus, most large ISPs now have their own TV services. So, these Internet delivered TV offers both push up ISPs' bandwidth and network costs, and they potentially undermine the ISPs' own TV services. So ISPs vocally use the issue of higher costs, while ISPs are also concerned about revenue protection for their TV services.

Media coverage on the views of BT, Carphone Warehouse and Tiscali (three of the UK's largest ISPs):
- FT:- ISPs warn BBC over new iPlayer service.
- Mail on Sunday:- Pay up if you jam the web, BBC warned.
- Independent on Sunday:- Internet groups warn BBC over iPlayer plans

The full impacts of all of this are still evolving. Clients must read our Net Neutrality in Europe report now, especially content owners, rich media/video aggregators, advertisers seeking to profit from this move to Internet TV distribution, and ISPs.