15 June 2009

BT Talks Up Plans to Charge Video Providers

15 06 2009 - BT, the largest broadband provider in the UK, has said it plans to charge video content providers for the amount of bandwidth they consume on BT’s network, according to a story in Thursday’s Financial Times.

The paper quotes John Petter, managing director of BT Retail’s consumer business, saying, “We can’t give the content providers a completely free ride and continue to give customers the [service] they want at the price they expect.”

BT last week was caught throttling connections to the BBC iPlayer to less than 1 megabyte per second between the hours of 5:00 p.m. and midnight for subscribers of its 8 Mbps service. That’s permitted under its terms of service, but it looks like BT wants more — from content providers like YouTube or Hulu. I don’t blame it. In any competitive market, subscribers would flee such prohibitive limits once they realized what was happening, leaving BT with lowered revenue. It would need to make that up somehow.

So now Petter is pulling out the usual ISP trope about content providers  “developing very profitable business models” using BT networks, and they should help subsidize the cost of the bandwidth the video content consumes. I’ve heard this from just about every ISP I’ve spoken with.

However, the content providers do pay for their bandwidth, as do the customers of the ISP who consume it. In many cases, video providers also contract with content delivery networks, which can help ISPs reduce the burden of the video files on the last-mile network connecting the consumer’s home to the ISP’s cable plant or central office. If video costs the ISP “many millions” as Petter tells the FT, then it should raise prices somewhere along the line rather than go into dangerous territory that sounds like  trading money for access:

He [Petter] said that the quid pro quo of payment from content owners might be guarantees of picture quality.

Maybe BT is all talk, but many ISPs would love to see a company get away with this, so they can try the same thing.

Source: gigaom

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