BT suggests a charge for video content
Thursday 11 June 2009 10:59:06 by Andrew Ferguson

Video over an Internet connection is hardly new, back in the dark ages of 2000 there were places where 300Kbps video streams could be found. In 2009 we now have a myriad of totally legal video sources, some in the UK and some hosted abroad, offering video at a wide range of qualities.

BT according to the Financial Times is attempting to call an end to the 'free ride' that it perceives video websites have had. The FT article specifically mentions the BBC iPlayer and YouTube, but there are many other sites offering video which, while not as massive, still contribute to the peak time traffic load.

"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"

John Petter, managing director of BT Retail's consumer business

It seems BT has seen what it feels are very profitable business models for delivering content to its BT Total customers and now feels it deserves some of this profit. This seems an odd stance given the presence of BT Vision which surely should be popular to BT customers and generate profit for BT, unless customers are finding content they prefer or of better quality elsewhere.

The FT article appears to be the next round in the ongoing BT Option 1 throttling war of words, which we first covered in February 2009. The BT website still claims that Option 1 is good for 25 hours of iPlayer content, with no direct link to the throttle condition. On the product page description of the 10GB allowance of BT Total Option 1, they claim that Option 1 is best for:

• Up to 8Mb download speeds
• Wireless broadband throughout your home
• Internet surfing and emailing
• Downloading 2,500 music files, 14 videos or streaming 25 hours of iPlayer every month

If BT Retail is finding the use of video streaming is too high, perhaps the product descriptions should change to emphasis that customers might be better off on a more expensive product. Billing the content providers will be a very messy affair, and in the case of the BBC could see them deciding to firewall the BT IP block rather than pay the money from the licence fee.

One serious side effect if BT Retail was to create a network where the provider pays for carriage and the consumer pays to view, is that the consumer may look for the video from other sources, such as downloads from websites or peer-to-peer networks, thus creating an even larger problem than there is now with peer-to-peer. Of course providers can throttle peer to peer (BT Retail does already) and given the legal status of much of the content, people do not complain en-masse.

The crux of the matter behind all this, is that the cost to carry a megabit of data is high for BT Retail in comparison to the costs Sky, O2 and other LLU operators have on their own networks. This is a deliberate situation set-up by Ofcom to ensure retail competition in the market, prices are due to reduce slowly as the 21CN network comes online, but currently the reduction in cost per megabit does not appear to equal the rising demand for bandwidth at peak times.

Broadband providers have generally promised us the UK public a lot and got us used to low prices. The question is will we, as we make broadband a key part of home entertainment, be willing to pay more if we don't accept that networks may become slower at peak times, or the amount of legal content will decrease as the content provider makes up the short fall in costs?