BBC iPlayer and the U.K. ISP bandwidth row

17 08 2007

So a typical download of a TV programme (of unspecified duration) costs U.K. ISPs £0.67 at peak times, according to Jeremy Penston on The Register, a site which has selflessly devoted itself to BBC iPlayer-bashing in recent weeks — given that BAA, the operator of London’s Heathrow, Gatwick and Stansted airports is outside its reporting remit, probably understandable, given it’s silly season.

While the piece offers a more conciliatory slant on the BBC’s position, highlighting the fact that ISPs with unrealistically-tighter margins are feeling the greatest squeeze, it neglects to mention that the recently-beta-launched iPlayer is but a drop in the ocean of online video usage.

YouTube’s figures grow exponentially month-on-month, for every YouTube there are 100s of lookey-likeys, alongside BBC iPlayer there are also dozens of video download services (most of which got to market before); so why is the BBC’s product singularly responsible for all of this greater usage?

While a major marketing campaign to promote the iPlayer once it fully launches is inevitable, together with the halo effect of other services which don’t have access to the kind of on-air time or impact at the BBC’s disposal, just take a look at the chart below, illustrating daily reach over a one month period: the flatline at the bottom is one of the world’s most popular websites (bbc.co.uk; which includes BBC iPlayer), barely registering on the radar. The one at the top is another of the world’s most popular websites 🙂 YouTube…

graph.png

Then there’s the £0.67 figure itself: where does it come from? Regulator Ofcom’s earlier estimates were based on an average user downloading 13 x 40-minute programmes over a typical month. Even at peak times of consumption its estimate was that this would cost no more than £0.50 per hour, per user.

But the clincher is that the average iPlayer user (take as a generic for average user of a video downloads service) would typically cost an ISP £0.24 per hour of usage. That’s tough on operators like Carphone Warehouse and Tiscali, who have chosen to underprice competitors, but perhaps they should be pricing in the exponential growth of other online video, or targeting the offer at market segments which are less likely to reach even average levels of consumption (e.g. research has demonstrated that the 55+ market, an ever-more-active online usage segment, is least likely to warm to the idea of consuming big files, like video downloads).

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ISPs: we know what you’re doing, and you’ll pay for it

8 08 2007

Packet sniffing may sound like something which goes on in the backrooms of less salubrious nightclubs, but it’s use is becoming increasingly commonplace among ISPs who want to build a detailed, real-time picture of how customers are using their networks, in order to manage demand; as well as to turn down the tap or surcharge heavier users.

In a more sinister twist, the same technology is also being used to comply with U.S. government-ordered internet wiretaps and by the Saudi Arabian authorities to keep a watchful eye on what its citizens are doing online.

By far the most comprehensive and accessible piece I’ve read on the subject so far is this one by Nate Anderson, over on ars technica. Recommended reading.





Of minnows, big ponds and wonky economics

3 08 2007

More consolidation among U.K. ISPs… Three weeks ago it was Tiscali’s £210 million acquisition of Pipex which turned heads in the City. While at the beginning of July and less likely to register as a big money deal, but noteworthy given who one of the players is, BT bagged small ISP Brightview Group for £15.8 million.

So if the Tiscali / Pipex deal was about extending reach (to 55% of the U.K. population) and unbundling more local exchanges, then what’s the motive behind the BT / Brightview deal? If both were based on subscriber numbers alone, Tiscali values 1.8 million Pipex customers at less than a penny each, while BT thinks Brightview’s 62,000 customers are worth a whopping £254 each.

Arguably, BT has purchased a relatively upmarket subscriber base: Brightview is a white label ISP for retailers Waitrose and John Lewis, alongside its own brands, Madasafish and Global Internet.

Reuters quotes Bridgewell analyst Dan Gardiner, who said the deal highlighted BT’s consolidation strategy within the ISP market of focusing on small, bolt on acquisitions of high quality customer bases rather than mass market players.

Expect lots more of this over the coming months as smaller, independent operators struggle to maintain margins for a product which has been reduced to mere commodity.





Analyst: TV downloads ‘use underhand tactics’

30 07 2007

So says Jupiter Media broadband analyst Mike Fogg, quoted in The Guardian today.

Mr Fogg warns that new U.K. download services such as BBC iPlayer, 4oD and Sky Anytime use [the same Kontiki] software which continues to upload downloaded file fragments in the background, even though the requested piece of content may already have finished downloading. “Many will notice that their internet connections may be running slower, but will not necessarily know why,” the sage of Jupiter adds.

Welcome to the wonderful world of peer-to-peer, Mr Fogg, it’s the way the technology works. You get something and act as partial onward distributor for others who may want the same thing. Slower connection speeds could as attributable to ISPs throttling speeds for heavier users, as it is to the Kontiki app. itself.

The analyst may have a point though when it comes to transparency from the content providers themselves: information on how to turn the Kontiki app. off, however, would be counter-productive as it reduces the available pool of onward distributors.

But then again, as he also observes: “Other peer-to-peer programs such as Skype and Joost [coincidentally from the same people] – which do not behave in this way – have come from people who understand how the internet works… These guys [BBC, Channel 4, Sky] are broadcasters and don’t necessarily have the same understanding.”

In a not entirely unrelated development, New Media Markets [sorry, subscription only] last week reported that the U.K.’s Virgin Media is to cap connection speeds for heavier users at time of peak demand (4pm-12 midnight) across its entire network, following successful trials earlier this year. A user on a 20 Mbit/sec contract exceeding a 3GB download threshold, for example, would typically have the tap turned down by 5 Mbit / sec. The restriction remains in place for four hours.

Nothing particularly novel about turning the tap up and down, it’s common practice by U.K. ISPs to help manage capacity. What is new is the end of Virgin Media’s truly ‘unlimited’ broadband offer, a U.S.P in the U.K. consumer broadband sector (at least for the price). On balance, p2p traffic figures do bear out that Virgin has a disproportionate number of heavier users vs. other U.K. ISPs. But speaking of transparency, how are Virgin proposing to announce this to customers?