The amazing, imploding ISP business

Not much sympathy for the tubes operators...

Andrew's Mailbag This week I described how amazingly vulnerable much of the British ISP business is. Vulnerable to botnets, hackers or fraudsters? No, nothing so exotic. A few people watching a bit of BBC on the streaming iPlayer may be enough to bring much of the business here to its knees.

(I drew on a post on STL Partners Telco 2.0 blog, who used data published by on the first month's iPlayer - do check them both out).

Some of you might be experiencing a bit of deja vu, here. ISPs rang the alarm some time ago about the impact of iPlayer. We explored the costs of delivering high-definition video over the internet last year here. But this crisis is being precipitated by the low bandwidth, streaming version of iPlayer.

Streamed TV over the internet costs your ISP a penny per viewer per minute. They're obliged to carry it, and there's no additional revenue for them. Which sounds like a mug's game. So what's the answer? STL suggests that the BBC should bear the cost of streaming - but I asked for yours.

A few of you took up the challenge.

First, a dishonourable mention to those that didn't.

I don't know who'll pay (what) exactly, but as a supply system: wifi and swarm?


Sorry, David - that's a Fail.

Instead of pumping it into the black hole that is the £40 billion Olympic debt, they could use some of that money to clean up soot covered London and improve the transport system (by bringing it into this century and widening seats for all passengers who are not stick thin pygmies).

Or - here's another idea. Let Google do what it want's to do and pay for a huge cloud wi-max network so that we no longer need to dig up roads and install optical fibre connected at exchanges by copper wire.

Michael G

Sorry Michael, that's corporate charity, and not really a recipe for future investment.

Really simple – ISPs charge based on usage, ‘x’ gigs a month for £|$x.xx with additional usage, charged at the same rate, added onto next month’s bill – might have some impact on piracy as well since it’s a lot of data you’re spaffing about when you P2P a movie. This is how a lot of web hosting companies already charge; the only difference is that they are serving their users data (to everyone else) whilst ISPs are retrieving that data for their users.

So long as we don’t get ripped off on the initial pricing structure (‘shyeah, right’) this could actually work out better for _most_ people – no more ridiculous “fair usage policies” so even extremely heavy users can download whatever they like (as long as they’re prepared to pay for it) and everyone else might see a slight reduction in their bills since they’re no longer subsidising the heaviest users or a small improvement in latency.

Chris Cheale

I think it's heading that way, Chris. It's odd to think that "unmetered broadband" and flat rate access was so hard fought over the years, yet seems unsustainable now.

Brian Griffin is more explicit:

It means that ISPs will have to offer realistic packages that they can afford to uphold. The ISPs will have to narrow their subsidising model and offer more customised packages. No longer will the unlimited package be sold to everyone, based on the fact that 90% of users will use less than 5GB, and only 3% of users will use over 50GB. Instead, the high users will need to pay a premium for an unlimited package, and the majojrity of users should pay less for a lower usage. It should stop some ISPs cramming too many people onto pipes as their customers will start to notice the slower speeds now that the acerage Joe is downloading/streaming video.

David Tomlinson hasn't forgotten the unmetered campaign at all:

There have been similar stories in the past (so recent, so soon forgotten). Brutal Economics and BT have appeared in the same sentence in the past; (OK, so they didn't use the exact words).

Remember the campaign for unmetered telecommunications (RIP 2001 -, Why metering is wrong ?

David also takes issue with my assertion that "BT, because it operates an end to end service, can also lower costs a little. But not much."

Not according to the experience of the rest of the world with deployment of optical fibre and WDM (GPON and Active Ethernet). Of course copper and the cable architecture are limiting factors. In Korea 100Mb/s (optical) 30,600 won, costs less than 4Mb/s (ADSL) 31,020 won, about 30 USD.

He continues:

Some developments that may have escaped your attention:

1. Moores Law: When applied to networking equipment we have seen a regular doubling of bandwidth every year, of course if your kit is not state of the art you could be several generations behind, and if you are still using copper wire you could still be in the bronze age.]

I'll jump in here. It's not really a technology problem - so doubling bandwidth is neither here nor there. If the operator can't make money, they won't get capital, and the networks won't get built.

2. BT's 21 Century Network, C21.

By 2012 (sooner in many cases) BT should have a backbone capable supporting the 24Mb/s it is proposing deploying to users (ADSL2+) from the exchange.

3. As noted above the cost per bit of bandwidth falls as the capacity rises, so Japan offers 100Mb/s for the same price as 10Mb/s ADSL in Australia (quote above). Of course it is not just lower cost per bit, but as BT have indicated in their FAQ, deploying fibre lowers the cost of maintenance of the whole network.

Telcordia has a report that states this more than covers the cost of deployment in less than a decade (eight years).

Reduced costs, higher bandwidth, that is the reality of FTTH.

David F

No.3 is cited on David "Net Neutrality" Isenberg's blog however, so the source is more evangelical than credible. The citation is also four years old. As we can see from the stagnant deployments since then, reduced op-ex is not compelling enough.

Looks like we're back to square one.

I can see no problems here, the ISP industry chose to capture customers by competing on price - just on price - now they must change; if they're charged by the gigabyte they should hand in on, as really they always should have.

The only issue I can see is the industries misuse of the language; "unlimited" means what it says as does "free". There is a word for using these words in any other way, it is "lying". This approach has sadly conditioned customers to believe in Santa, the Tooth Fairy and an eternal free lunch. Nearly all the blame here is with the ISPs and, I suspect, their evil wing; the marketing departments where one would hope the P45s would land first (unlikely).

In the end I am more than happy to be metered, especially if it helps in network investments. Those that aren't happy about it are what's called in the real (capitalist) world "customers not worth having".

Steve Hardy

So is it IP TV... or bust?

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