Broadband boss: 'The end of freeloading is nigh'
There's no such thing as a freetard's lunch
The telecomms industry is in a Mexican stand-off and we'll have to pay for the data we use. So reckons David Williams, the outspoken chief executive of broadband-by-satellite outfit the Avanti Group.
Williams had an interesting letter in the FT yesterday castigating "content free loaders". So I gave him a call.
Williams' concern isn't actually pirates, but the bigger question of who pays for their free lunches.
"All-you-can-eat will disappear, I am 100 per cent sure of that," he predicts, with operators quietly creating tiered pricing structures they have yet to unveil.
So here's a summary of what he said:
"Neither consumers or providers are bearing the cost. Telecomms companies have set up tariffs to download what is effectively an unlimited amount of data. Those all-you-can-eat tariffs were set up on the basis of how much consumers would use; few expected to reach those so soon," he says.
"So it's a Mexican Stand Off. If a market has four operators, and one introduces charging by data, then the others might have a short-term opportunity to criticise them, but they will follow in the end."
Here's how he explains the maths.
A typical family watches 28 hours of TV, mostly by FreeView or Sky. The video is encoded at 1.5Mbit/s. iPlayer is encoded at about the same rate. If that was transmitted over IP, and the unicast protocols we use today, that would be around 81GB of data a month. Using the current BT pricing (where £15.99 buys you 10GB) then that would cost the family around £87 per month, after they'd paid their excess charges, and before they'd done any web surfing, shopping or downloading music.
If they were watching in HD - as around two million households are, mostly on Sky - then the figure would be 145GB or £600 per month at current rates.
It's not going to happen - at least not at these prices.
Williams says the cost incurred is moving data from the local loop to the backbone; the backbone itself is inexpensive.
"I'm long on any telcomms company that owns transmission infrastructure - that includes mobile operators - they'll generate significant returns."
Virgin could be a winner here, he predicts because it has "fantastic economics for the transfer of video over short distances. They already have the street cabinet infrastructure."
The only way it will change, he reckons, is if somebody throws £50bn at the broadband infrastructure - which nobody's got - and people put up with their roads being dug up for five years.
"There's nothing magic about telecomms that will change that. If we want higher capacity data networks, a lot of capital has to be raised. For that to happen, there has to be a business plan that shows there will be capital returns on the investment. Which means the consumer has to pay for it. But if they're confronted with bill rises of 500 per cent, then why would a family bother?"
Your thoughts are welcome. ®
Gas main replacement
National Grid are currently digging up a large part of Biggleswade, Bedfordshire to replace the old cast-iron gas main (and causing major traffic chaos in the process!). You would think that whilst they are doing that, it would be sensible to throw in some fibre-optics at the same time. That kind of joined up thinking would see large swathes of the country flooded with street-level fibre within a few years.
OK, you can pick yourselves up off the floor now and stop laughing!
I've heard of these wonderful things called airwaves. You can broadcast a TV signal, basically for free, and people can recieve it. Oh, if only there were a way for thse broadcast signals to be displayed on a TV without having to go through the Internet...
It's completely stupid to stream TV through the Internet until we have seriously new ways of delivering data. The cost is just horrendous. We can have broadcast towers and video recorders.
OK, I like iPlayer, but tell me it isn't really decadent, and there is some way that all TV watching can move to the Internet without a massive investment in infrastructure. If we are talking £50bn (I would say that's low-balling it) then per household that is £2500, assuming everyone has it. If it only goes to half of households, then we're talking £5000 *each household*. Do you have that money to get iPlayer rather than just a normal TV?
Leave scheduled TV and Radio where it is, carried by broadcast RF - and preferrably on the existing analogue channels and FM. This works perfectly well and is a cheap transport method. In addition, these require much less energy to operate than the fancy new all-digital crap being rammed down our throats. Can you say DAB? This should be kept in mind: we'll need all the power savings we can get when the current crop of generators start to shut down around 2015 and there are no replacements ready to take over.
Keep the much more expensive digital networks for the non-broadcast and interactive data transfers its currently used for, and maybe consider charging both source and consumer for the bandwidth they actually use rather than the current capped allocation.
Of course, this means that all those seeking to make money by flogging off the broadcast channels and their fanbois running round begging for crumbs (Mandy, I'm looking at you) won't make all that lovely wonga but do the rest of us really care?