By Jane Wakefield

Technology reporter, BBC News



More people are watching video online

Already people are seeing the amount of bandwidth they can use limited by monthly caps and, in the US, operators have just won the right to charge more for bandwidth-hungry services.

With next-generation networks likely to cost billions to roll out, the issue of how operators will make money from them becomes even more pertinent.

Network operators in the US, and increasingly also in the UK, believe that rather than pass all of the costs on to the end user, content providers should also put their hands in their pockets in order to guarantee the best delivery of their services.

But others feel that allowing operators to prioritise certain traffic over other is fundamentally at odds with the free principles of the net which has allowed companies to flourish from very humble beginnings.

Pipe-dreams?

PlusNet offers a service tailored to gamers

"It could be time for a new pricing model," said Simon Gunter, head of strategy at UK ISP Tiscali.

He added: "We have to handle much more video and the question is - how do we square the costs of distributing lots of content? We could look to minimise the costs of distribution and in that the content originators may need to contribute."

Already some operators offer tailored packages.

For example, UK internet service provider PlusNet offers a broadband package aimed just at gamers.

"It offers a better performance. Gamers are assured of a faster gaming service," said Neil Laycock, chief executive of PlusNet.

Going forward he expects more and more consumers to demand a certain quality of service from specific applications such as broadband telephony.

"Net neutrality is an issue no ISP can escape. We're convinced that demand for bandwidth driven by innovative applications will always outstrip the physical and economic supply of network," he said.

"For that reason, net neutrality is a pipe-dream. We believe it is vital to put the customer in control of what takes priority on their line and we're already developing that capability," he said.

Quality of service

The debate to maintain a neutral net has been raging most vehemently across the pond where competition between cable and rival operators is fierce.

In the US network providers such as Verizon and AT&T have effectively already won the right to prioritise the traffic of certain content providers, a power that has horrified net activists.

"The problem with the system in the US is that in order to guarantee one player's content it is prioritised over someone else's" explained Antony Walker, head of the UK's Broadband Stakeholder's Group.

"That is moving away from the basic model of the net that created innovators such as MySpace and YouTube on the basis that all bits of content were equal," he said.

Competition

Could the US learn lessons from the UK broadband market?

The issue in the US is being fought by organisations such as the Open Internet Coalition. Companies with a huge net presence such as Google and Microsoft have also joined the campaign.

The Open Internet Coalition says some companies are employing network management tools to deliberately block file-sharing traffic, irrespective of what files are being shared.

It also accuses companies of blocking content that they feel is too political in nature or is in someway derogatory to them.

For companies such as Operax, which offers the network management tools that allow operators to prioritise traffic, the issue is being blown out of proportion.

"The major arguers for net neutrality say that access to the network will be locked down for commercial advantage but I think that is a myth. There is no evil plan and everyone recognises that a competitive net is a key driver," said Chris Merrick, chief marketing officer with Operax.

The prices that companies such as Verizon - which is investing $18bn in a fibre network to reach huge swathes of the US - are paying to connect people need to be recouped somehow, he argues.

"What people are saying is 'Let's have quality of service for specific services such as voice-over IP and IPTV. Let's allocate resources to make sure they work effectively while still guaranteeing access to the free-for-all internet.'," he said.

Many believe the debate is unlikely to become quite so heated in the UK as it has in the US, largely down to the fact that the UK has a far more competitive market.

"Essentially the issue of net neutrality is about competition. In the US the broadband market operates like a duopoly," said Antony Walker.

Pricier services?

The regulatory landscape in the UK is such that there is far more competition with 60% of homes having a choice of at least four broadband providers.

And Ofcom forces BT to act with so-called "equivalence" so that any services it offers to consumers must also be offered in a wholesale version.

It is a system that the US is looking closely at.

One thing which most commentators agree on is that the cost of rolling out next-generation broadband is unlikely to be passed on to the consumer.

"The question is not whether you can charge more but rather whether you will even be able to charge what you charge today," said Ian Fogg, an analyst with research firm Jupiter.

And whether consumers are going to be accept their content in a series of differently tailored packages is also open to debate, he thinks.

"People are used to the concept that when they pay for broadband they are paying for access to the whole internet, with a choice of websites. Packaging it is going against what the internet is about," he said.