Industry opinion The last month has seen substantial media coverage of the latest row that has erupted between BT Retail and a number of content providers including the BBC. However, we think a fundamental issue is being missed. Instead of BT Retail focusing attention on the BBC et al to contribute to its increasing costs, it should instead be tackling its wholesale provider to reduce the price of bandwidth. Here I explain why this has a wider significance to ISPs and the industry as a whole.

June 2009 proved to be a turbulent month for two of the UK’s industry giants, BT and the BBC. The month began with reports that BT was throttling its option 1 customers’ connections to the BBC’s iPlayer service (and other bandwidth hungry services including YouTube) during peak times, reducing speeds to less than 1Mbps on the advertised up to 8Mbps service.

This, according to the BBC, notably affected the iPlayer’s service quality. The argument escalated when the BBC claimed that BT’s advertising of its option 1 package shied away from detailing this level of throttling. Instead it states that the package is capable of 25 hours of iPlayer streaming and only refers to the throttling in its FUP.

By mid-June the plot thickened with a request from BT for content providers to pay towards the cost of delivering customers to their sites, claiming that the “free ride for content providers was over”.

“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,” said John Petter, managing director of BT Retail’s consumer business.

Petter continued to explain that the BBC iPlayer was just one of the services involved in this and that the issue was much wider reaching. He continued to explain that an increasing number of content providers were developing profitable business models that are delivered across BT’s network and that they should therefore be prepared to contribute to the costs they were generating for BT Retail.

Missing the point

We disagree. Surely the duty of delivering traffic to such sites falls to the network provider and therefore so should the costs. We think that instead of attempting to consume a chunk of these highly successful business models’ profits, BT Retail should instead concentrate on re-developing its own business models to more effectively satisfy customers’ increasing demand for bandwidth.

If its current packages fail to profitably satisfy existing bandwidth demand now, how does it expect to cope as demand inevitably increases? As technology develops further; as access becomes more widespread (especially with the introduction of the USC, or universal service commitment, mandating 100 per cent UK broadband coverage with speeds of at least 2Mbps by 2012); and as demand for such services grows, ISPs are finding it more difficult to deliver products that are competitive.

Therefore we believe the argument between BT Retail and the BBC is missing the point. We think the real issue lies with the wholesale provider. Instead of focusing its attention on the content providers we think BT Retail and other affected ISPs should be turning their attention to their wholesale provider, the primary one being BT Wholesale (BTW).

As demand for bandwidth inevitably continues to grow, surely it is time for BTW to rethink its existing wholesale bandwidth pricing strategies which appear to be stifling the current market. Basic economics teaches us that, when demand is high and growing, providing bandwidth at lower prices will allow it to generate profit while enabling ISPs to meet customers’ needs at a competitive price.. Surely given its position in the market, BT Retail is best placed to challenge BTW to reduce its bandwidth pricing.

By late June the war of words had received substantial coverage and Out-law.com became involved, launching an investigation into the legal standing of ISPs blocking access to content providers’ sites. The findings were surprising - there is very little protection in the UK to stop this practice. Basically, as long as the network operator covers the practice in its terms and conditions little can be done to stop them. This worrying prospect could spell the end for net neutrality.

Net neutrality is a fundamental principal of the Internet that keeps the Internet uncensored and provides an equal experience to all users. By enabling network providers to block access, in this case to content providers (such as BBC iPlayer) that refuse to pay towards the delivery of the traffic to their site, that particular ISP’s customers (BT Retail customers) could find that they are unable to access that service. If this path is taken a lack of net neutrality could lead to a highly censored Internet and a tiered approach to access i.e. the more you pay the more you can do.

The impact of the BBC’s iPlayer on ISPs’ networks has been raging since the service was launched. In fact BT Retail is just the latest to join a number of other providers that have already complained that the service is having a negative effect on their network. Even the call for content providers to foot the bill is not new or unique to BT Retail - just yesterday media coverage shows Tiscali have decided to make a similar announcement.

Reports suggest that in reality, the iPlayer accounts for approximately seven per cent of peak UK Internet usage and there are many other applications delivering much larger amounts of bandwidth demand. But even if it was higher and the networks were struggling to cope as they suggest, surely the solution is not to punish the development of innovative and popular new services.

If ISPs insist on retaining their existing packages which are often based on outdated usage habits is it so surprising that they are struggling to accommodate the additional costs? Now is the time to adapt and evolve. To develop new broadband packages that cater for the inevitably increasing demand for bandwidth as our usage habits evolve to encompass the new technologies available. And that needs to apply to BTW too. In the absence of a shift in strategy from the wholesaler, pressure will only increase on the ISPs to raise prices to End Users as bandwidth consumption climbs.

We fully support the development of enterprising new technologies regardless of their supposed effect on ISPs’ networks and we firmly believe the responsibility for the network and the costs it incurs lies with the network operator. We fear by adopting BT Retail’s suggested approach, net neutrality would inevitably be compromised and tiered Internet access would ensue.

BTW needs to look closely at its existing business models and investigate how it can redevelop its pricing strategies to encompass this increasing demand for bandwidth to make it easier for its ISP partners to satisfy their customers’ demands profitably.

Neil Watson is tech support manager at Entanet, a provider of wholesale services to UK ISPs. His article was originally published on Entanet's site.