BBC and UK service providers continue dispute over network costs

The debate around network costs the BBC's iPlayer streaming video service has officially launched at the end of 2007, the opposing parties have once again lashed out at each other. A BBC staff member gave the access providers some advice in a blog entry, and Tiscali CEO Simon Gunter responded by calling once again on the BBC to cover some of the network costs that providers incur.

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The debate flared up shortly after the initial test run of the iPlayer. Since then, British providers claim they are suffering from the flood of data that the BBC's streaming service causes. The firms say that the iPlayer is responsible for as much as 5 per cent of all of their traffic. Those providers with smaller networks are of course feeling the most strain. Such providers purchase connections from British Telecom and pay per gigabyte, even though they sell "unlimited" ratings to their customers. But if push comes to shove, 'unlimited' offers are anything but; the British broadband market is now seeing the same kind of fake flat rates that once plagued other European countries like Germany.

On the surface, the dispute seems to be about money and the additional costs that providers are incurring, while at the same time increased competition is causing Internet rates to continue to fall. Customers suddenly find themselves being asked to fork out for a bill they did not see coming – the big letters on their contracts read "unlimited", but the fine print allows a different interpretation. iPlayer users have been making headlines with their exploding Internet bills, which access providers are not happy about.

Other issues also play a crucial role in this debate. They include network neutrality, rates offered by providers, industry consolidation, and regulation. And of course, the basic question of what a public broadcaster can do at the expense of the private sector, is again raising its ugly head.

Tiscali's CEO has said he does not wish to subsidise public broadcasting from his company's funds any longer and is threatening to add a "BBC tax" to invoices. In doing so, he is reacting to the well intended proposals of BBC strategist Ashley Highfield. Highfield called on providers to say what they mean and make "unlimited" access truly unlimited. He added that he could imagine content providers like the BBC recommending certain access providers whose networks are iPlayer-friendly and who don't levy extra charges.

It is possible that access providers are making a political issue out of a purely economic one; all they need to do is ensure that their capacity meets demand and charge accordingly. Highfield certainly thinks so, but he says his comments in this respect are merely intended as a basis for discussion, not as a recommendation. But he also wonders whether Ofcom should step in as a regulator to give providers more leeway for future development, a step that would mainly affect BT Wholesale.

There is yet another political component in the debate: network neutrality. For some time now, major providers have been thinking about charging content providers extra for priority treatment, especially for heavy traffic. This approach contradicts the industry's position in a separate case. In the dispute with the music and film industry, access providers argue that they have to be neutral and fiercely protest claims that they should monitor and filter out certain network content. Critics of the access providers therefore argue that the BBC should have the same rights as file-sharing customers.

(trk)