Who’s going to pay for the internet?

There’s trouble brewing in the world of online entertainment. Like students squabbling over an unexpectedly expensive phone bill, internet service providers (ISPs) and broadcasters such as the BBC and YouTube are locking horns over who should meet the rapidly escalating cost of piping video into our homes. Google, too, has recently rocked the boat with plans to put cached media servers deep within the network in a bid to streamline delivery, prompting critics to claim the No Evildoer is placing an internet fast lane through the middle of net neutrality.

The sudden surge in video is pushing bandwidth costs past the point of provider profitability. Some ISPs are struggling to stay in business.

Since many ISPs stacked broadband packages high and sold them cheap, there’s simply no budget for the recent TV traffic surge. Yet broadcasters – and that includes anyone from Channel 4 and Google to Joost and ITV – continue to pump out more programmes at increasingly high resolutions.

Something has to give and someone has to pay, but how will that affect the way we pay for broadband? And who will be left picking up the tab?

Read ‘Where your ISP fee goes‘

Video in demand

According to BT-owned ISP Plusnet, streaming video accounted for 30% of peak usage last summer, surpassing the previous bandwidth hog that is P2P sharing. Virgin Media says overall traffic has nearly doubled in the past year.

There’s plenty of capacity to fit all this new video on to the network, according to network experts at BT, but deciding who should pay for the extra traffic is another matter. “Video is making a big difference [to traffic], but the network is coping with the expansion,” a BT spokesperson told PC Pro. “These issues are commercial, not technical.”

Amid the bun-fight, end users are predictably suffering, with many people hit with huge data charges, or having services restricted so severely that some applications barely work at peak times. “We’ve had feedback about certain ISPs and the way they’re dealing with expanding traffic,” said Alex Buttle, director of comparison site Top 10 Broadband. “Some use throttling, and other major ISPs have hit customers with big data charges. We’ve seen customers who have landed data charges of £200 when they’ve been downloading a lot of video.”

ISPs are seeking to recoup the bandwidth costs, and we could all see higher broadband charges over the coming months. The question is whether content providers will be forced to put their hands in their pockets too, and exactly how will that affect us.

The big debate

At the heart of the dispute is money. ISPs – despite selling “unlimited” broadband packages – have to pay for the bandwidth customers pull from the network. When traffic levels rise, so do ISPs’ costs.

“It’s the old chestnut of who’s benefiting from the traffic, and part of the problem is metered bandwidth,” said Aydin Kurt-Elli, CEO of business ISP Lumison. “One of the issues is driven by ISPs’ own actions in their drive to push down pricing. Large ISPs over-contend their networks, which is okay for consumers in terms of price, but the contention ratios were set when net resources were evenly shared, and that leaves tension between margin and user demands.”

In a bid to conserve bandwidth, ISPs have admitted to throttling P2P sharing applications during peak times, but they would be on desperately thin ice should they start to block popular, legitimate services. “Then they start losing customers, because application-based management really does get people annoyed,” said Tim Johnson, chief analyst at broadband researcher Point Topic. “Previously, they’ve been able to target the P2P bandwidth hogs because everyone accepts that they’re a drain and illegal, but lots of ordinary people use iPlayer – they’re not going to accept it if that’s blocked.”