Connected Research

Union policy research in the 21st century

BT looks for contribution from content owners

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This morning’s FT (subscription required – see also Rory Cellan-Jones on the BBC) carries a story with quotes from John Petter, managing director of BT Retail’s consumer business, that the company could no longer ‘give the content providers a completely free ride and continue to give customers the [service] they want at the price they expect.’

The crux of the story is that, against the background of BT’s defence last week of its actions in a BBC story which pointed out it was ‘throttling back’ speeds for bandwidth-hungry applications like the BBC iPlayer, network owners, like BT, are starting to believe that content providers, like the BBC, should pay them a ‘fair contribution’ in respect of the network bandwidth their applications use (though BT’s target is not just the BBC, but online video programme providers of all types).

The argument is quite simple – making the investment in providing such bandwidth is expensive and communications companies, regulated ones in particular, find it difficult to justify such investment when the return is uncertain (or, at least, heavily controlled both by regulation and by the mistaken model of competition which exists in the UK based on providing ever-increasing bandwidth at ever-lower prices). It’s a fair point – and is not one dictated just by the need to exploit new and apparently rapidly expanding potential sources of revenue (though something of that may be there too since BT argues that content providers have been busy developing ‘very profitable business models’ delivering content across BT’s networks).

For their part, content providers are unwilling to provide such a contribution, arguing that delivery networks are not under their control and thus that providing the investment to improve communications networks is nothing to do with them.  It’s a fair point – and one sharpened by the limitations, in the case of the BBC, by what the licence fee allows the Corporation to do.

There are two ongoing, and linked, policy initiatives going on behind this: firstly, the soon-to-be-made publication of the final report of the Digital Britain team, which will argue for a universal broadband commitment; and secondly the debate over what happens to the spectrum released by the switching-off of analogue broadcasting frequencies (the ‘digital dividend’) which is wanted both by broadcasting and by communications companies.

In this context, the sound of battle lines being drawn in the policy debate is a loud one. It is clear that the case for commercial investment in the communications networks of the future is an extremely tough one and not one, in the current economic or policy environment, given the way that market competition in the broadband sector has been developed, that regulated communications providers would necessarily want to take (at least, not in the absence of the evident political pressures). At the same time, it is clear that ‘something must be done’ about how investment can be funded, or other technological or political solutions provided, if the net is not to grind to a halt in such a way that may well make people long for the days of ‘throttling back’, or when the principle of ‘net neutrality’ could actually be debated.

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Written by Calvin

11/06/2009 at 2:30 pm

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