Earlier this week, whilst I was busy bashing out words for a review, Jamie, our Production Editor, alerted the PC Plus team to the news that Simon Gunter, Tiscali's strategy head honcho, had made a controversial statement. He claims that the BBC's iPlayer is placing such high bandwidth demands on them that some of the license fee should go towards upgrading their network. Jamie asked my opinion on the matter and the first words that came from my lips is that in fact, since the BBC is responsible, they should pay something.
This opinion was at odds with the rest of the team, most bloggers and comments on forums. My reasoning is that iPlayer is not just another service, but in fact a bandwidth intensive application offering content that is very popular amongst anyone who enjoys TV in the UK. Bandwidth is a finite resource and the more video that gets thrust onto the web, the tougher the demands on ISPs.
Then I spent some time thinking about it, and backtracked slightly. Networks will definitely need an upgrade to meet the demands of the web in the future, but it shouldn't be coming from the license fee. After all, it's a TV license we pay for, not a content tax (although it can seem like that). Moreover, to actually serve the content, the BBC is already paying for server space and connectivity.
Mr Gunter then goes on to say that Tiscali's policy is to offer agressive pricing on their broadband deals, and they do not want to have to increase their prices (to pay for additional network upgrades). But perhaps they will have no choice.
The web is certainly changing and demand for bandwidth is going up. The iPlayer is not the only reason for greater bandwidth demand. First it was YouTube and P2P music sharing, and when YouTubeHD goes live, this will increase further. ISPs will have to upgrade their networks or risk losing customers to competitors who can actually cope with the demand.
The solution isn't clear. The network needs upgrading, but who pays the billions it will cost? I stand by my belief that sooner or later it will be time to bring fiber to the home, which will hopefully provide the network capacity for the next decade or two. The initial expenditure will eventually pay itself off.
To keep Tiscali happy, they could offer a tiered price structure, keep their low prices for basic web access (heavily capped, limited to email and basic web surfing) then charge more for those who wish to use iPlayer and Youtube. Customers wont be happy though, and Tiscali will have to bring their prices in line with their competitors, losing a big advantage in the market.
