This rather quaint old media saying is not just funny – it might also still be true. Especially for high quality graphically rich content.
Web 2.0 evangelists have been promising us for some that we would be able to pipe time shifted high quality content of all kinds across the Net. But this month something happened in the United Kingdom, that might portend massive upheavals for the Internet Service Providers (ISPs) and put a spanner in the works of broadcast industry web dreams.
And the significant event is? – the launch of the BBC iPlayer a month ago.
The iPlayer is a very different & dangerous beast from video aggregation websites like YouTube says Telco 2.0, because:
- It is heavily promoted on the BBC broadcast TV channels. The BBC had a 42.6% share of overall UK viewing in 2006/7 and therefore a lot of people already know about the existence of the iPlayer after one month of launch.
- It is a high quality service and is designed for watching whole programmes rather than consumption of small vignettes. This is sharp contrast to the current #1 streaming site, YouTube.
- It’s not reliant on advertising funding.
The Register spells out the damage the iPlayer is doing to business models.
In only its first month of service, iPlayer pushed up ISP costs by 200 per cent, from 6.1p per user to 18.3p per user. This obliges ISPs who are simply BT resellers – and most are – to order more pipes; yet there’s no extra income. Remember that this is the low-bandwidth version of iPlayer, not the high resolution, high traffic P2P service, which uses much more bandwidth. And of course, it’s early days – we’re at the beginning of the iPlayer adoption curve. January’s figures involve just 19 minutes of TV per viewer for the month.
In other words, viewing iPlayer today costs your ISP a penny a minute – but the ISP isn’t gaining any additional revenue from you. Nor is it being subsidised by the content provider, the BBC, to carry those streams.
…The analysis makes grim reading for anyone who doesn’t own and operate a major network.
Telco 2.0 lays the fault at the door of the all you can eat business model.
The data reinforces our belief expressed in our recent Broadband Report that “Video will kill the ISP star”. The problem with the current ISP model is it is like an all you can eat buffet, where one in ten customers eats all the food, one in a hundred takes his chair home too, and one in a thousand unscrews all the fixtures and fittings and loads them into a van as well.
ISP’s that own their own Network, like the UK’s Virgin (who has a dedicated cable TV Network) and BT (Who owns all of the Network right to the homes) do better.
This suggests industry consolidation – the end of the small ISP resellers – will follow. And perhaps the end of the all you can eat model.