BT Content Connect and Net Neutrality

Since yesterday’s post, I’ve dug up a bit more detail on the new BT service. It’s been attacked in the media as being a “two-tier” system, reminiscent of the Net Neutrality debates.

But far from being able to force content providers to have to pay to provide a decent service to end users, the economics mean that BT will possibly need to give this service away to content providers for little more than a nominal fee to make it work.

The concept is simple – local bandwidth is cheap, internet bandwidth is relatively cheap, (Well under £10 per Mb/s per month in bulk) UK-wide backhaul is expensive. (£40 per Mb/s per month and upwards) A significant portion of the cost of your home broadband (Around half, depending on the package you are on) is not the connection to the exchange but the bandwidth from the exchange to the rest of the world. (Hence fair use caps and lower bandwidth limits on cheaper service providers.)

The solution is to keep popular content as close to the end user as possible. If, for example, I know as a provider that an episode of Eastenders or Coronation Street is going to be watched using an on-demand service by tens of thousands of people there will come a point where it makes sense to just send it out in advance and off-peak (When there is spare capacity) to servers around the country. This does not apply to a YouTube video of a skateboarding dog, unless it’s fantastically popular over a particular timeframe (And you need to know in advance what’s going to be popular), because there is a cost of storing all that data throughout the country to consider.

I do not know the details of Virgin or Sky’s architecture for on-demand services but it’s likely they’ve done the same sums and have worked out if this makes sense for them to implement with their own on-demand broadband/cable services. At least with BT Content Connect, all Content Providers have the ability to submit content but it’s the getting content where BT may struggle.

It’s clearly in the interests of service providers who bear the majority of bandwidth costs to implement this, particularly if they are also a content provider (e.g. Sky/Virgin) but there is less benefit to other content providers like the BBC. Even if the service is free for them, there will still be significant engineering investment to talk to BT’s new Content Connect servers.

So BT will need to sell the idea to the content providers, which they can do by promoting the idea that somehow the content will be better/faster/smoother/gold plated compared to the alternative. But this assumes that there is a congestion problem within the ISP in the first place, which does not currently seem to be the case with BT. Unless BT somehow engineer congestion, which would be a net-neutrality issue, (And no doubt result in complaints of lag from Skype users, online gamers and the like if all services were affected) objecting to content connect on neutrality grounds and claiming a two-tier internet is being created is not quite as easy as some press reports are suggesting: It’s popular on-demand content that’s affected, rather than the internet as a whole and it’s likely similar is already being done in more closed shops (Virgin/Sky) anyway.

In practice, I do not think we will see a wide uptake of this service beyond BT Retail. The technical limitations mean that the majority of ISPs will not be able to use it, although BT Wholesale are (rightly) required to offer any service they provide to BT Retail to everyone at the same price in the interests of competition.

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