‘Load of bollocks’
In a Television magazine interview, Virgin Media’s brand new CEO Neil Berkett said ‘this net neutrality thing is a load of bollocks’, and revealed plans to deliver faster connection speeds to users and content providers who are prepared to pay more for it.
In a shot across the bow to public sector broadcasters (PSB), and their tame Ofcom quango, Berkett said that if PSB do not pay a premium for faster access, Virgin Media, the second largest (after BT) ISP with 3.6 million subscribers, will put them into ‘bus lanes,’ with content delivered at lower speed.
Virgin Media’s fibre optic network makes it the only ISP likely to deliver the 50 MB standard enjoyed by net users in Japan and Korea any time soon. Berkett’s statement makes it clear that the company intends to exploit the situation to the full.
Net neutrality
‘Net neutrality’ is an incandescent issue on the other side of the pond, but has only now caught fire in the UK. American internet freedom fundamentalists coined the term to describe a net in which ISPs cannot speed up or slow down content based on source, ownership or destination.
In principle we agreed with the judgement of Ofcom’s Douglas Scott last year (before he moved to PSB Channel 4), that net neutrality was not an issue so long as customers could migrate to an alternative provider quickly and easily. There is still plenty of competition – up to 24MB.
But that was before the BBC introduced iPlayer, used to watch about 600,000 shows per day with traffic increasing 25 per cent each month. Last week Tiscali, which buys capacity from BT, stated that the BBC should contribute to the cost of buying increased capacity to cope with the surge in demand,. Sky chimed in, calling for ‘a debate about how distribution costs are addressed.’
YouTube, 4oD, itv.com, MSN Video and others also contribute to the surge, but it was the exponential growth of demand for iPlayer product that caused the ISPs to go public.
Regulators’ self-made dilemma
Since Ofcom’s first priority is to defend PSB privileges, we may expect Berkett’s statement to bestir the quango into exercising its atrophied competition powers. Not too difficult to predict what it will rule in any conflict between the BBC and the – sniff – commercial ISPs.
Recent HEXUS comments on aspects of this issue are here and here.
The dilemma for Ofcom will to reconcile the BBC’s new need for net neutrality with the fact that even after BT completes its upgrade to a mixture of fibre optics and copper wires, it will not be able to match the all-fibre optic Japanese and Korean standard.
BT owes its current dominance in the ISP market to regulators having held back competition during the introduction of broadband. ISPs other than Virgin Media and Sky must buy increased capacity from BT, and will have to raise subscription rates if they cannot charge content providers by volume.
It would appear that Ofcom cannot rule in favour of content providers without permitting variable charges for speed of internet access, which will favour the faster speeds only Virgin Media can easily provide. Depend on it – Ofcom’s ‘solution’ will involve increasing taxes, one way or another.
