UK ISPs who resell will bleed money to death

Bosses at BBC might be congratulating each other over the success of the iPlayer but ISPs are more nervous and worried about the effect that watching TV shows online will have on their already battered networks.

Andrew 'The Oracle' Orlowski reports on a news bulletin released by Telco 2.0 and which looks at the streaming sector from the content provider perspective and from an ISP point of view.

BT-owned Plusnet provided with an initial analysis of the impact that the iPlayer had on its services, something that Telco2 reckons, will send shivers down the spine of a few ISPs.

Plusnet found out that more people are watching high quality television shows online for longer periods, a stark contrast with the model advocated by Youtube - short, low quality content.

Plusnet found out that the cost of streaming increased from £17,200 to £51,700 per month, which represents a trebling of the cost per user - which goes to 18.3p - and that's for the first month only.

Telco 2.0 writes that "the BBC paid just £99.7m for distributing its broadcast TV signal last year, £42.6m for its radio signal, and only £8.8m for its online content. This is out of a total of £3.2bn licence fee income."

The Register calculates that the cost per minute per user is roughly a penny - 60MB of data - which the customer is paying by way of a fixed fee to the internet service provider, regardless of how much you view.One hour of viewing therefore costs 60p which is not bad until you consider that the more people start watching telly online, the more congested it becomes.

Unlike traditional broadcasting where the cost of disseminating content is more or less the same whether you are serving 1 people or 1 million users, the same is not true for one-to-one narrowcasting.

As a result, eat as much as you want ISPs will find themselves in an untenable situation; either change their business model to severely metered, put restrictions on streaming or leave the segment altogether.