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Friday 4 April 2008

The New Face of British Internet [Lurks]

Up until this point the public perception - that is to say our perception - of Internet bandwidth was all that really matters is what sort of speed connection you can get. That's still something most people think about, looking forward to the continued roll-out of ADSL2+ via the BT's 21CN program, meaning up to 20-odd Mb of bandwidth. Of course LLU operators have sprung up a plenty offering ADSL2+ sync rates ahead of BT, albiet in annoyingly cherry picked high population areas.

That's what people think they need. More bandwidth to the house. The reason this scenario existed is because people tend to be interested in that as a simple number which indicates how good your Internet is. Consumers will jump ship because of it, which is why cable and LLU entered the market to compete in those terms. The reality of the situation is that there was not terribly much to do on the Internet except browse web pages. Which meant that most people were basically using no bandwidth at all.

This will be familiar ground to British readers; the ISP market was flooded with countless operators all offering unlimited Internet access. Initially because no one ever thought you would need to limit bandwidth, and then later because it became another differentiator. Eg Jonny Customer wants to buy an Internet connection with as much bandwidth as possible without any limits. Whether or not he'll use it.

It's a bit like why laptops offer 1920x1200 displays on 15-inch screens now. Not because it's practical or desirable, in fact it's a one way ticket to a migraine, but because the number is bigger you end up with a commercial arms race as customers look for easy figures used to differentiate between how good products are and manufacturers follow suit.

ISP wise the chickens gradually came home to roost. The guys doing all the leeching stopped being one or two guys and turned into hundreds of guys. ISPs put little stars on the T&Cs and pointed out that unlimited was subject to a Fair Use Policy. Eg. it wasn't unlimited at all. It was unlimited if you weren't going to use much, that makes sense right? Right.

Now we're moving into a new phase. For a little while now ISPs have basically assumed everyone is going to be doing some downloading and today most ADSL packages have hard bandwidth limits depending on the package you're on. Unfortunately some operators in the industry are still doing essentially all you can eat packages, or not making it clear enough to consumers and this is coming to a head.

Why? Well, ostensibly because of the BBC iPlayer. Now there's something useful for everyone to use with broadband, which actually uses bandwidth and so is something which can quickly make sure someone ends up using gigabytes per month. Not one or two guys, not hundreds of guys, but thousands of people or a serious slice of an ISP's customer base. This is causing a fundamental shift in the Internet and the business models of many ISPs in the UK, particularly the cheap as chips hope-they-don't-actually-use-any-bandwidth sheisters such as Plusnet.

Plusnet have already had a good cry about iPlayer. The key point is their claim that sharply since the launch of iPlayer the Cost of carrying streaming traffic increased from £17,233 to £51,700 per month, which is pretty hard core. Some, such as Telco 2.0 and the ever-clueless Register, think that the BBC should actually pay ISPs to distribute the content through iPlayer.

Telco 2.0 helpfully cites the fact that the £3.2 billion BBC licence fee ends up kicking out £99.7m for broadcast television distribution, £42.6m for radio distribution and just £8.8m for online distribution. Which is an absurdly simplistic way to look at it. Those costs represent actual hardware needed to do these things. You don't pay anyone else to switch on your television and receive through the airways, on the Internet you pay your Internet Service Provider for that because that's the way it works.

It's not practical either, as the BBC's Director of Future Media & Technology Ashley Highfield points out.

"I would not suggest that ISPs start to try and charge content providers. They are already charging their customers for broadband to receive any content they want. If ISPs start charging content providers, the customer will not know which content will work well over their chosen ISP, and what content may have been throttled for non-payment of a levy."

If you're interested, you should definately have a read of that link, Highfield makes a number of clear and obvious points regarding ISPs which I think we all know to be true. Scroll down to "Internet Service Providers:". Vitally it should be pointed out that many of the big boys including BT are distancing themselves from the nasal whining of the few ISPs discovering their business models are bust.

If there's not enough money to pay for, you know, using the goddamn Internet then they're not charging enough. It's that simple. Their business model needs to change. ISPs are collectively responsible for ridiculously low monthly charges, destroying the margins and hence axing the ability for anyone to offer a high-quality service as the perceived value of an ISP plummeted in the eye of the public.

This is something of a political distraction from my real point in this blog however.

With most British broadband being delivered via BT's backhaul from the exchanges - and this includes the LLU operators because they use this too - the real limitation on your Internet, on anyone's Internet, has less to do with whatever ADSL sync speed you get on your modem. The cost for bandwidth through BT's backhaul is largely the same and it is this which is the limiting factor for any moderate to heavy user. That means us.

As the average bandwidth-per-user goes up there ends up being less room to wiggle your business plan with low charges, dumping off high bandwidth users so you can subsist on the casual web browsers, and prices tend to lock step with the actual cost of bandwidth. This is already happening, if you shop around ISPs they are already starting to look a lot more alike than they once did.

It also doesn't leave a lot of room for the little guys. One of BT's 155mbit centrals costs a metric assload of money per month but it's only able to support about 300 people streaming something off iPlayer. So until you get up large numbers of customers there's not quite the same averaging out of costs per central necessary and an ISP could plummet into a loss when they responsibly pre-order that additional central.

That's already happened. Does anyone remember how many ISPs there used to be? I'd urge you to take a look now. This isn't anyone's fault as such. It's just a symptom of the fact that the average consumer of the Internet now actually uses some resources that cost money. It's as if all the people going into computer shops stoppped buying £5 mice (which cost .50p) and wanted to look for the best deal on a laptop. Great for the big guys, less good for the little independent computer shop. It's a shame but these are national services people are offering, not local vegetable stalls.

It's not all doom and gloom. One innovative business model in response is wholesale broadband services such as My ISP uses these guys and, I have to say, the bandwidth I'm getting for the money including the business 8000/800 sync rate and traffic priority (above domestic) is heads and shoulders above anyone else. However they do a very strange thing, they run the pipes to capacity and when they get full they hard limit everyone's bandwidth so latency and packet loss doesn't kick in. That means when the off peak period kicks in bandwidth plummets to a couple of megabits per user.

They're up front about that that though. They show you the effect and even provide a Windows Vista sidebar gadget and a stand-alone tool. They're completely honest about how they operate and a whole bunch of ISPs resell the same basic service and customer focused stuff (hosting, control panels, support etc) themselves. But interestingly not the billing itself. That's not unreasonable though because billing is a major pain in the arse for any ISPs and centralising it makes it much smoother.

A little weird though isn't it? You could be on one of several ISPs and getting different web space, control panels, support etc but you're ostensibly on the same ISP IP wise and paying the same people too. Still, this is a sound business response to the existing climate of the Internet in the UK.

Until BT seriously up-rates the backhaul capacity and lowers bandwidth charges accordingly then this, and not sync speed, will remain the most significant and practical limitation of UK broadband. Unless you happen to be a lucky bastard on cable that is.

Interestingly in Australia it is far easier to get an ADSL2+ connection than the UK. Great, so you're on some up-to 24Mb connection but then you find your bandwidth is many times more expensive than here. It's tricky to buy a high-end package in Australia that offers the starting bandwidth of a decent ISP in the UK. To the point that the idea of downloading television and movies is virtually an alien concept and even pulling down game demos and trailers on your Xbox 360 could have expensive consequences. Let''s just say that they do not habitually download 1080p high-dev movies from Australia.

And of course IP performance to anywhere outside of Australia is absolutely diabolical. I'm not sure why, exactly, I've been trying to find out. It seems to congestion in the trans-pacific links from the US to Australia and if anything it seems to be getting worse.

So uin many respects we've got it pretty damn easy and what speed connection you've got is not even half the full story.


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