TV war as access hits 100Mbits/sec

Cable giant NTL is field testing a 100Mbits/sec home link in the opening shot of a new battle for dominance of next-generation networks. But BT countered with news that exchanges covering 99.6 per cent of the country will be upgraded to provide links of up to 8Mbits/sec from 31 March.
BT is also testing ADSL2+ offering speeds up to 20Mbits/sec, something rivals are already providing at some exchanges. But the real battle is less over who can offer the fastest speeds (see here) and more about who is going to make what money from the system.
Telcos face a vicious circle. Faster broadband speeds mean more use of video and a huge increase in bandwidth demand. This will require massive new investment – BT alone is spending £10b on its 21st Century Network (21CN). Yet revenues from traditional voice calls fell 15 per cent last year as people and businesses switched to VoIP (Voice over IP).
So how are telcos going to make their money? One way is to charge more for bandwidth, either as per MB charges or by subsuming them into the price of a video download.
Another way is for the telcos to sell content themselves. Both BT and NTL plan to offer IPTV services (TV delivered using the Internet Protocol) and they are far from alone. Some see this as wishful thinking: how can BT compete with the likes of Sky and the BBC?
Mac Taylor, chief executive of the Moriana consultancy, told a Netevents forum last month that telcos can make money from IPTV if they offer content not available on existing TV or episodes of popular series not yet shown in Europe.
Other speakers pointed out that IPTV can generate money from advertising targeted at individual users or groups and from the fact that viewers can interact speedily with adverts.
There were also signs of an industry reacting against the likes of Google and Yahoo, which are getting ready to offer video-on-demand and stand accused of creaming off revenues from other people’s services.
Rob Keil, VP of infrastructure provider Hammerhead, said: ‘Google and Yahoo don’t want to pay anything more than they do now [for content delivery], which is nothing.’ He predicted that telcos would demand a premium for delivering video of the same quality they themselves provided.
But, as Taylor pointed out, telcos face competition from a host of smaller providers. IPTV could go the way of radio, which has at least 10,000 stations streaming over the web.
The BBC is even encouraging ‘people’s TV’ by making content available for non-commercial use: you can edit footage to create your own programs.