BBC vs ISP: The Irresistible Force vs The Immovable Abject

One news headline in particular caught my eye today, and it wasn’t the usual “Man Weds Goat” stuff, but one headed, “BBC and ISPs Clash Over iPlayer“, wherein I read with increasing disbelief the words of Simon Gunter of Tiscali, a well-known and largely unremarkable trans-national ISP. After reading same, I found myself provoked, stirred and in a state of generalised arghness. So the following may contain traces of rant.

Dear Mr Gunter, I’m having a little trouble with this: you’re part of a business where customer demand for your services is rising on the back of demand driven, in part, by a national broadcaster who is finally taking an enlightened and increasingly energetic view of their own relationship with their market. You’re in the enviable position of being able to satisfy that demand and all you need to remember is that, if people want more, they’ll pay more: surely an entrepreneur’s dream?

You’re an ISP. Think about it – that’s: Internet. Service. Provider. Which part of that don’t you understand? It isn’t for you or any other ISP to tell your customers or content providers what they ‘should’ be doing – it’s your job to respond to the market, to carry the services that your customers demand, to invest in the infrastructure needed, preferably just ahead of that demand curve, and to set prices for your customers accordingly. It’s called The Market, and it’s a concept you and your cohorts seem to be having trouble with. The simple answer is that, in the end, ISPs that don’t invest will go bust unless (and this is a big ‘unless’) you and the others who have joined you in the ‘race to the bottom’ are colluding in a cartel of incompetence, wherein all participants have tacitly agreed to adopt the Ostrich model towards investment – an attitude that has profound implications for the competitiveness of an entire national economy.

It’s also desperately predictable and desperately, desperately characteristic of most of the current crop of service businesses in the UK: investment appears to be a dirty word, as is quality of service: the outlook is relentlessly short-term, the strategy (for want of a better word) is invariably that of the lowest common denominator and the term customer service is treated as though its mere utterance were the ultimate blasphemy. Your initial market is saturating and, rather than differentiate your offerings on quality, you’re running in fear of actually sticking your neck out and doing something.

It’s not like this wasn’t going to happen: media delivery has been converging on IP-based technology for more than a decade, and usually delivered over the public Internet: In 1997, part of a study I did for AT&T Labs was a research paper (The 3D Internet) which examined the impact of streamed audio and video services on internet capacity. My conclusion then was that, given the choice, I wouldn’t start from here – packet-based systems being inherently inefficient carriers of streamed and broadcast data and all that – but that sufficient economies of scale would in time accrue to make the technology and backbone work tolerably well, as long as service providers accepted that they couldn’t ever stand still.

We’re already seeing a number of protocols being throttled if certain ISPs regard them as ‘trivial’ or undesireable – as someone who professionally works with P2P networks (to take one instance), I see this all the time – a transfer that runs at 20Kbps in the UK will instantly jump to 400Kbps when I switch on my machine in Moscow. All this in lieu of the continuous investment in backbone and switching that’s needed at all levels in a technology-driven market. This is not, and likely never will be, a static market. If you or your investors don’t understand that, go back to selling baked beans.

The British government is no better: Effective communications are one of the greatest single competitive resources a modern economy can have, and Britain is rapidly falling behind not just other European, North American and Far Eastern economies, but is being leapfrogged by emerging economies like Russia, whose ISPs are already running technologies whose existence UK providers barely acknowledge. In the UK, we’ve also seen the national backbone given away by the then government to BT, then a private monopoly (and which remains so in many areas) but, then as now, without any strategic foresight to effectively mandate and manage BT’s Universal Service Obligations (USOs) and wholesale charges to ISPs. BT has spent every year since trying wriggle out of honouring its obligations rather than actually investing to create the services that people need. So we have the double whammy of underinvestment and lack of strategic thinking by both ISPs and the primary network provider (BT’s 21CN network rollout completely ignores the nettle of investment in last mile services, where the UK is still largely dependent on 19th Century technology). Just one case in point: BT recently had to be brow-beaten into spending £150k to upgrade capacity into our glen. They did so with a copper cable, creating a minor improvement in capacity which is already taken up, when for about 1/3 of that, it could have provided high-speed wireless Wi-Max service to the entire glen.

So, Mr Gunter and your contemporaries, get out there, thank the BBC for creating demand for what you do, think of a real market strategy to satisfy that demand, (and by all means, keep kicking the government and OFCOM to restructure BT’s wholesale offerings) invest against the strategy, provide the service that your customers want and stop whinging: are you really so determined to make a problem out of an opportunity?

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