Video will kill the Web, claims comms company

Unless you pay them more
Inquirer
May. 15, 2006

US comms companies have been massively overcharging for ages and fear that video telly will butcher their cash cow, according to new research.
Verizon is warning that video downloads will slow the Internet down to a snail's pace unless users pay it a huge amount of cash to build a two tier web. But according to this site, the problems are down to the greed of ISPs in the past. The article quotes a research firm TeleGeography as claiming that an always-on, 1 megabit-per-second tap into the Internet backbone costs an ISP $10 to $20 a month.

ISPs sell around 30 times more bandwidth to their end users than they can connect simultaneously to the Internet. The oversubscription enables the ISP to run 40 DSL accounts, each at a maximum speed of 768 kilobits per second. So the cost of providing data to each DSL is about 25 cents to 50 cents a month per customer.

Even at the top end that means that the comms companies have been charging $20 for a service that costs them 50 cents. However video is set to kill that off. Tom Tauke, Verizon Communications top lobbyist said that oversubscription doesn't present a problem as long as people are using the Internet for Web surfing, e-mail and the occasional file download. But if everyone in a neighbourhood is trying to download the evening news at the same time, it's not going to work.

"The plain truth is that today's access and backbone networks simply do not have the capacity to deliver all that customers expect," he said.

BellSouth chief architect, Henry Kafka said the current average use of a household was $1 a month however if a punter starts watching Internet TV eight hours a day, BellSouth's cost would go up to $112 a month.

The comms companies answer to this is to chuck net neutrality out the window and build fatter pipes to just handle video traffic. This will mean that they can keep charging high prices and keep their cash cows mooing, and munching on grass.