Andrew Walmsley on digital: Carriage row is anything but neutral

For over a year now, the net-neutrality argument has raged in the US. Now it looks as though the BBC's iPlayer is set to ignite the same debate over here. BT, Carphone Warehouse and Tiscali have reportedly held informal discussions about the impact of TV being carried over the internet, and the fact that the ISPs bear the cost of providing sufficient capacity. So what is net neutrality, and why is the BBC upsetting the apple cart?

Internet protocol (IP) governs how files are transferred around the internet. Whether it's an email, a picture of your auntie or an illegal copy of Pirates of the Caribbean, it's all the same to IP, which shunts the bits and bytes that make up the file around the web until you receive them. IP doesn't discriminate between these files, and treats them with equal priority.

This was fine when IP was created, and files were mostly pretty small. But a video file can be thousands of times bigger than an email and is much more time-critical. If an email is delayed by half a second, you won't notice. But if you're watching video live as it comes down the line (what web people call streaming), you'll lose patience rapidly if it judders all the time as the file struggles to get through quickly enough.

So ISPs in the US started to push to be able to discriminate between the types of content they carry. Prioritising video, they argued, would allow them to provide a better quality of service to all users, by delivering urgent packets faster.

ISPs provide us with our connection to the internet, buying bandwidth and dividing it up among their users. Bandwidth is the biggest cost to their business, and the rise in online video is giving them a massive headache - according to Cisco, US video sites alone are responsible for as much traffic in one month as the entire web was in 2000.

Net-neutrality advocates argue this is the thin end of the wedge. Allow discrimination, they say, and you open the door for differential charging, and for the selective blocking of services that might compete with the ISP's other business.

This has happened in the US, where one local ISP and telco blocked internet phone calls before being hauled up.

ISPs have gone further. Bandwidth-hungry content such as video should be made to pay for carriage, they say. TV companies pay for carriage on cable, so why not online?

There's no doubt the ISPs are faced with a problem. Consumer prices for broadband have been falling consistently over the past few years, while demand for bandwidth has soared. ISPs have to balance their investment in infrastructure against the revenue they can generate, and IPTV is throwing off all their sums.

But there's a fundamental difference between the cable TV and ISP business. The customer proposition of cable is packages of TV channels, while that of ISPs is more simple - access.

Although the early days of the internet market started with ISPs selling exclusive content to consumers, those so-called 'walled-garden' packages (AOL, MSN and so on) declined in popularity and have all but been abandoned as content and access businesses have diverged.

So consumers want to pay their ISP for access and make their own choices about what content they see. Just as consumers rejected the walled garden for web content, they're likely to reject it for TV too - if you want to watch The Sopranos, you don't want to experience a slow, jerky picture just because HBO hasn't got a carriage agreement with your ISP.

The problem is that ISP companies aren't worried just about bandwidth. Both BT and Tiscali also own TV businesses, so are in competition with all those other content owners on the internet, and would like to retain their position as gatekeeper, controlling access for consumers.

So the fight around net neutrality isn't just about ensuring that TV can be delivered effectively over the internet. It's about who controls what you see.

- Andrew Walmsley is co-founder of i-level

30 SECONDS ON ... ONLINE VIDEO

- There are tens of millions of films and clips available online, covering every-thing from Hollywood blockbusters to Japanese teens lip-syncing to hits from the 80s you wish you'd forgotten.

- Cisco has predicted that video streaming and downloads will increase from 9% of all consumer web traffic in 2006 to 30% in 2011, driven by greater desire to watch high-definition movies and TV shows via PCs.

- Ofcom has indicated that if the BBC's iPlayer takes off, clogging bandwidth pipes, it would cost the internet industry up to £830m over five years to provide enough capacity to cope with the growth in online video.

- An estimated 90% of clips on video-sharing site YouTube - purchased by Google for $1.65bn last October - are posted by amateurs. A Scottish private school last week condemned one clip that showed former pupils engaging in a mock 'chav hunt' that showed teens in shell suits 'shot' by others dressed as aristocrats.

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