Video will kill the Web, claims comms company

Found on The Inquirer on Sunday, 14 May 2006
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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.

So, to sum it up, the ISPs want the customers or content providers to pay more because they sold too many accounts. That's the problem with mixed calculations: when the market changes, you're in trouble. Not to mention that they already got money from the government to upgrade the networks.