LONDON, May 11, 2010 - Bandwidth capping has been a contentious issue for internet service providers, but lifting the limits has also proved controversial in the United Kingdom, where it is allowing big operators to flex their network muscles.
Cable operators are exploiting their infrastructure already optimized for delivering high-resolution video content by offering download packages that cannot be matched by small ISPs without their own backhaul infrastructure.
In the United Kingdom, ISPs of all sizes such as the incumbent telecommunications firm BT, dominant cable television provider Virgin Media and small service providers running over unbundled local loops, are capping their users in various ways even within supposedly premium unlimited services.
Concurrently, bigger players such as Virgin Media are unleashing their core networks quickly and gaining customers, while smaller ISPs struggle against falling subscription revenues. The problem lies in the cost and availability of backhaul and core infrastructure.
Competition regulators for years have taken into consideration backhaul costs. In the United Kingdom, the regulator Ofcom declared almost a decade ago that local loop unbundling would be ineffective unless BT provided access to its backhaul at cost prices, and acted accordingly.
The cost of backhaul has remained relatively low at around $1 per customer per month. That’s around 4 percent of what most customers pay, so this does not appear to be a competitive constraint.
However, the problem lies in the accelerated rate of traffic growth caused by video streaming. When that is combined with the almost equally rapid evolution of the network infrastructure, along with the impact of competition from powerful cable operators in some countries such as the United Kingdom and Germany. This is creating new bandwidth options leaving smaller ISPs with more limited internal development resources struggling to keep up.
For example, the U.K. ISP Talk Talk, which in March 2010 split from Carphone Warehouse, now has a fiber-based infrastructure. That means the cost of backhaul bandwidth linking its access points to the Internet core has been cut to the cost of administration plus the ongoing upgrades to routers whenever bit rates are increased.
But it is still impossible to scrap bandwidth caps while TV and other video streaming services are gaining ground so fast that networks are in danger of being swamped during peak viewing. The ratio between average traffic levels and theoretical maximum access speeds has been increasing rapidly.
By October 2009 the average broadband connection generated about approximately 11.4 gigabytes of Internet traffic per month, according to Cisco. The average theoretical access speed of 4 megabits per second would equate to around 1 terabytes per month if fully saturated. This is still a ratio of almost 1,000, indicating how much potential growth there is for backhaul and core network traffic.
ISPs are managing this transition toward much higher ratios between actual and theoretical bandwidth consumption in various ways. BT rationing TV streams at peak times, throttling back BBC’s iPlayer service from its output speed of 8 mbps to 896 kbps between 5 p.m. and midnight. That is far below even standard definition TV resolution on a laptop screen, and less than half a typical Internet feed in the United States.
Meanwhile, Virgin Media has adopted a more sophisticated form of throttling, reducing overall customer bandwidth during peak periods only when a certain threshold is exceeded, and then by not quite such a high ratio as BT.
For example, a customer subscribing to a package normally allowing 10 mbps downstream load and 512 kbps upstream is capped after accumulating 1.5 GB of download traffic between the hours of 4 p.m. and 9 p.m. – that is just 20 to 25 minutes worth of video at full speed. For the rest of that five-hour period, their capacity is cut by 75 percent, downstream to 2.5 mbps and upstream to 128 kbps, which means customers can still watch video at standard definition. Virgin plans to raise these caps progressively to enable continuous high-definition service over the internet, as well as over its subscription TV service.
Some ISPs have complained that Virgin and BT are guilty of misleading customers. Zen Internet has said that the larger firms have advertised speedier service when in reality they deliver little more aggregate bandwidth than before. But Zen itself is finding it hard to match the relaxations in bandwidth capping. It still imposes a monthly limit of 5 GB on customers of its standard package – only enough for just over an hour’s viewing of an HD video.
As the battleground for Internet subscriber moves from the access network to the backbone, the bandwidth capping wars are likely to intensify and make it difficult once again for service providers with inadequate infrastructure to compete.
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