Broadcasters face charges for internet delivery

Broadband companies have indicated they are looking to charge broadcasters for distributing content in order to bolster traditional revenues as growth in the UK market slows.

Virgin Media, launching its new super-fast broadband service yesterday, said that it expected new business models to involve payment from broadcasters for delivering their high-definition content across its fibre-optic network.

BT, the telecoms group, is also looking to charge the BBC and ITV for some content-distribution services for the first time as part of its involvement in "Project Canvas" - a plan to create an internet-connected set-top box that will succeed Freeview.

Such proposals could help BT or its rivals justify investment in a UK-wide fibre-optic network, favoured by the government. They could also prove a setback for advocates of "net neutrality", the libertarian idea backed by Google, the search engine, that all content should be given equal and unfettered passage over the internet regardless of its -origin.

With broadband capacity strained by the rise of the BBC iPlayer, YouTube and other online video services, internet service providers (ISPs) are already slowing down some network traffic to provide a good service to all their customers.

Project Canvas - which is still subject to approval from the BBC Trust and a public consultation - intends to establish basic technical specifications for a new kind of digital TV receiver by 2010 that is "open for all public service broadcasters, device developers and other ISPs".

Analysts say such a service would enable the public service broadcasters to compete with subscription services from BSkyB and Virgin Media. For participating ISPs, the service will drive usage of their broadband networks,

"[Canvas] is a huge change," said Arash Amel, senior analyst at Screen Digest, a media consultancy. It could make the internet into the fourth form of television distribution, after terrestrial, cable and satellite. By opening TV sets up to any of the content available on the internet, via a set-top box, "the benefit for the consumer will be choice".

But in a speech last month, Kip Meek, chairman of the Broadband Stakeholder Group, which lobbies for ISPs, criticised new online video services that benefit from investment in new broadband infrastructure "but [bear] none of the risk".

Tiscali, a leading UK ISP, singled out the iPlayer for overloading its network earlier this year.

Neil Berkett, chief executive of Virgin Media, said that the ISP business model "will change" as more providers invest in faster broadband networks. "It's time to start to think about alternative business models," he said.

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