Who should pay for online video transit?
Two announcements this week could be the first volleys in a long battle to make online video content companies foot part of the bill for the bandwidth they use on telco and cable networks. The National Telecommunications Cooperative Association has begun lobbying the Federal Communications Commission to force Google and other online content providers to begin paying into the Universal Service Fund, and across the pond, BT is throttling the BBC's iPlayer, claiming competitive pressure from online video providers. Several other network operators, including Comcast, Frontier and Time Warner Cable have also attempted some form of bandwidth cap structure or tiered pricing, often to tremendous consumer backlash.
With Cisco predicting that 90 percent of all IP traffic will be video related by 2013, bandwidth usage by online video companies will only become more of a hot button issue over time. In addition to the fear, they will simply become "dumb pipes." Network operators also must face the eventual threat online video and over-the-top video companies pose to their own content offerings.
You have to wonder how much revenue erosion will have to take place for network operators to get serious about demanding remittances from the online content companies, who, in their minds, are freeloading off of their expensive network buildouts. I certainly don't see online video content providers paying network operators for their bandwidth usage tomorrow, but I also don't see this relationship being anything but eventually dysfunctional. End users actually hold significant clout here as well, as voting with their wallets and leaving a service provider who throttles or doesn't work with certain online content companies could lead the network operators to stick with the status quo.
Ultimately, infighting over who foots the bill for video transit will be bad for everyone involved. If relationships sour and network operators start restricting certain content companies, or all content companies, the solutions to the problems will be convoluted to say the least. Let's hope that proactive deal-making can defuse the situation before it comes to a head, because the resulting landscape for online video producers, aggregators and other content companies gets bleaker if the network operators ramp up protests to actual blocking, throttling or tolling.