The online video boom has brought potential challenges to the UK market, which are starting to be talked about before they become a major problem.
Driving the issue is the European market in general, and the UK market specifically. In Europe, consumers are more resistant to pricing of their broadband than say in the U.S. As JupiterResearch analyst Ian Fogg says: "If ISPs had healthy margins for broadband, this wouldn't matter anything like as much. But European consumers are highly price sensitive on broadband access, so ISP margins are poor."
A lot of the concern focuses on the BBC, which accounts for 80 percent of the free video viewed online in the country. The ISPs are starting to rebel some, saying the BBC is piggybacking on their businesses by having them absorb the costs of the video.
One of the big ISPs in Britain, Tiscali, says that the BBC iPlayer takes up to 30 times more bandwidth as YouTube does, evidently based on offering much higher quality video.
"Our position is that high bandwidth content services like iPlayer are being launched without proper attention to the cost of delivery," said Tiscali.
A spokesman for the BBC said that the ISPs also have their own TV services, and "These internet delivered TV offers both push up ISPs' bandwidth and network costs, and they potentially undermine the ISPs' own TV services. So ISPs vocally use the issue of higher costs, while ISPs are also concerned about revenue protection for their TV services."
It does sound like this is a prelimary skirmish to attempt to get consumers to accept price increases by the British ISPs as the costs of providing video increase.
It seems the ISPs are attempting to put the blame on the BBC video services as the reason they may raise prices. The BBC is saying the TV service offerings by the ISPs are a big part of the potential problem as well, and it has put pressures on margins of the ISPs.
Either way, it looks like sometime in the near future there will be an attempt to raise bandwidth prices in the UK.
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