What an interesting juxtaposition of stories: the Information Technology and Innovation Foundation or ITIF if you’re thrifty with your syllables ranks Australia 12th in the OECD on its assessment of our broadband; the Economist Intelligence Unit ranks Australia 4th in the same group in terms of a wider assessment of “e-readiness”; and yet ACMA finds that IPTV is struggling in this country because of how broadband plans are structured. If Australia is reasonably good at broadband, and very good in terms of “e-readiness”, then why can’t services like IPTV get decent traction?
In part, there are issues of how services are sold. As ACMA noted, capped downloads inhibit IP TV: there’s no point in watching a show on Monday but missing it on Friday because you’re facing either a huge bill for excess downloads, or three weeks on 64 Kbps waiting for the ISP to reset your account.
Looked at this way, the Internet in Australia is a very expensive way to get your television. Let’s pick an arbitrary file size of 500 MB for a half-hour show, and put the show on each week. If I look at broadband plans on the basis of “price per gigabyte” (in other words, price divided by download allowance, irrespective of speed), the best price I can see from any major ISP is about 47c per gigabyte. To watch just one show four times a month costs nearly two dollars.
But if a user were to watch an hour each day, their IPTV cost (on the same plan) would be nearly $3.50 each week, or $15 per month – and to achieve that “least cost” scenario means moving into a relatively expensive broadband plan (well over $50 per month). So in the best case, an hour of IPTV per day would mean devoting 30% of your broadband purchase to television content alone.
If, instead of “lowest price per gigabyte” I look at the average price across a basket of plans from 20 roviders, things get worse, because the per-gig price across 20 providers and more than 200 plans is about $2.50 per gigabyte At that level, IPTV has an effective price of $1.25 per halfhour show – which is too high to give IPTV a convincing case against ordinary Pay TV.
To get around this kind of problem, providers look to a walled garden solution: offer the IPTV content as an on-network service and don’t count the downloads. The problem, as IPTV content houses told ACMA, is that few ISPs have enough customers to make a good business case.
And it’s a second-class solution for the customers, since the walled garden solution restricts the content available to the customers: if you want shows that are hosted on different ISPs, you can’t get them. So in the face of the inadequacies of the service model, what do customers do? Either they ignore TV over the Internet (which is probably most customers), or (for the geekish minority) they download via Bittorrent. None of the solutions are ideal, but it’s hard to see a way around the conundrum. At least we’re doing well in the broadband and e-readiness stakes – if you think such measures mean anything on the ground.
Article by Richard Chirgwin
