Regulators Urged to Eye Multiplay Services for Bottlenecks
Broadband triple-play offers appear to turn the adage “you get what you pay for” on its head, a co-author of an Organization for Economic Cooperation & Development (OECD) report said today (Tues.) “Countries such as France and Japan, which have the lowest priced bundles, also offer the fastest speeds, best calling plans and the most included channels,” said economist Taylor Reynolds of the science, technology & industry directorate. But, he and colleague Yoshikazu Okamoto said, multi-play services could raise regulatory issues such as net neutrality and must-carry.
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OECD analyzed 87 broadband providers in its 30 member countries in Sept. 2005, at that time finding multiple-play offers of video, voice and Internet access available from 48 providers in 23 countries. Offers were on all main types of wired infrastructure -- telephone lines, cable and fiber. A further 29 firms in 21 nations offered double-play (voice and data) over ADSL lines; 10 providers in 9 member nations offered video and data services over cable networks. Quadruple-play offers (adding mobile voice) were available in 10 OECD countries.
To compare triple-play prices, OECD made 2 categories: Those offering unlimited calls to fixed-line networks and those that didn’t. Analysts assumed users would be willing to pay more for a service with unlimited calling than one with calls charged on a per-minute basis.
French ADSL operator “Free” offered the lowest prices, one of the highest download speeds and 93 video channels for a flat monthly fee ($36.72), with unlimited public switched telephone (PSTN) network calling. The cheapest cable bundle with unlimited PSTN calling from Kable Deutschland, on the other hand, cost more than twice Free’s rate ($78.40) for slower broadband speeds and fewer available channels (38).
Among triple-play offers with per-minute calling charges, Japan’s Yahoo BB won hands down, charging $39.22 per month for 100Mbits connectivity -- the fastest speed offered in OECD countries -- and 24 TV channels over a fiberoptic network. Most other companies offered much less connectivity and/or fewer channels for substantially higher monthly fees.
Regulatory issues and potential bottlenecks do exist in the market for multiple-play services, the report said. Price controls may be needed to prevent predatory pricing and spur competition, it said. In general, multiple-play package prices likely will fall as competition grows, the OECD said. But the “net effect on overall multiple-play pricing could be ambiguous if one of the key components (e.g. channels) in a multiple play package increases in price due to high demand.” Some OECD countries are looking at possibly requiring operators to price channels a la carte, the report said.
A few OECD markets limit the amount of data traffic subscribers can use in a given month (bit caps), the study found. That can create bottlenecks when providers take only competitors’ and not their own video streams into account. Bit caps’ effect will be “largely determined by how television over an Internet connection evolves,” OECD said.
Two video camps are emerging: IPTV and Internet TV, the report said. IPTV, usually a geographically-based closed video delivery system offered by telcos, aims to substitute for cable and satellite TV. But Internet TV is evolving such that firms can be content aggregators, providing video by subscription over any Internet link, such as Google’s video service. Regulators should monitor both to ensure markets have widespread availability of unlimited data offers and sufficient broadband choices to prevent incumbent cable and telecom firms from keeping independent Internet TV producers out of markets, the study said.
Incumbents could build “walled gardens” by blocking outside content, the OECD said. Some have suggested telecom operators could block competitive services on their networks to enhance quality and security, limiting access to outside content such as on-demand movies or VoIP calls from other providers. Policymakers in many OECD countries are trying to address network neutrality, the report said, but it urged regulators to “carefully plan” in case companies decide to block rivals’ traffic.
Must-carry on cable TV networks is one of the key issues broadcast and telecom regulators will face in coming years, the report said. As telcos enter the video market, govts. will have to rethink the role of must-carry rules on cable networks, a necessity made more urgent as the move to HDTV speeds up. In time, need for must-carry in some OECD countries may ease if content providers can use alternative distribution methods for content and consumers have more access to those channels, analysts said.
Other issues raised by multiple-play offers include: (1) Whether existing rules for traditional broadcast should apply to on-demand services, a question the EU is weighing as its revises its TV Without Frontiers directive. (2) What curbs, if any, regulators should impose on foreign-based providers of multiple-play servers whose offers fall within their jurisdictions. (3) How to handle quality of service issues caused by degradation of a network as more services ride on it.