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British Telecom: "Congestion Problem? No!"
Monday, 20 October 2008 16:03
Sally Davis can handle the traffic Update: June 12, 2009 BT Retail is throttling all streaming video. Here BT does not need to charge extra for access for the iPlayer. Sally Davis, CEO BT Wholesale, confirms she was misquoted about restricting access. They've solved any congestion problems. Apparently, the propaganda from Comcast and AT&T paid advocates about network management led a reporter to misconstrue a senior executive, just as Jim Cicconi was misquoted in the London Times. Davis, Cicconi and anyone informed know video isn't clogging large DSL networks. The local loop isn't shared so unlike cable has no problem. The fiber backhaul behind the DSLAM can be upgraded at modest cost, less than 2% of the service price. Almost all traffic is inexpensively peered, so there's no transit cost. Result: BT, AT&T and almost large carriers can easily meet any plausible demand. Exaflood doomsayers funded by the telcos  have claimed otherwise so often that even smart, independent observers sometimes get this wrong.  Toteltele, good reporters,  headlined "Wholesale giants say Internet will no longer be free" supported by a quote from the BT Wholesale CEO. "As demand for online content grows, so does the need for more bandwidth, giving rise to debate over who will pay for that bandwidth. And the answer could be to restrict "free" access to services like the BBC's iPlayer that allows users to stream BBC TV content over the Internet, according to keynote speakers at an industry event in London on Tuesday. "One thing keeps me awake at night. In the immortal words of Jerry McGuire 'show me the money!"

Because Ms. Davis knows BT's network bandwidth costs are very low, the denial came right back: "Here's Sally's speech. The point she was making (Show me the money!) is how web 2.0 applications or services (not infrastructure) won't necessarily be funded through traditional telco models (line rental plus price per minute) and, as things stand, it's not clear that making a return on investment is necessarily clear cut." 

Ms. Davis is making a different point, as she positions BT at the center of a virtuous cycle. " We’ve gone from technological innovation driving falling costs driving new services … to lower costs driving technology to enable new services." Web 2.0 needs much lower costs to succeed,  which BT Wholesale can provide because of scale. "The communications industry is more dependent on scale today than at any time in our history," she added.

I watched streaming media die in 2001-2002 because the costs were just too high. I had a friend in 2001 who essentially invented YouTube. He failed, but as Moore's Law brought down costs by 2006 the business plan could work. BT wants to leap on to the next generation, providing the efficient platform for what ever comes next. 

Davis' speech could almost have been written by Simon Torrance and Martin Geddes, as she spoke of Telco 2.0 and the two sided business challenge.  Most of us think of "one-sided" models, with most of the income coming from consumers. Simon and Martin (friends) proving most interesting analysts of a second side, providing services wholesale to the Internet companies. All the net companies need bandwidth, servers, billing, customer relations, phone support, and many other services telcos know how to perform.  So these are natural services for telcos to offer. 

Anyone in the business who doesn't know the Telco 2.0 Manifesto needs to read it at  http://www.telco2.net/manifesto . If you're senior enough to afford the two thousand pound registration, find a way to spend November4 and 5th at their sure to be outstanding conference http://www.telco2.net/event/november2008/index.php . Ms. Davis is just one of over 2 dozen extraordinary speakers in a very friendly exchange of ideas.

Last Updated on Friday, 12 June 2009 09:40