ISPs Fret That Video Downloads Could Choke Internet

NEW YORK – Every day, it seems, a new service pops up offering to send you video over the Internet. "Desperate Housewives," Stephen Colbert heckling the president, clips of bad dancers at wedding parties: It's all there.

You may be up for it, but is the Internet?

The answer from the major Internet service providers, the telephone and cable companies, is "no." Small clips are fine, but TV-quality and especially high-definition programming could make the Internet choke.

Most home Internet use is in brief bursts — an e-mail here, a Web page there.

If people start watching streaming video like they watch TV — for hours at a time — that puts a strain on the Internet that it wasn't designed for, ISPs say, and beefing up the Internet's capacity to prevent that will be expensive.

To offset that cost, ISPs want to start charging content providers to ensure delivery of large video files, for example.

Internet activists and consumer groups are vehemently against those plans, saying they amount to tilting the Internet's level playing field, one of the things that encourages innovation. They want legislation to guarantee a "neutral" Internet, but prospects appear slim.

At the heart of the debate is a key question: How much would it really cost the Internet carriers to provide a couple of hours of prime-time TV over their networks every day?

The carriers are playing their cards fairly close to their chest, but there are ways to get close to an answer.

One data point: As a rough estimate, an always-on, 1 megabit-per-second tap into the Internet backbone in downtown Atlanta, bought wholesale, costs an ISP $10 to $20 a month, according to the research firm TeleGeography Inc. An ISP's business is carrying data from that tap to the customer.

One megabit per second doesn't sound like that much, but ISPs spread that bandwidth out over their subscribers. Analysts estimate that ISPs sell around 30 times more bandwidth to their end users than they can connect simultaneously to the Internet (the figure probably varies widely from provider to provider).

In this sense, broadband is like old-fashioned telephone service, where there are always more lines leading from homes to the local switching station than there are going from the station out of the neighborhood.

If everyone in a neighborhood picks up the phone at once, some calls won't go through because there aren't enough outgoing lines. But that rarely happens, so the system works.

On the broadband network, the oversubscription means that one megabit-per-second connection to the Internet is enough to serve 40 DSL accounts, each at a maximum speed of 768 kilobits per second, typical for low-end DSL. So the cost of providing data to each DSL is about 25 cents to 50 cents a month per customer.

Of course, the carrier also needs to pay for the equipment that brings data from the Internet connection point to the subscriber, first through fiber-optic lines and then through DSL or cable.

Oversubscription doesn't present a problem as long as people are using the Internet for Web surfing, e-mail and the occasional file download. But if everyone in a neighborhood is trying to download the evening news at the same time, it's not going to work.

"The plain truth is that today's access and backbone networks simply do not have the capacity to deliver all that customers expect," according to Tom Tauke, Verizon Communications Inc.'s (VZ) top lobbyist.

The solution, of course, is to make the pipes connecting to the Internet fatter.

To illustrate what that would mean, BellSouth Corp.'s (BLS) chief architect, Henry Kafka, uses the assumption that the cost of providing a month's worth of data to the average user, about 2 gigabytes, costs the company $1.

That's a fairly small amount compared to the $25 to $47 a month BellSouth charges for DSL, but then the company has to pay for sales, support, maintenance and a host of other costs.

If that same user were to start downloading five TV-quality movies per month, BellSouth's data cost, not including the cost of maintaining the DSL line, would go up to $4.50 a month. Higher, but perhaps not high enough to break BellSouth's business model.

But if the customer starts watching Internet TV like the average household watches regular TV, 8 hours a day, BellSouth's cost would go up to $112 a month, according to Kafka.

"We don't expect to get to the point where we're charging anyone those kinds of prices for Internet service, but it does reflect the kind of impact that high-quality video could have on the network and business models for providing the Internet," Kafka said.

To deal with that, Kafka said says BellSouth might put caps on the amount of data that a residential user gets for free, and charge extra if the user goes over, much like cell phone users pay overages.

Other options include charging content providers extra for guaranteed delivery, the kind of model that has raised the hackles of Internet content providers and activists.

However, Kafka's estimates for these costs aren't really BellSouth's. Like other telephone companies, they don't disclose their actual costs.

Instead, Kafka's base figure of $1 for 2 gigabytes of data per month is based on an estimate by Dave Burstein, editor of the DSL Prime newsletter, and Burstein thinks Kafka has it wrong.

"Traffic just isn't moving up that fast," Burstein said. "It will go up and it will go up faster, but not fast enough to be dollars and cents that really matter."

Internet video is still just a small fraction of the total amount of video people watch, and that's unlikely to change overnight, in Burstein's opinion.

In fact, he said, Internet traffic has increased much more slowly than the prices of Internet-carrying equipment like switches and routers have fallen, and that trend is likely to continue.

Burstein believes the danger of letting the carriers charge extra for guaranteed delivery is that they'll put the spending for upgrades into creating that extra "toll lane," and won't reduce oversubscription in the rest of the network even though it would be cheap to do so.

Both Verizon and AT&T Inc. (T) have said they won't degrade or block anyone's Internet traffic. But it's impossible to tell what goes on inside their networks.

The message: Stay tuned, and watch your download speeds.