if connected

I’m fascinated by the name of the new initiative by the BBC, ITV, Channel 4 etc. to distribute TV programmes across the Internet using a common platform (there are existing separate approaches by Channel 4, Sky and ITV as well as a long-heralded launch due from the BBC).

Was the name ‘Project Kangaroo’ chosen because it’s all about ‘over the top’ business models?

On the cost side: I’m curious about the impact on ISPs. Large-scale Internet TV distribution has to threaten to increase their cost base as consumer bandwidth consumption increases substantially. I can’t imagine any ISP being able to overtly block mainstream TV organisations such as the BBC, ITV etc. without widespread public outcry.

However, ISPs may deploy more subtle quality of service management to minimise load on ISP networks at peak times. To some extent this is already happening. Or, ISPs, may simply increase the number of package tiers with data volume limits.

Even more interesting are the competitive issues. I’ve written about broadband threatening to become a Trojan horse for operators before. Project Kangaroo is yet another example of such a threat.

If ISPs use cost as an excuse to reduce the quality of service for Project Kanagaroo, which worsens the customer experience, will Ofcom of others act? It seems to depend on whether the ISP has significant market power. However, the UK ISP market is consolidating, so defining a clear test of which ISP’s have such power will become more challenging and more important for both the industry and for consumers.

For example on the competitive side: most of the major UK ISPs have TV offerings. Most have been focusing on improving the on demand parts of their TV services too:

• Virgin Media - Cable TV company. Differentiates its TV service with a free video on demand channel. Over the top catch-up TV diminishes this differentiator if it’s available to any UK broadband subscriber.
• BT - Launched an on demand IPTV service last December, BT Vision.
• Tiscali - bought IPTV company Homechoice that offer a TV set-focused service, now re-branded to use the Tiscali name. Tiscali also offer PC-based on demand movie downloads in conjunction with Arts Alliance Media.
• Orange - offer IPTV in France and elsewhere in Europe. Have plans for a UK launch.
• Sky – the leading UK pay TV operator with over 8 million DTH satellite homes, plus operate a fast growing DSL ISP using an LLU network. Plan VOD. Already offer a triple play of TV, DSL and telephony with the tagline: “See, Speak, Surf”.
• TalkTalk/Carphone Warehouse – alone of the major ISPs in lacking a clear TV strategy. Perhaps therefore they are best placed to benefit from Project Kangaroo.