After 15 years of utopian gibberish about the "internet as a platform" that (of course) "changes everything", the pigeons are finally flying home to roost. In 2008, IP networks look less like the future of media, and more like tarpits that promise to bankrupt anyone who tries to run one. Especially the middlemen - as the distributors look like going to the wall first.
These brutal economics are highlighted by a new bulletin from Telco 2.0 today. The analyst outfit has looked at the early impact of the BBC's iPlayer streaming service, and has been modelling data costs derived from the UK ISP Plusnet. The analysis makes grim reading for anyone who doesn't own and operate a major network.
In only its first month of service, iPlayer pushed up ISP costs by 200 per cent, from 6.1p per user to 18.3p per user. This obliges ISPs who are simply BT resellers - and most are - to order more pipes; yet there's no extra income. Remember that this is the low-bandwidth version of iPlayer, not the high resolution, high traffic P2P service, which uses much more bandwidth. And of course, it's early days - we're at the beginning of the iPlayer adoption curve. January's figures involve just 19 minutes of TV per viewer for the month.
(The BBC estimates 17 million programs have been streamed or downloaded with up to 500,000 a day).
In other words, viewing iPlayer today costs your ISP a penny a minute - but the ISP isn't gaining any additional revenue from you. Nor is it being subsidised by the content provider, the BBC, to carry those streams.