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Home arrow Economics arrow Content Delivery Networks. Fundamentals, Design, and Evolution
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ISP and Content Providers

When residential ISPs started up in the early and mid-1990s, they were, more or less entirely, focused on generating revenue from dial up users. The last mile Telco and the ISP were both aligned in that the longer you spent on the phone the more you paid the ISPs. They didn't care about what you actually did online, so long as you didn't call them for support. And that was basically it. Life was good for the ISPs.

Gradually they moved from minutes to always-on services with monthly billing, and the relationship with the last mile Telco changed. The ISP was essentially wholesale reselling “extra” always-on copper phone connections. However, given install quality/availability and service varied, the ISPs started to shop around much more, and eventually the last mile operators opened up their own direct-to-market/retail ISP services too.

As the music industry (in particular) started to struggle with its transition to online, they explored a numerous legal opportunities to attack the ISPs, squarely blaming them for the decline of their record revenues. Here in the UK the Electronic Commerce Directive brought in, and embodied in law, the general principle that the ISPs had self-regulated under, for the years up to that point, “mere-conduit"[1]

Mere-conduit states that operators will have no legal liability for the consequences of traffic passing through their network. By and large the ISP has been indemnified from liabilities caused by its customers.

As part of granting this mere-conduit status, the ISPs did have to agree to act swiftly if served a notice (called a “take down notice”) of illegal activity on their networks. There have been cases where extreme piracy or extreme political or abuse websites have been blocked within territories and within specific AS network footprints. Generally, this has been brought about through laws relating to copyright or to public obscenities, and had the same action been carried out using paper, then the paper distributors would have been also forced to stop.

The “take down” approach was adopted between the music industry and the ISP community, and indeed other publishers, such as YouTube, have systems that can effect “take down” expediently and reasonably automatically on requests from trusted/known parties such as music rights holders.

The ISPs did push back on some of the proposed measures, not least to limit exposure to the cost of issuing “take down notices,” not only in terms of execution but in terms of brand too.

Generally, though, the ISPs now have working processes in place, and essentially this has created some form of framework for the various parties to at least form a working arrangement.

Where I expect ISPs to start changing is that soon they will start to look for ways to upsell their subscriber value, and as content is becoming more available for online models, I predict more ISPs will start to offer IPTV services on their internal operator CDNs, and upsell high-quality video and VR as a “walled garden” service for on-net customers. As these models open up, it is doubtless that ISPs, which ultimately have direct relationships with subscribers - always of interest to those monetizing content - will start to find traction in the types of “IPTV walled garden” models offering premium content with billing for access to that content integrated with the ISP service billing. Models like this were tried 10 to 15 years ago online (think AOL Time-Warner), but this was long before there was any content available for such online models, and more important, before there was an ability to offer IP-based SLAs in an acceptable commercial way.

  • [1] http://www.legislation.gov.uk/uksi/2002/2013/regulation/17/made
 
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