Friday, September 18, 2009

Will Tivo kill the NZ internet?

New Zealand TV viewers and internet users discovered yesterday that when Tivo launches in this country later this year, they may have to change ISPs to get the full benefits.

Although Tivo can be used like a regular PVR, one of its strengths is the fact that it can also download material over the internet.

Instead of being restricted to broadcast content and programming, Tivo users will be able to hook their boxes up to the internet and suck down all manner of additional material -- some free, some "pay per view".

So far so good.

However, in a deal announced yesterday, TVNZ has opted to form an alliance with Telecom for the delivery of this extra content through the internet.

The alliance is critical to the success of this extra feature because, as we all know, our broadband accounts are not "all you can eat".

Many plans are capped, hitting users with fairly stiff "over-cap" charges when they exceed their monthly allocations or forcing them to suffer the indignity of significantly reduced speeds if they're considered to be exceeding a "fair use".

Under the terms of the deal with TVNZ, Telecom will allow customers to download as much content onto their Tivo as they want, without that traffic counting towards their monthly consumption.

This might sound like a great deal for existing Telecom broadband customers, but what about other ISPs? How can they compete?

Well I suspect they can't

Since the vast majority of the broadband infrastructure around NZ is owned and operated by Telecom, only they can afford to deliver masses of extra data without facing massive additional costs. Any other ISP that simply resells Telecom's DSL service will be unable to match Telecom's "all you can eat" service and may lose customers as a result.

Even those ISPs that have their own DSL infrastructure will find the going hard, due to the very limited coverage their own equipment provides.

All is not lost however...

If/when the government rolls out our own Nation-wide Broadband Network, Telecom's strangle-hold on the DSL infrastructure maybe broken (or at least weakened). It's up to politicians whether they roll out a network that is truly free of commercial bias and dominance but they would be foolish not to take this chance to break Telecom's monopoly.

In the meantime, if you want to get the most out of your Tivo, you may find yourself having to change ISPs.

Isn't that anti-competitive?

And we can only wonder what effect all those Tivo users will have on backhaul capacity that is already saturated in some areas. Will Tivo kill the internet for the rest of us as thousands of Kiwi Tivo users become the new data-leaches?

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