UK media regulator Ofcom has acknowledged the strains bandwidth-heavy services like IPTV will place on broadband lines by publishing a consultation to examine how to implement even faster offerings (release and consultation document). Currently being rolled out in south Wales, BT’s (NYSE: BT) 21st Century Network will offer 24Mbps over copper wire and Virgin Media (NSDQ: VMED) is testing 50Mbps over cable, but the government’s advisory Broadband Stakeholder Group is pressing telcos to compete with the 100Mbps next-generation network (NGN) services under trial in France and Germany and which are commonplace in South Korea.

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The consultation noted over 50 percent of households now have broadband access, but the newest customers, on average, take out packages of only 4.6Mbps. It includes as-yet-unreleased Ofcom research showing most customers are currently happy with their low-speed broadband but a report out next month will argue this “could change in future”...

—TV: “Recently the use of video based applications is rising with the proportion of consumers ever using video content services increasing from 44 percent in Q1 2006 to 50 percent two quarters later. Usage is currently highest in the 16-24 age group, but interest may increase across age groups as more professionally produced content is available on-line. Many traditional broadcasters have launched video-on-demand propositions, for example 4oD, ITV (LSE: ITV).com, and iPlayer, which will sit along new internet video services such as Joost, Babelgum, hybrids such as BT Vision and video-sharing portals such as YouTube or Dailymotion.”

—ISPs: The regulator acknowledged the necessity for faster networks may be offset by more economical compression and by quickening speeds between the core network and local exchanges. Ofcom: “This issue has been raised by a number of broadband ISPs recently following the launch of the BBC’s iPlayer service” (the recent kerfuffle in which Tiscali and Carphone Warehouse complained BBC iPlayer’s P2P distribution method would swamp its networks is clearly resonating).

—Infrastructure: Ofcom’s Future Broadband consultation acknowledges: “Even with ... upgrades, the existing broadband networks will ultimately be limited in terms of the combination of speed and coverage they can provide.” Ofcom said it was a “viable upgrade path” for Virgin Media to install fibre lines direct to consumers’ homes because its network already involves fibre running to cabinets out on customers’ streets. It said 31 percent of Japanese and 24 percent of Korean customers already have fibre to their homes, and said the demands of IPTV were the top reason others countries were making the investment.

—Investment: Key is Ofcom’s “equivalence” proposal, by which a wholesale supplier like BT would be forced to open any new high-speed network to competitors - in the same way its Openreach subsidiary has with conventional-broadband local loop unbundling - even after investing in building the network. But: “Regulation should reflect these risks in order to provide appropriate incentives for investment in the first place.”