BT Wholesale is working with its retail arm and two other internet service providers in the United Kingdom on a plan to store online video programming within the network to improve efficiency. BT Content Connect aims to cache content closer to the consumer and optionally allow broadband service providers to charge programming providers for the delivery of media. Sian Baldwin of BT Wholesale outlined the modest proposal at the Online TV and Video Summit in London.

The plan would see storage connected to broadband access equipment in telephone exchanges to reduce the need to pull popular on demand programming across the core network.

The proposals have been tested in a trial, using programming available on the BBC iPlayer and a sample of around 2,000 users.

Orange and Virgin Media are reportedly involved, but BT has declined to comment on whether the talks involve Google which is by far the leading single provider of online video with its YouTube site.

“We’re not in talks with Google,” declared Sian Baldwin, the director of broadband and content services at BT Wholesale, despite speculation in the press with headlines like “BT and Google in talks over creating video delivery network for ISPs”.

Delivering the keynote presentation at a London conference chaired by William Cooper of informitv, she outlined a plan under which broadband service providers could charge programming providers for the use of the system, which controlling the costs they face in backhaul network traffic.

She pointed to the need to establish a balanced and sustainable ecosystem of device, programming and broadband service providers.

Last year each BT Wholesale broadband customer consumed an average of 15-20kbps. This year it is more like 30-35kbps. Next year it is forecast to be 55-60kbps and could be around 120kbps by 2012. When streaming video, customers will be consuming many times that average, typically around the same peak times, and therein is the economic problem.

For the core network provider, this suggests the need for increased capacity and more efficient use of capacity through mechanisms such as multicast and caching.

Sian proposed changing the value chain. Rather than a programming provider like Hulu paying a content distribution network provider like Akamai to deliver its media, she proposed that it could instead pay the retail broadband service provider who could if they chose offer some guarantees of delivery as a result of using the caching network.

“If the ecosystem is balanced, money moves in all the right ways, to all the right people who are incurring the costs, then bring on the growth,” she said. “It’s completely up to the ISPs whether they chose to charge anyone or not”.

The BT Wholesale executive conceded that the company would install a caching network whatever happens for efficiency reasons but by turning it into a product it is hoped that retail broadband service providers will also be able to benefit.

The original Content Connect proposition included a number of components, including static and dynamic multicasting of linear channels, as well as edge and centralised content hosting.

This could be important as consumers connect their main living room screens to the internet. New platforms like the proposed Project Canvas, in which BT is a prospective joint venture partner with the BBC and other broadcasters, could benefit from improved access to online video programming.

Companies like Akamai have been doing good business in delivering online video on a global basis, while global players like Google and Microsoft have made major investments in hosting infrastructure, but that online goes so far in reaching the end user.

Some time ago a startup company called CacheLogic proposed installing storage in local exchanges to reduce the overall demand on the core network and improve service delivery to the end user. The company was subsequently rebranded Velocix, and is now owned by Alcatel-Lucent, a supplier to telecommunications companies like BT.

The real question is whether media providers will pay to have their programming cached in order to deliver a better service to the customers of particular broadband service providers. Although it is argued that some do so already in using the services of so-called content delivery networks, these do not generally distinguish between the customers of different broadband service providers.

That raises issues of network neutrality, which could also present challenging legal and regulatory problems.

There is little doubt that caching closer to the edge of the network will be required in order to enable scalable and sustainable distribution of popular online video programming. The issue, as ever, is who should pay for the necessary investment, and whether it represents a new business opportunity or simply a cost of doing business.