File-sharing dilemma for broadband firms

File-sharing is proving to be a double-edged sword

By Jane Wakefield BBC News Online technology staff

Fast net providers find themselves with a tricky dilemma as file-swapping becomes one of the most popular broadband activities.

The ability to get hold of music, video and software at the touch of a button for free is proving a major draw for people making the switch to fast net services.

But sharing material that is copyrighted is illegal and file-swapping is causing a huge drain on the bandwidth, and consequently the pockets of service providers.

File-sharing - known as peer-to-peer (P2P) networking - has all the elements of being the perfect online activity.

Phenomenal growth

Like many of the internet's success stories it is all about community, it is free and it is mutually beneficial to both the sharer and the recipient.

File-sharing has proven to be broadband's first killer application

Dan Stevenson, Jupiter Research

But for the music and movie industries such services are a disaster because they offer no way of recouping royalties.

Despite much-publicised battles with peer-to-peer providers, the industry seems to be fighting a losing battle.

According to analysts Jupiter Research, file-sharing in Europe is growing at a phenomenal rate, with over 75% of broadband subscribers using P2P networks at least once a month.

This means that networks are being swamped with file-sharing traffic and the amount of bandwidth they use is causing serious headaches for providers.

"Although not the only factor in driving internet users to broadband, file-sharing has proven to be broadband's first killer application," said Jupiter analyst Dan Stevenson.

"As well as being a big problem for record labels and the Hollywood studios alike, internet service providers are beginning to suffer too under the heavy weight that file sharing imposes on their networks," he added.

Many may have to follow the cable provider ntl and some European operators in limiting the amount of bandwidth users can get their hands on.

Paying the price

If ISPs start managing peer-to-peer networks it could be argued that they are helping users to break copyright laws

Andrew Ferguson, ADSL Guide

Monthly data limits will increasingly become the rule rather than the exception, expects Jupiter Research.

This will force users to either adapt their newly-learned broadband behaviour or pay a heavy price for being bandwidth hogs.

There seems to be little alternative for operators, already struggling to make money on wafer-thin margins.

There are tools that operators can put into their networks to re-route or reduce the bandwidth being used by file swapping services but this could prove to be a legal minefield.

"If they start managing peer-to-peer networks it could be argued that they are helping users to break copyright laws," points out Andrew Ferguson of broadband advice website, ADSL Guide.

Dealing with it

ISPs appear to be in a no-win situation, either continuing to bear the brunt and cost of heavy network traffic or face the wrath of users by introducing punitive charging for using bandwidth-heavy services.

Some of the UK's smaller ISPs have already grabbed the bull by the horns.

Andrews & Arnold is offering a tiered service, charging £60 a month for totally unlimited access and a more reasonable £29.95 for a service with bandwidth restrictions.

UK ISP Sniff Out, true to its name, sniffs out those people using P2P services for more than six hours a day and moves them to a different part of their network.