Anyone who has ever asked what business benefits ultra-fast broadband can deliver should pose this question to Sky TV.
In fact, ask any broadcaster.
In a time when illegal downloading of music, movies and TV shows is rife, broadcasters have had to adapt by themselves offering free or low-cost download services to their audiences.
And while this may cannibalise audiences for their broadcast services to some degree, it also reaches those people they will just not pin down in front of a TV screen or in earshot of a radio.
Online media services also opens up new revenue streams for broadcasters as they offer another avenue for advertisers to reach audiences they would not otherwise get in front of.
So, the business model for offering online TV sounds pretty solid, right?
Wrong. Again, ask Sky TV.
It’s Sky Online download service is under threat – not because it can’t make the business case fly, but because customers want too much of it and in the process are burning up the measly data caps meted out by local ISPs.
OK, that may be a bit harsh on the ISPs – well most of them anyway.
For instance, Orcon has recently created its O Zone – a group of local websites from which traffic is zero-rated – in other words, it does not count towards a customer’s data cap – this includes TVNZ Ondemand.
But as the New Zealand Herald’s John Drinnan reports, even though Sky has been trying to secure a similar deal with ISPs, it plans to now halt the Sky Online service, as it does not make sense in the current New Zealand broadband market.
Drinnan writes that with the wholesale price charged for bandwidth capacity there are no signs yet that any ISP could cover the costs of customers' rapidly expanding downloads of video.
This reflects the fact that ISPs themselves are hamstrung by bandwidth restrictions placed on them.
The additional bandwidth capacity that fibre offers will go a long way to relieving these limitations. After all – copper was never built to transmit video, and will surely buckle under what will inevitably become an insatiable demand for more and higher quality content.
With fibre to the premise, data caps on local traffic, such as Sky Online and TVNZ Ondemand, should disappear.
International bandwidth meanwhile is another thorny and a highly emotive issue for ISPs, as displayed at last week’s Telecommunications and ICT Summit, where several speakers referred to this as one of the major bottlenecks in unleashing New Zealand’s connectivity.
But, if media content providers can host and distribute overseas material locally, which their licences with large studios that produce the material would certainly favour, international bandwidth cannot be used as an excuse for restrictive data caps.
As Sky's dilemma shows, these restrictions both limit uptake of new online services and inhibits local businesses from offering such services, which is a loss to the overall economy.
This demonstrates clearly that a 21st Century communications infrastructure is needed now if New Zealand wants to create and nurture a digital economy.