Web search giant Google and British Telecom are believed to be in talks about creating an ISP based video delivery network that would deliver improvements to the quality of online video by storing popular videos on the ISP's own network, according to the Guardian.
It is understood that BT's wholesale arm is working on a deal to make Google's video content available on the network, which will be made available for other British ISPs including Orange and Virgin Media. As well as relieving some of the Internet congestion caused by on-demand video such as the BBC's iPlayer, the network would also help ISPs try to recoup the costs involved in trying to keep up with demand.
Although some ISPs are already paid by media providers for offering a more reliable service, many ISPs receive no compensation at all - something that may mean some ISPs will have to decide whether they can continue to spend money on their networks, according to Sian Baldwin, director of broadband and content services at BT Wholesale.
"It's really difficult to predict what will happen. You cannot say all of the ISPs will get into a stand-off in which they threaten to cut off the traffic of YouTube or Apple but by my predictions there is a situation where they might have to," she said.
Several thousand British broadband users currently testing the service are receiving better access to content, even at peak times when many people suffer from slow downloads.
BT hopes to launch the service commercial in the spring.