The BBC's iPlayer is setting the pace for online video, embracing the latest technologies while also navigating sticky issues such as digital rights management and bandwidth consumption by viewers.

The iPlayer, which is only available to U.K. users, debuted in July 2007 as a stand-alone application for only Windows PCs that could download programs from the previous seven days via P-to-P (peer-to-peer) file sharing.

But over the last 10 months, the iPlayer has seen major upgrades to the way it can deliver video, video quality and compatibility with an ever-expanding number of mobile devices, putting the iPlayer on the forefront of Internet video delivery. The BBC is solving many of the problems with online video delivery that have vexed other services around the world.

"We are going to be putting a lot of research and development into this," said Anthony Rose, head of the BBC's digital media technology and former CTO of Kazaa, a P-to-P file-sharing service that rankled the music industry. "I hope we'll be a real leader in this area."

Last December, the iPlayer began streaming BBC content in Flash video files at 500K bps (bits per second). Flash video offers instant gratification: PC users only need Flash installed in their browser, and the video starts playing nearly immediately. The iPlayer P-to-P client isn't needed, although users can still use it to download a show to their hard drive.

Last month, the BBC started encoding shows using H.264 compression, which offers better-quality video that streams at 800K bps, plus a better sounding audio track in the AAC+ format.

The video upgrade was made possible by two other advances: Most people are using the latest version of Flash player supporting H.264, Rose said. Also, one of the BBC's partners, Level 3 -- a company that specializes in distributing online video to ISPs (Internet service providers) -- started supporting H.264.

But the higher data stream means people use more data, which has caused ISPs to complain that the iPlayer was putting undue stress on their networks.

By the end of the year, however, the BBC hopes to begin using variable-bit encoding systems, Rose said. The systems encode video in a way that preserves the highest quality but uses the least amount of data possible. For example, in slow moving or static video scenes, less data is needed. Those scenes would be encoded at a lower bit rate, while fast-moving scenes would be encoded at a higher rate.

"We are going to see the rise of quite sophisticated systems that analyze the video as it is processing," Rose said.