New Streaming TV Services Could Weirdly Help Comcast

23 Mar 2015 | Author: | No comments yet »

Cost of HBO: Is now a good time to get the premium service on cable or satellite?.

The fuzzy regulatory construct known as net neutrality may get its first big test when providers of streaming video services like HBO and Showtime try to buy their own dedicated “channels” from cable operators to avoid congestion on the broader Internet.All three companies have talked to Internet service providers such as Comcast about treating their online video offerings as “managed services,” sources told the Wall Street Journal.

Judging by a quick survey of cable, satellite, and telephone-company pay-TV services, HBO’s upcoming launch of the HBO Now streaming-only service on Apple TV is already having an impact: Many of those service providers are cutting the cost of HBO as part of a TV package. But instead of putting their web traffic on the public Internet’s main thoroughfare, they want to be in a separate lane that would ensure their content gets special treatment. These services would not count toward subscribers’ data caps, and would run on a separate flow of bandwidth with less congestion than the open Internet. Visits to several of the larger cable company websites show that many have cut the price for adding HBO from $16 to $20 to $10 a month, which we’re assuming is in anticipation of the launch of HBO Now.

The cable companies are reportedly ambivalent about building such lanes, both because of the cost and because it might get them in regulatory hot water under the Federal Communications Commission’s new net-neutrality rules. In effect, that would move them away from the congestion of the internet, which they fear will only get worse as more people opt to stream movies and TV shows on the web.

The FCC has thus far avoided making any firm statements about where “broadband Internet access service” ends and “specialized services” – relabeled “non-BIAS data services” – begins. DirecTV is running a special promotion offering new HBO subscribers a $50 Visa gift card, provided they sign up by April 15 and keep HBO for at least three months. At this point, the government can either allow a handful of these services to prosper through special treatment—with cable companies serving as gatekeepers—or it can keep the lanes open to even more services, all competing for the same bandwidth, data, and dollars.

But the FCC says it will remain vigilant for evidence “these types of service offerings are undermining investment, innovation, competition, and end-user benefits.” It will be interesting to see how the net-neut cops treat dedicated channels for streaming video on demand, then. As the Journal explains it, managed services aren’t exactly the same as the “fast lanes” that net neutrality forbids, because they wouldn’t be occupying any of the bandwidth that’s dedicated to open Internet access. Since virtually all digital cable traffic now utilizes some form of Internet protocol as a delivery method, any channel set aside for a paying customer like HBO is theoretically bandwidth that could be used for general-purpose Internet access. Instead, they’d live on a slice of bandwidth that Internet providers use for specialized services, such as their own digital phone and video-on-demand offerings.

Cablevision, for example, is still charging $15 a month, but it’s the first pay-TV service provider to say that it will carry the upcoming HBO Now service, so perhaps there’s less reason to cut regular pricing. Just note that many of the deals we’re seeing require you to sign up for HBO online, and it’s entirely possible—especially with cable—that deals will vary based on where you live. The officials who devised net neutrality say data services bundled with specialized devices like heart monitors, thermostats or automobile telematics will be free from regulation. But “network management” has been built into the Internet protocol from the beginning, as a means for ranking bits according to priority – the very evil net-neutrality rules are supposed to prevent. To be sure, the agency allows “reasonable network management,” but that is a fuzzy term that will be enforced retroactively against companies that engage in practices the regulators later decide weren’t so reasonable.

Included in the earliest Internet headers was a feature called Diffserv, Yoo said, which allowed eight levels of priority so time-sensitive bits like fragments of a voice conversation can speed ahead of lower-priority bits like email messages. Comcast has indicated it doesn’t want to do anything that runs afoul of FCC rules. (The company has separate net neutrality restrictions in place as a condition of acquiring NBCUniversal in 2011.) Cable providers are also wary of establishing new services that compete with their own TV offerings, and some told the Journal that such arrangements would require hundreds of millions of dollars in investments. That was “one of the most interesting decisions of the IPv6 architects,” Yoo told me, since it demonstrates how prioritization of traffic is considered a basic feature of broadband.

The Journal also cited Roger Lynch, CEO of Dish Network’s new Sling TV service, as saying these arrangements would be bad for the entire industry, as they would force large video providers to strike deals “under duress” and put small providers at a disadvantage. “It makes a mockery of net neutrality,” he said. If HBO et al get dedicated “channels” for their streaming services, it will “start the process for the many ad hoc FCC `interpretations’ that will occur going forward,” said Robert Frieden, a professor of telecommunications law at Penn State Law School. On the other hand, they don’t want to undermine the basic concept of net neutrality, under which consumers theoretically have equal access to any Web content on the other end of the broadband pipe.The agency specifically mentions so-called “over the top” video providers, which it wants to protect against better-heeled competitors that pay to shove their bits in front.

While that made sense for the finance industry and the cost was born by traders and their customers, it might not be the best model for the Internet, Yoo said. By prohibiting broadband providers from charging for prioritized delivery in one sense, the FCC may be fostering investment in prioritized delivery on wasteful parallel lines.

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