{"id":657339,"date":"2013-05-10T13:07:09","date_gmt":"2013-05-10T17:07:09","guid":{"rendered":"http:\/\/gigaom.com\/?p=644156"},"modified":"2013-05-10T13:07:09","modified_gmt":"2013-05-10T17:07:09","slug":"a-mobile-internet-subsidized-by-content-providers-espn-might-want-it-but-you-shouldnt","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/657339","title":{"rendered":"A mobile internet subsidized by content providers: ESPN might want it but you shouldn\u2019t"},"content":{"rendered":"

For the last year mobile carriers have entertained a strange notion: content providers should pay for the mobile data their customers consume<\/a> on operators\u2019 networks. At first, the big internet players seemed to shrug off the suggestion, but carriers may have found their first taker in sports entertainment giant ESPN.<\/p>\n

According to the Wall Street Journal<\/i>, Disney-owned ESPN is negotiating with Verizon Wireless<\/a> to let the operator\u2019s customers partake in unlimited quantities of ESPN content without incurring any additional data charges. In essence, ESPN would pay Verizon to exempt its content from its data caps.<\/p>\n

The Journal reported that no deal is imminent and ESPN isn\u2019t even sure that the economics will work, but the fact that it\u2019s entertaining the idea is significant. It turns the notion of a neutral mobile internet on its head. The hierarchy of the internet is pretty simple: customers pay for access in the form of data plans, leaving internet players free use of the mobile airwaves to deliver their content either for free or as paid services. If ESPN and Verizon strike a deal that hierarchy gets flipped, and there would be consequences.<\/p>\n

The mobile internet has problems, but it works best when it remains neutral<\/h2>\n

Mobile operators have chipping away at the principle of net neutrality for years, banning certain apps<\/a> here and restricting competing over-the-top services<\/a> there. In Europe, carriers are battling with Google<\/a> over carriage fees. But in this case, a carrier appears to be challenging net neutrality with the complicity of a content provider. I can understand why ESPN might be eager to take the plunge into subsidizing mobile data. In fact, I\u2019m surprised a big name player like Netflix or Hulu hadn\u2019t done it sooner<\/a>.<\/p>\n

\"Google's<\/a>One of the biggest obstacles to widespread video consumption on the mobile internet is overage fees. Who\u2019s going to watch a 3-hour sporting event on their mobile phone or tablet if it drains your monthly data plan in the process? If ESPN wants to make consumers as comfortable using its mobile apps as they are watching its cable programming and using its web services, then it has to get around those data caps.<\/p>\n

But there are enormous consequences to such a deal. The biggest and most obvious consequence is that it favors one provider\u2019s content over another. If all access is created equal, then no content has an inherent advantage over another \u2014 which is the whole idea behind the wireline\u00a0network neutrality rules the FCC established in 2010<\/a>. But if consumers know they can get ESPN\u2019s content without incurring any additional charge, they\u2019ll naturally gravitate toward that content.<\/p>\n

There\u2019s an even bigger risk that ESPN\u2019s competitors won\u2019t just get penalized in the eyes of the consumer. Their traffic flow could be penalized<\/a> as well. Embedded deep within Verizon\u2019s network are policy servers that can distinguish an ESPN packet from any other packet. Not only could Verizon use that technology to exempt ESPN traffic form data plans, it also could use that technology to prioritize ESPN\u2019s traffic from all others. The Journal\u2019s story didn\u2019t mention anything about traffic shaping<\/a>, but you can bet its high on the list in any negotiation.<\/p>\n

Do carriers really want to go down this road?<\/h2>\n

I suspect ESPN isn\u2019t the only content provider interested in bargaining with the carriers. And I\u2019m sure the carriers are thrilled at the prospects at an additional mobile data revenue stream. But there are risks for the carriers, too.<\/p>\n

\"verizon\"<\/a>Operators have long complained about being reduced to mere dumb pipes, but these kind of subsidy deals would only make their pipes dumber. If all the big destinations on the mobile internet starting paying network fees for the consumer, then operators won\u2019t have much left to sell. Consumers basically would be dealing with the big internet brands to get their content and their access. That leaves carriers selling smaller and smaller mobile data plans to customers who will increasingly gravitate toward those big content providers. Operators will have even fewer ways of distinguishing themselves from their competitors.<\/p>\n

What\u2019s more, operators are making the very dangerous assumption that they will always have the upper hand in such negotiations. Last week The New Yorker<\/a><\/i> published a very insightful piece by Tim Wu about the growing threat to net neutrality. While Wu was making his case for wireline neutrality, his points apply to the mobile internet as well:<\/p>\n

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An important aspect of the Internet\u2019s original design is that many prices were set at zero\u2014what have been called zero-price rules. The price to join the network is zero. The price that users and sites pay to reach others is zero: a blogger doesn\u2019t need to pay to reach Comcast\u2019s customers. And the price that big Web sites charge broadband operators to carry their content is also zero. It\u2019s a subtle point, but these three zeros are a large part of what makes the Internet what it is. If net neutrality goes away, so does the agreement to freeze prices at zero.<\/p>\n<\/blockquote>\n

If mobile carriers and content providers start negotiating over access the delicate balance of the mobile internet suddenly goes off kilter. Right now it\u2019s teetering toward the mobile operators but that might not always the case. ESPN, Google, Facebook and HBO are enormously powerful brands and their consumer influence is only growing. Meanwhile carriers are becoming increasingly less significant.<\/p>\n

It\u2019s not hard to imagine a day when ESPN asserts itself in mobile just as its done in the cable industry, turning the tables on the operators. One day carriers may have to pay ESPN<\/em> for the privilege of delivering its sports content.<\/p>\n

Featured photo courtesy of Shutterstock<\/a> user Lane V. Erickson; Verizon p<\/em>hoto\u00a0courtesy of<\/a>\u00a0Flickr user\u00a0slgckgc<\/a><\/em><\/p>\n

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