The future of over the top video (at
least in the United States) is increasingly moving into the hands of the U.S.
federal government.
On June 16, the New York Times reported that the Justice Department was
investigating whether cable companies were discriminating against video
providers such as YouTube and Netflix by treating their data differently (i.e.
counting it toward a data cap while exempting similar data from the provider's
own Web video service from said cap). In addition to determining whether cable
companies are engaged in discriminatory practices, the Justice Department is
supposedly taking a broader look at video delivery in the United States.
According to the Times:
The department
is also said to be studying the ways in which distributors bundle disparate
television channels together in all-you-can-watch packages. Distributors and
programmers have resisted calls to unbundle channels, but Internet distribution
may give consumers more choices in that area — assuming that data caps or other
network management practices do not stand in the way.
As if on cue, the Times had another story just a week later. Can you guess the title? "Internet
Providers Testing Metered Plans for Broadband."
Imagine that.
What's happening is obvious: the
cable companies are digging a second trench around their profit margins. The
first trench is the uneven application of 'data caps' to third party video
services and the providers own Internet video (the kind that sparked the
Comcast-Netflix row). If this trench is over run, the second line of defense
will be to hike the price of America's broadband access or put caps in place to
discourage bandwidth-heavy applications like video streaming among
price-sensitive consumers.
The Justice Department may yet
rescue over the top providers from discriminatory treatment, but they can't set
the price of broadband access. Even more competition for residential broadband
- the oft-cited remedy for price hikes - may not be enough. In the mobile
world, there is far more competition for data access and all the major carriers
have either scrapped or are poised to scrap unlimited data plans in favor of
tiered pricing.
While data caps wouldn't kill
streaming video options outright, it could definitely put the brakes on future
growth in the U.S. Those cord cutters, and cord shavers, who are driven by cost
pressures may think twice as the economics of their Internet bill change. And,
as the Times piece notes, tiered
pricing would also put a crimp on pay providers attempt to "unbundle"
their service by offering a selection of pay TV content to any subscriber with
broadband access.
And while we're on the subject of
Washington and the future of video delivery, Dish's Chairmen Charlie Ergen also
made an appearance, testifying before the Communications
and Technology Subcommittee of the Energy and Commerce Committee about Dish's new commercial-skipping set-top
box technology. Broadcasters
are suing Dish over the technology, but Michigan Democrat John Dingell voiced
his own concerns, as reported by National
Journal:
"I've got an election coming
up, like all my colleagues," Dingell said, during his questioning of Dish
Network Chairman Charlie Ergen. "We all put political ads on the local
stations to reach our constituents. The Hopper potentially limits the ability
of every member of this subcommittee to reach constituents to help them make up
their minds on Election Day.
I think Dish just found their next
marketing hook.
