Never heard of zero rating? Here is Senator Al Franken's Facebook response to Pai’s move:
“On the surface, 'zero-rating' plans sound great for consumers. They allow you to access certain content without counting against your data plan. But here’s the catch: some zero-rating plans actually dodge net neutrality—the principle that the internet should operate as an open and level playing field for American consumers and businesses—and give priority to large corporations with deep pockets. As a result, some zero-rating plans stifle competition and innovation, disadvantage small businesses, and inhibit free speech on the internet.”
It’s the net neutrality conversation that’s been going on for quite a while now, including back to 2011 when Al Franken held his own session on the topic at SXSW: The correlation between telecom companies that control the internet pipes and give data preference to content they own versus treating all and any internet traffic equally, no matter the source.
Despite Pai’s statement that pulling the plug on preventing zero-rating programs was good for consumers and supported innovation, Franken disagreed with the chairman's actions and position. “I want to remind you that you’ve been entrusted with protecting Americans’ access to diverse information sources and ensuring that the internet remains a tool for American innovation, economic growth, and public discourse. You no longer work for a large corporation.”
There was also push back from within the FCC, including a statement made by FCC Commissioner, Mignon Clyburn, who was surprised by Pai's actions, "Today multiple Bureaus retract—without a shred of explanation—several items released under the previous administration that focus on competition, consumer protection, cybersecurity and other issues core to the FCC’s mission."
Tug of war is not only taking place within our court system to battle Trump's E.O. ban on immigrants. From other publicly released FCC statements, it appears that these aggressive actions taken by Pai to dismantle a number of FCC items, aside from zero rating, included Inmate Calling Services reform to reduce prison call costs, which is being led by Clyburn.
But in relation to the streaming market and people's equal access to the internet, Pai used his FCC position to overturn Wheeler's decision by stopping nine companies from participating in the federal Lifeline program that provides low-cost internet services for low-income Americans. Wheeler had also pursued efforts to increase cable box competition for consumers, similar to being able to either rent a modem from the provider or buy their own for internet services. That too has disappeared, so for now, cable companies will continue to require cable customers rent their proprietary cable boxes, and consumers will continue to "collectively spend around $19.5 billion a year on cable box rental fees," according to Wired. While cable companies may think this is a win, it could be an added incentive in the future for consumers to push those cord-cutting statistics even higher.
A Closer Look at Zero-Rating Plans, Net Neutrality, and Streaming Entertainment
Going back to Verizon and AT&T, they were not the only carriers whose feet were to the fire. Initially, T-Mobile was also under scrutiny with its 2014 Music Freedom program based on a zero-rating model, before it had that label.
Then came T-Mobile’s BingeOn program that expanded on Music Freedom to include a wider array of both music and SVOD platforms like YouTube, HBO, Netflix, Showtime, Amazon Video, NBC Sports, and gaming sites like Azubu.tv and Mobcrush.
T-Mobile was found to be within the FCC’s guidelines because there wasn’t any ‘pay to play’ agreements between the carrier and the streaming content providers.
“There’s no monetary relationship between us… [and the streaming services] with respect to participation in Music Freedom,” Clint Patterson, a senior director at T-Mobile, told VentureBeat in 2014. “We don’t ask them to change bandwidth levels, we simply whitelist the music content from them. There’s an open [i.e., rolling] admission process for music services to join Music Freedom.”
Netflix CEO, Reed Hastings, has been a longtime proponent of net neutrality while having a somewhat contentious history with Comcast, not only as a content provider like HBO, but via their own Content Deliver Network (CDN) with multiple servers across the country (and most likely, around the globe, since they expanded to 190 countries a year ago), which avoids the added middlemen CDN hop through services such as Level 3 or Akamai, and connects directly to Comcast for increased speed and performance, but for a price.
That said, when the news hit that AT&T was pursuing an acquisition of Time-Warner, which could again, put the telecom company in the position to favor Time-Warner channels over others, Hastings did have something to say, “We really want to make sure that to the consumer, to the system, it doesn’t give an unfair advantage to HBO over Netflix. If it’s open competition we love that.”
2016 saw an increase in virtual MPVD providers, as AT&T’s DirecTV Now joined the market with Dish’s Sling. This month Hulu officially announced their plans for providing subscribers with live television, with Amazon Video expected to follow. One would expect Google's YouTube Red to get into the virtual MPVD fray as well, given their robust history of live streaming content on YouTube.
Twitter has also increased their live streams TV offerings and recently announced a deal to stream NHL games in a similar model of Thursday Night Football. Facebook was used by the White House as one of the social platforms to stream the nomination for the next Supreme Court judge, with a promotion of said event looking more like an ad spot for the Apprentice than a presidential affair.
And then there are the demonstrations, festivals, conferences, Martha Stewart cooking up a meal, designers strutting their Fall line during the New York Fashion Week, and other life events taking place worldwide that are being live streamed on Facebook, Instagram, YouTube, Snapchat, and Periscope.
Could users streaming that content experience slowness and buffering unless these media companies (yes, that includes you, Facebook) cut deals with AT&T, Verizon, or Comcast? Twitter and Facebook, like Netflix, have developed their own CDNs. But these are still the big guys, so what does the future hold for the smaller content streaming platforms and new ones entering the market in the future?
Snap, Inc., who went public this last week, isn’t a startup by any means, but they’re still concerned. This statement on potential hurdles to their success was included in their filing:
“If the FCC, Congress, the European Union, or the courts modify these open internet rules, mobile providers may be able to limit our users’ ability to access Snapchat or make Snapchat a less attractive alternative to our competitors’ applications. Were that to happen, our business would be seriously harmed.”
This could also apply to Live.ly and Music.ly, Soundcloud and Mixcloud, Pandora and TuneIn, and many others. As the volume of video content - from SVOD and virtual MVPD to Snapchat and video advertising -- continues to increase far past the speed of Moore’s Law, the issue of how all internet traffic is treated will grow as well. There will also be new M&A developments that will open the door for cable and telecom companies to again, favor streaming content media within their own network over others. This includes rumors that T-Mobile may acquire Dish Networks, which owns Sling; Hulu, which is owned by both Comcast and Time Warner under a joint agreement (also includes Disney-ABC Television Group and Fox Entertainment Group); and then that AT&T / Time Warner merger.
Adding the Open Internet to Our Protesting To Do List
Back in 2014 when net neutrality was hitting a tipping point, there was a huge outcry from over four million consumers who petitioned the government, and the FCC in particular. This high level of citizen activism was definitely lit up by John Oliver during one episode of his Last Week Tonight show with his call to arms...or to fingers typing furiously on our computer keyboards.
Back then, we weren’t protesting the unconstitutional ban of refugees and immigrants from Muslim-majority countries by the White House, the desecration of regulations put in place by the EPA over the last forty or so years, the stripping of the bipartisan Dodd-Frank regulations designed to prevent another financial meltdown, pulling the plug on the ACA which could leave millions without health care, or pushing our congress people to vote no on the clown car of cabinet candidates, and the list goes on.
Maybe that’s what this new administration is counting on. While they're fucking up our country in a multitude of other ways, Pai has stated he plans to overturn Title II of the Telecommunications act put in place by the Obama administration later in 2014 that reclassified consumer broadband as a common carrier.
In an interview with Marketplace Tech, Wheeler discussed his thoughts as the outgoing FCC Chair and the future of telecom regulation, and in particular, when telecom carriers and mobile providers become content owners.
"That's all well and good if their activities as networks are responsible," Wheeler answered. "But if they use their network position to give themselves an unfair competitive advantage in their non-network activities, that's harmful to competition, that's harmful to consumers. And that's what we were calling out in that particular 'zero rating' activity."
As Americans, we've definitely become less apathetic and gotten a lot better at getting vocal about our political system and those running it (using the latter term loosely). So while we're overloading our congress people's email inboxes and telephone lines, let's see if we can overload the FCC website like in 2014 and eclipse the four million petitions. File your complaint here.
And to John Oliver - is it time for another call to arms?? (hint, hint)
Deep-Dive Live Streaming Workshop for Promoters
MAR 15, 2017 | 2:30PM – 4:00PM
How the FCC could impact live streaming is one of a number of topics I and the Bulldog Digital Media team will be presenting at our SXSW workshop, "Deep-Dive Live Streaming Workshop for Promoters," which will get into the nuts and bolts of live streaming entertainment, the business case for promoters and brands, its impact on advertising and branded content, cost and logistics, and what the future holds for live streaming VR.
This SXSW session requires you RSVP and seating is limited, so if you’re attending during SXSW, click here to register.
And there's more...