Public interest group Public Knowledge has filed a complaint in the US with the FCC, intended to demonstrate that all services, but especially Comcast’s Stream TV service, which exempts video delivery from data caps, are essentially illegal.
However, since much of the logic in its filing refers to the Conditions of Merger that Comcast signed up to in order to get its purchase of NBC Universal agreed, this case may end up standing on its own – Comcast may have to make changes, but that may not necessarily mean AT&T and Verizon can’t continue the process.
In February we reported that Verizon would not count data used streaming its Go90 OTT video service and felt that its tone invited the FCC to act. But given this complaint, the FCC may have to take on Comcast first.
Theoretically the FCC can simply remind Comcast of its obligations under the merger terms, and inform it that it feels Stream TV, in its current free data format, breaks those terms. Comcast could then agree to change its behavior or take legal issue with the FCC in court.
However, a court case forcing Comcast to adhere to a contract it has signed might have little bearing on the overall Title II adoption the FCC undertook in order to enforce net neutrality. The court might agree with the FCC, but make no mention of Title II, and so at Faultline we thought that the FCC wanted to fight a different war, the one against Verizon first and foremost.
But this battle could be turned into a war on two fronts as Public Knowledge has also cited the Open Internet rules as well as the merger terms. If a court backed up the FCC on both fronts, it could kill two birds with one stone. Alternatively, if it split its decision, it might just confuse matters.
Essentially the defense that Comcast has always cited against the “Zero Rating” argument is that it was not delivering Stream TV content over the open Internet, and that this was a separate path. However Public Knowledge has argued in its filing that since the service uses capacity from the IP Access network, it is not exempt from the Open Internet rules, otherwise under no circumstance would Comcast ever be guilty and as such it could evade the consequences of the FCC Open Internet order forever.
For our money, it would be nice if for transparency reasons Comcast was also forced to break out how many OTT customers it supplies, so that we could see the effect on traditional video customers delivered over non-IP protocols.
Public Knowledge points out that Comcast imposes a 300 GB data cap and yet admits that this cap serves no technical purpose. If anyone ever tried to use Comcast to watch the average 31 hours of video a week it would eat 372 GB a month says the complaint, so OTT video can never compete fairly with traditional cable.
Anyone who wanders outside Comcast’s video walled garden would have multiple users in any given home and would use far more than 300 GB automatically, and the only way to go fully IP would be to take Stream TV as well, giving Comcast an unfair advantage over Netflix, Hulu and others. Public Knowledge then applied all of its usual arguments about this making Comcast a gatekeeper to particular sources of content, such as NBC Universal, as well.
At Faultline we have been talking about OTT video for ten years, and while we hunger for its arrival, we suspect that the market needs to go at this slowly, or risk the collapse of many existing content regimes, so we can see both sides of this argument. Few people who watch 31 hours a week of TV, will want to watch it all over the internet, so there is plenty of room here for both sides of IP content to thrive, while companies like Comcast find their feet in an open market.
On the other hand, once you close a market, and advantage existing players by allowing zero rating, it makes it tough to undo the damage at a later date when all video wants to travel OTT, so perhaps the FCC needs to fix this as soon as it can.
The news this week that DirecTV will join Dish in offering OTT content on ANY broadband line before the year end, means that this will become a serious issue in the near, rather than long term.
This is the second complaint that Public Knowledge has filed against Comcast and its zero-rating behavior, previously it targeted the Xfinity app on the Xbox 360. It has since removed this and instead introduced it on Stream TV so Public Knowledge has withdrawn and updated its complaint.
The critical point is what a consumer would have to pay, and Public Knowledge says that to take Stream TV it is $15, but to take Hulu it is $12 plus the $35 needed to upgrade broadband to unlimited data, so $47, with the bulk of that going to Comcast anyway. Hence the feeling that it is anti-competitive.
In the end, Comcast is not a national treasure and not widely loved for much other than giving fast broadband. This is essentially an open and shut case, although we have some sympathy with a company like Comcast needing to “adjust” to a new era where TV can be unbundled from the infrastructure. In Europe a similar case was made for MNOs who charged punitive roaming charges – the MNOs said they needed that money, so it was phased out over time. Perhaps Comcast and others offering zero rating could phase the data back in over time, to give them time to react to a world hell bent on going OTT for video.
It is also worth remembering that the Open Internet rules that the FCC put forward were never ratified, and are simply an indication of how the FCC wants Title II to be policed. The FCC needs to clarify this and show its teeth. An FCC presided over by a presidential administration with Donald Trump at its head (if that ever happens) would almost certainly be pushed (by appointing the next chairman or commissioner) towards sympathy for big business. So unless Hilary Clinton gets in, there is a time limit on this.