Updated: ACA Says Charging Sub Fees For Internet Content Could 'Cripple' Broadband Rollout
Polka Tells FCC Pay Model Will Drive Down New Adoption Rates
John Eggerton -- Multichannel News, 6/11/2009 10:11:00 AM
The American Cable Association is taking aim at Internet content suppliers, saying charging sub fees for Internet content could "cripple" the nation's plan to deliver broadband to every household.
ACA, which represents smaller and mid-sized cable operators, says that companies like Disney are charging for Web-based content and "requiring" broadcasters to include those fees as part of basic Internet access for all subscribers.
That, suggested ACA in its comments about the national broadband rollout to the Federal Communications Commission on June 8, is a recipe for depressing broadband adoption.
"The FCC and parties involved in the network neutrality debate "should be concerned that Web-based content and service providers...will drive up the retail cost of broadband access and drive down new adoption rates," ACA president Matt Polka told the agency.
Disney and ESPN Media Networks responded to ACA's assertion.
"Once again, ACA is making unsubstantiated claims, which to me represents another attempt to convince the government to give it valuable programming for free," said David Preschlack, executive vice president, affiliate sales and marketing, for Disney and ESPN Media Networks. "We don't force distributors small or large to carry any of our product. ESPN360.com is a business that would simply not exist except for this economic model. And we have over 3,500 over live events, many of which would not otherwise be seen if it weren't for the business model."
Polka countered in a Thursday statement: "By its own account, Disney's ESPN360.com business is not economically viable on its own unless broadband providers are forced to charge all subscribers for this unwanted online sports content sought by a niche audience of sports junkies. Media conglomerates and other Web giants must be prevented from using their market power to drive up the cost of basic broadband access, and deny independent access to their Internet content for individual users. The Obama Administration, Congress, and the Federal Communications Commission must take notice now before these high-cost "closed Internet" business models are replicated and damage the prospect of universal and affordable broadband access."
ACA, in its comments to the FCC, also said that by making sub fees the price of entry, those companies are effectively preventing surfers from accessing the content on networks of broadband providers who won't pay the fee.
That charge came in comments on the FCC's national broadband plan, which it must come up with by next February.
The network neutrality/content access debate has primarily been centred on the broadband network side, rather Internet content suppliers, but ACA is clearly trying to expand and/or refocus it.
"E-commerce is built on an online marketplace where companies are free to charge for their services, and consumers are free to buy them," responded Free Press policy director Ben Scott. "The situation changes when companies begin walling off content and selling network operators the right to distribute it."
But Scott saw Disney as the exception.
"Disney's ESPN360 is the only company I've heard of that does this currently. And my gut reaction is that it's a terrible business model that defeats the whole idea of maximizing exposure on the Internet."
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"You can only have my product if you include it in your base price charged to all of your customers, and we'll price it based on how many customers you have."
Sounds like what Microsoft did with Windows, and got slapped for it. Time to apply the same logic here.
Big Eric - 6/10/2009 9:40:03 PM EDT -
Having "channel" fees for internet content that must be applied to all subscribers of a broadband service is definitely against the concept of the internet, which is supposed to be an open, a la carte system. Stuff like ESPN360, which this article seems to be reerencing, is a holdover from TV revenues where content providers can extort money form all cable subscribers for XYZ service that not everyone may want.
I for example would have no use for ESPN360, however if I did have a use for it, I'd have no problem paying $5.99 or whatever per month for access. No need to spread out what I want to view over the rest of the broadband populace. Hiding costs like that...not cool. Especially when other companies get the idea and you end up with a significant portion of your internet bill devoted to content fees rather than access. This also crowds out smaller operators, which have to pay bigger per-head fees.
Ian L - 6/10/2009 9:07:07 PM EDT
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