Congress wants to understand the impact of online video on the television market, which is why the Senate Commerce Committee held a hearing on the subject today. Unfortunately, online video is a complicated topic. It’s tied to other gnarly issues including video retransmission rights, broadband availability, and that biggest of all bugaboos, net neutrality.
For example, in today’s hearing, Senator John Kerry asked how critical net neutrality is to the video market. Media mogul Barry Diller – now a major investor in online video start-up Aereo – responded that its importance is at parity with the need for a national broadband policy that improves our country’s world broadband ranking to number one or number two. Diller’s response was a good one, but it still failed to address how we define net neutrality in the first place.
In theory, net neutrality simply means that all traffic sent over the Internet gets treated equally. However, the Internet isn’t one big monolith. There are big differences depending on whether you’re talking about last-mile Internet access, or the infrastructure that makes up the middle part of the Internet’s byways. Also, you have to differentiate between managed Internet Protocol (IP) networks, and the free and clear Internet, which also uses IP.
And here’s where things get sticky.
Internet service providers like Comcast and Verizon are now setting aside some bandwidth to create their own managed networks in the last mile. And within those managed networks, caps on consumer data usage don’t apply. Internet video providers complain that lack of data caps mean ISPs are creating preferential status for their own online video services, thereby violating the principal of net neutrality. But on the other hand, the ISPs were the ones to invest in that underlying last-mile infrastructure originally. If some of it is used for the ISP’s own video services – which consumers choose to pay for – is that wrong?
All of this takes us full circle back to online video’s role in the television market. To level the playing field, should content providers have the ability to lease capacity from ISPs in order to manage their own video delivery? In that case, the programmers would be in charge of managing congestion and deciding whether to impose their own data caps. But that seems a bit impractical. For one thing, not all programmers want to be in the business of video delivery.
Or maybe programmers should just pay ISPs a certain amount of money to optimize last-mile delivery and take caps off the table for their services too. In that case, costs would go up for programmers, but they couldn’t complain about unfair advantage with consumers.
Or maybe Congress should create a big fat dividing line between Internet and TV service, and limit the amount of capacity ISPs can dedicate to TV service delivered over a managed IP network. That would theoretically leave more bandwidth for the rest of the Internet, and therefore create less pressure to cap usage and discourage other Internet video services.
But guess what. Even that discussion doesn’t take us to the end of the debate. Don’t forget that you also have to figure in video retransmission rights, and what guidelines should be put around channel bundles. Not to mention the issue of broadband availability. There are still rural areas where high-speed Internet isn’t even an option for consumers. And what about wireless connectivity?
Like I said, online video attaches to some seriously gnarly issues. Is it good that Congress is trying to understand the landscape better? Absolutely. Do all of our lawmakers have a firm grasp on the topic today? I don’t think we’ve even settled the net neutrality question. And that’s only one part of the online video debate.