4:55 PM -- Reed Hastings isn't the only one whining about Comcast Corp.'s broadband capping policies these days. (See Netflix CEO Keeps Whining About Comcast.)
Sony's not too wild about them either, so much so that it's putting a proposed broadband TV service on the backburner while it waits for some guidance from the feds on Comcast's capping policy for its Xfinity TV app for the Xbox 360. For now, anything streamed to the console via that app doesn't count toward the MSO's monthly 250-gigabyte cap because, as Comcast argues, it's delivered via Comcast's managed IP network rather than the public Internet. (See Sony Seeks Slice of Pay-TV Market, Comcast's Xbox App Raises Net Neutrality Concerns and Comcast Won't Cap Xbox 360 Streaming .)
The policy is giving Sony pause. "These guys have the pipe and the bandwidth," Sony Entertainment Network VP and GM of Global Video and Music Michael Aragon said this week at a tech event hosted by Variety. "If they start capping things, it gets difficult."
Sony's grievances only toss more fuel on a fire that Netflix Inc.'s CEO has been stoking lately, claiming that the policy violates network neutrality rules and stymies video competition. Hastings has a pretty good reason to be concerned. Comcast launched a subscription-based streaming service called Streampix that’s viewed as a potential Netflix competitor. Pressure groups like Free Press are also calling on the Federal Communications Commission (FCC) to conduct a probe on capping policies and determine whether they really help ISPs manage their networks and keep them unclogged. (See Comcast Goes OTT to Target Netflix, Hulu Plus .)
Sony, meanwhile, has had limited success trying to enter the U.S. pay industry by making cable set-tops, so a broadband-fed, over-the-top approach involving the PlayStation 3 might make more sense. But its hopes and dreams had best not be hitched to this virtual MSO idea if it's truly intent on waiting for the FCC to act on something. Sony may end up cooling its heels for much longer than it wants to.
And it may not win, anyway. Sanford C. Bernstein & Co. Inc. analyst Carlos Kirjner gives the network neutrality card being played a small chance of working. In a recent note to investors, he points out that the FCC's Open Internet Order "explicitly and unambiguously endorses usage based pricing," adding that Comcast's Xfinity TV app for the Xbox is the kind of exception covered by the Order.
Plus, the timing for such a challenge is horrible. The FCC's already fought that battle and won't be back for more until after it solves its more pressing spectrum issue.
If Sony has any real desires of becoming a virtual MSO anytime soon, it might be better served getting it off the ground now and taking its chances. It can keep its powder dry for a battle that likely won't be fought for years down the road.
— Jeff Baumgartner, Site Editor, Light Reading Cable
Interested in learning more on this subject? We’ll be covering it at our live event: Managing & Monetizing OTT Video – June 21, 2012. Registration details are here.