Comcast's Stream TV is a different kind of net neutrality problem. The IP-based cable TV service, which doesn't count against users' broadband data usage caps, doesn't travel over the public Internet, but it is accessible on Internet-connected devices, and that's making a lot of industry watchers wary.
The Stream TV issue has popped up again in the news because of reports from TV Predictions and Ars Technica, both of which noticed in an online FAQ document that Comcast Corp. (Nasdaq: CMCSA, CMCSK) is planning to offer Stream TV to non-Comcast subscribers. The service will always require a Comcast-specific modem, but later this year, the company hopes to offer Stream TV to anyone that wants it within the Comcast footprint -- whether they buy traditional Comcast Internet or TV service or not.
The question at the heart of the debate: Is it okay that Comcast's new Stream TV service, which offers live broadcast TV channels, HBO and on-demand content for $15 per month, delivers content to connected devices without that video counting against subscribers' broadband data caps?
I have mixed feelings. On the one hand, Stream TV is a facilities-based service, and a service for which Comcast has agreed to meet certain public interest requirements based on the terms of regional franchise agreements. Over-the-top Internet video services have not negotiated for access to public rights of way for service delivery (that's how regional franchises were designed), and therefore do not have the same spectrum/bandwidth access and rights, but are also not bound by the same requirements.
On the other hand, the bandwidth used for IP-video service and Internet service comes from the same overall pool of spectrum, and there are no rules today about how much bandwidth should be set aside for that "managed" video service versus the public Internet. If bandwidth was infinite, that wouldn't be a problem. But the reality is that Comcast's use of bandwidth for its managed IP video service affects pricing and policies for its Internet service.
Where Comcast faces significant Internet competition, the problem is mitigated. Comcast has to deliver high-quality Internet service at a reasonable price as determined by the market. However, where competition is minimal, Comcast doesn't have to ensure that its bandwidth resources are fairly allocated. It can, if it chooses to, charge a premium for broadband service so that fewer people sign up for higher speeds, and Comcast doesn't have to invest as much money to maintain the bandwidth it needs to deliver both profitable Internet and IP-based video service.
I wish I had a simple answer for the Stream TV dilemma. Recently I posted my thoughts on the net neutrality issue surrounding sponsored data solutions from wireless carriers. My idea: if carriers allow companies to subsidize content so that it doesn't count toward subscribers' mobile data caps, then carriers should also have to set aside a slice of spectrum for some PEG (public, education, government) programming so that it too doesn't count against users' monthly data allowance. (See How to Solve the Sponsored Data Dilemma.)
But the Comcast issue is a different one, and far more complex. Even worse, there's a good chance that Comcast is using Stream TV as a way to test the waters for a video service that eventually goes beyond its current regional footprint, and its own managed network. To be clear, Comcast says it is not looking outside its footprint today. But it would be crazy for the company not to consider that possibility in the future. The Internet is obliterating artificial geographic boundaries, and with OTT services available nationally or even globally, Comcast has to evaluate its options for competing across the same broad territories. (See Comcast Eyes Global Moves, BYOD & More and Netflix: The Birth of a Global TV Network.)
Again, I don't have a solution for ensuring fairness with Stream TV. The best I can come up with is a wait-and-see approach. And to quote Federal Communications Commission (FCC) Chairman Tom Wheeler: competition, competition, competition.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading