Companies Avoiding AT&T's 'Free Shipping' Data Idea So Far → Naturally, this makes sense for ESPN

This scheme makes perfect sense for ESPN. First, their content would use a good deal of bandwidth, so customers may freak out when they notice how much data it's consuming, an event that might cause them to reconsider whether they want to use ESPN on their mobile devices. Second, I suspect that ESPN feels that it hasn't reached the price ceiling with these customers just yet, so these people may be willing to pay more to cover the cost of the "free" bandwidth they're getting, should ESPN sign on.

Excellent analysis. And why ESPN, Netflix, Hulu, & other video providers eating up huge amounts of bandwidth will eventually sign up for a service like this; unless the FCC or courts prevent it.

The only caveat I have is streaming video content is today's bandwidth elephant. If we rewind the clock 15 years to when DSL was just spawned, quality streaming video on par with with broadcast/cable video just wasn't possible. As technology continues to march forward (and it will because other than rural coverage, the fixed-price model seems to have provided sufficient capital to build where we are today), video will no longer be an elephant. This means even if some of these schemes have some logic today, they won't tomorrow. It would be far better for innovation if ISPs competed with fixed-plan prices (and maybe they need to increase the prices to cover inevitable upgrades) rather than turning to the airline model of including almost nothing in the ticket price and everything else is extra.

My thoughts turn to the revenue generated when monopoly AT&T charged fees for touch-tone dialing and unlisted numbers. Once they start down that path again and today's duopoly just gets more entrenched, we'll never get rid of it short of DOJ action.

For ESPN, it makes sense, but I'm not so sure about Netflix and Hulu. The difference is that their programming isn't live, which means that watching it later on a wired or wi-fi network isn't such an issue, and it's also theoretically possible to download the content and store it for later viewing. Also, I think that Netflix and Hulu users will be more sensitive to price increases. Actually, a better way to put it is that sports fans will probably be more willing to accept higher prices than those watching non-sports programming. And finally, sports programming doesn't compress as well as other programming because of more on-screen motion, so it will often require more bandwidth to stream.

Actually, Netflix missed an opportunity to make something like this work. If they'd charged an additional fee to use their service via a mobile app and a cell network at the outset, they might have been able to build in these charges and have people swallow them in exchange for the convenience of having mobile access to movies. But, by launching mobile apps and not charging extra for them, they set a precedent of including them for free with a subscription, and that will be extremely difficult to undo without incurring customer backlash. Granted, ESPN did the same thing, but, as I said, I think they feel that they can charge their customers and get away with it.

It would have to be the courts as the FCC wouldn't have any power to say what happens over the Internet.