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Small ISPs Revolt Against ESPN360 Model
One WISP considers boycott or class action suit...
by Karl Bode 12:52PM Thursday Feb 12 2009 Tipped by Steve See Profile
As we just discussed, there's a renewed interest in ESPN's two year quest to hoist the TV industry business model upon the broadband industry, by striking deals with ISPs for their ESPN360 broadband video service -- instead of individual customers. Some see this as an infraction of network neutrality -- which it isn't -- unless the service doesn't count against ISP caps. It is potentially bad business, given ESPN is marginalizing and annoying a lot of potential customers. Interestingly, ESPN seems to think the solution to broadening adoption is by urging ISP customers to switch carriers by showing the following alert to users on non-partner ISPs:
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ESPN360.com is available at no charge to fans who receive their high-speed internet connection from an ESPN360.com affiliated internet service provider. ESPN360.com is also available to fans that access the internet from U.S. college campuses and U.S. military bases. Your current computer network falls outside of these categories -- Switch to an ESPN360.com affiliated internet service provider or to contact your internet service provider and request ESPN360.com.
ESPN's business model here assumes that the content ESPN is offering is so compelling that it will force users to change carriers. It also assumes that most people have a choice of carriers, when many still only have access to one ISP. With more and more people signing up for triple or double play offers -- and signing with carriers based on introductory discounts -- it's also unlikely that people will be willing to ditch their current deals for some additional sports video content.

In other words, the market will probably kill this as a bad idea in time -- but it still raises some interesting questions. With ESPN striking deals primarily with larger carriers, one interesting thing this may do is make life even harder for the smaller ISPs and WISPs that have already been kicked, beaten and bruised by a national regulatory policy that favors large carriers. According to a small WISP operator in our forums who called ESPN to check on the service, smaller carriers can expect to pay more than large carriers for the privilege of offering the service.

"The fee per customer for a small ISP like myself would be $0.79 per user, but would be substantially less for a larger one," notes user SuperWISP See Profile (aka Brett Glass, operator of Wyoming WISP Lariet.net). "So, our large competitors would have to raise their rates less per customer than smaller ISPs, giving them a big advantage, he says. "ESPN also seems not to realize that ISPs' margins are tiny as it is -- I make about $2.50 per month on a basic residential customer now, and so their fee would take an outrageous 1/3 of my profit."

Glass, who is traditionally an outspoken critic of network neutrality legislation, suggests either boycotting ESPN, or filing a class action lawsuit against the sports giant for "tortious interference with contract."

While the idea that this currently violates network neutrality may not be an accurate statement yet, that doesn't mean ESPN's model is a good idea, or good for this industry. Assuming this business model caught on, each ISP would have to pay content creators individually to offer users access to content, and the nation's largest carriers would pay less. Worse, you could clearly expect the endless rate hikes you see with cable television now applied to your broadband bill -- on top of any successful efforts to implement metered billing.

Though big ISPs could obviously just pass costs on to consumers, not all large carriers are playing along with ESPN. Back when ESPN started trying this in 2006, Cox told the New York Times they wouldn't be playing along. "Exclusivity is one of many competitive strategies to consider, and you have to be very thoughtful about it," said Cox's Bob Wilson. "Otherwise you and your competitors can end up just trying to ‘out-exclusive’ each other, and all you accomplish is bidding up your costs and making the content providers rich."

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Yarmouth Port, MA

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The irony is amazing.

Brett Glass, SuperWISP See Profile, wants to force ESPN360 not to interfere with the relationship between user and ISP.

However, he is totally against any Net Neutrality regulation that would prevent ISPs from interfering with the relationships between users and their own chosen destinations on the net.
Robb Topolski -= funchords.com =- Hillsboro, Oregon -- KJ7RL
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