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Small ISPs Want FCC To Ban ESPN 360 Model
Say new business model unfair to small operators...
Earlier this year you might remember how smaller ISPs were annoyed with ESPN's business model for their "ESPN 360" online video service. The sports network has been striking deals with large ISPs, urging visitors to those sites to switch carriers if they want access to ESPN 360 content. While more than 60 ISPs have signed on, smaller ISPs complain they have to pay more than big carriers to carry the content. The American Cable Association this week asked the FCC to stop the business model (apparently government's evil...until it isn't), though it's not entirely clear that ESPN's plan won't just fail organically. Making each ISP pay individual content creators to offer content sounds like an impractical and uphill effort that runs in contrast to the existing organic direction of the Internet (consumers paying content companies if their content is worth it).
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en102
Canadian, eh?
join:2001-01-26
Valencia, CA

en102

Member

and the problem is... ?


While more than 60 ISPs have signed on, smaller ISPs complain they have to pay more than big carriers to carry the content.

Thats similar to me paying more to purchase a single gallon of milk at Sam's Club, or buying a dozen. You buy in bulk/large quantities, you'll get a better deal. The 'small' ISPs wouldn't have access to information on what the 'larger' ISPs pay, as it would be confidential information.
Sammer
join:2005-12-22
Canonsburg, PA

2 recommendations

Sammer

Member

Re: and the problem is... ?

said by en102:

Thats similar to me paying more to purchase a single gallon of milk at Sam's Club, or buying a dozen. You buy in bulk/large quantities, you'll get a better deal. The 'small' ISPs wouldn't have access to information on what the 'larger' ISPs pay, as it would be confidential information.
No it's more like a HOA buying milk for an entire subdivision and saying you have to pay for it even if you're lactose intolerant.

nixen
Rockin' the Boxen
Premium Member
join:2002-10-04
Alexandria, VA

nixen to en102

Premium Member

to en102
said by en102:

While more than 60 ISPs have signed on, smaller ISPs complain they have to pay more than big carriers to carry the content.

Thats similar to me paying more to purchase a single gallon of milk at Sam's Club, or buying a dozen. You buy in bulk/large quantities, you'll get a better deal. The 'small' ISPs wouldn't have access to information on what the 'larger' ISPs pay, as it would be confidential information.
Umm... How is this anything like purchasing milk? We're not talking about a physical object that needs to be shipped. We're not talking about a situation where you're realistically amortizing those shipping costs across a greater number of units (i.e., whether I send one gallon of milk or a hundred, at least one truck needs to roll). If ESPN is making available 50TB of programming content, then it's the same 50TB whether the buyer (the ISPs) is forwarding it on to 10 end-users or 10,000.

If you wanted a more realistic comparison, it's like sending a video tape to a couple of bars - then charging the bars for the number of people that watch it. There's no real cost differential between sending one copy of the tape to the local, corner bar that seats 30 people than it does to send it to a Hard Rock Cafe that might have a few hundred people in it. The only difference is the number of chargeable viewers. There's no real cost-basis to the content producer to drive non-linear fee structures.

S_engineer
Premium Member
join:2007-05-16
Chicago, IL

1 recommendation

S_engineer

Premium Member

Re: and the problem is... ?

How much demand for 360 could possibly warrant these type of actions. I mean, at a time when ISPs are complaining about people chewing up bandwidth with people watching useless videos, the ISP then stands in line to get permission to provide access to Burmese Soccer?

nixen
Rockin' the Boxen
Premium Member
join:2002-10-04
Alexandria, VA

nixen

Premium Member

Re: and the problem is... ?

said by S_engineer:

How much demand for 360 could possibly warrant these type of actions. I mean, at a time when ISPs are complaining about people chewing up bandwidth with people watching useless videos, the ISP then stands in line to get permission to provide access to Burmese Soccer?
Well, if you're caching content locally, then you don't have to worry about overheads associated with satisfying content requests exterior to your network.

S_engineer
Premium Member
join:2007-05-16
Chicago, IL

S_engineer

Premium Member

Re: and the problem is... ?

so then how much of your cache do you need to dedicate to ESPN?
And doesn't this undercut the ISPs own argument that content providers are chewing up bandwidth?
Heres a clear cut case where the ISP will push the preferred content that they want you to see so they can make the money back.

nixen
Rockin' the Boxen
Premium Member
join:2002-10-04
Alexandria, VA

nixen

Premium Member

Re: and the problem is... ?

said by S_engineer:

so then how much of your cache do you need to dedicate to ESPN?
And doesn't this undercut the ISPs own argument that content providers are chewing up bandwidth?
Heres a clear cut case where the ISP will push the preferred content that they want you to see so they can make the money back.
ISPs (and others) have long used content accelerators (since at least the mid-90s) to more efficiently make use of bandwidth.

jmn1207
Premium Member
join:2000-07-19
Sterling, VA

1 edit

jmn1207 to nixen

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to nixen
Your comparison is a bit faulty as well, and does not hit on the issue that is being brought up by the small ISP's. If ESPN actually did charge by the number of potential viewers, that business model would seem fair.

The problem is that ESPN sends their "tape" to a small sports bar that seats 50 people and demands $100 per seat, while selling the same tape to a huge bar that seats 500 people at $10 per seat. Both bars end up paying the same amount for the tape, $5000, but the smaller bar is impacted more and has to sell drinks for higher prices to recover the cost.

If the small bar refuses to pay such high prices, ESPN plasters signs outside the door telling customers to go across the street to watch the game.

I don't particularly care for this business model, and it does seem unfair.

nixen
Rockin' the Boxen
Premium Member
join:2002-10-04
Alexandria, VA

1 recommendation

nixen

Premium Member

Re: and the problem is... ?

said by jmn1207:

Your comparison is a bit faulty as well, and does not hit on the issue that is being brought up by the small ISP's. If ESPN actually did charge by the number of potential viewers, that business model would seem fair.
That would be my prior reference to linear pricing (i.e., a uniform "per-seat" cost is applied)...
said by jmn1207:

The problem is that ESPN sends their "tape" to a small sports bar that seats 50 people and demands $100 per seat, while selling the same tape to a huge bar that seats 500 people at $10 per seat.
...Which would be NON-linear pricing.
said by jmn1207:

Both bars end up paying the same amount for the tape, $5000, but the smaller bar is impacted more and has to sell drinks for higher prices to recover the cost.
Which is why a licensed content model with linear pricing makes the most sense (relative to content-owner delivery costs).

r81984
Fair and Balanced
Premium Member
join:2001-11-14
Katy, TX

r81984 to en102

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to en102
said by en102:

You buy in bulk/large quantities, you'll get a better deal.
Really, I did not know that since it seems like the more gas we buy in bulk the more expensive it gets.

KrK
Heavy Artillery For The Little Guy
Premium Member
join:2000-01-17
Tulsa, OK

KrK to en102

Premium Member

to en102
This is the beginning of the "Content Cartel" ruling over Internet content as well.

Soon you'll have "tiered" internet access. Expensive plans to access "Premium" websites. and cheap plans to gimped out, slow "rest of the net"

spewak
R.I.P Dadkins
Premium Member
join:2001-08-07
Elk Grove, CA

spewak

Premium Member

Not a factor

If these small ISP's were smart, they would know that ESPN 360 is not even a factor. Frontier tried to use it, all I personally cared for was download/upload speeds.

DaveDude
No Fear
join:1999-09-01
New Jersey

DaveDude

Member

Cya ESPN

This always ends in the producer losing. Really its more like bribery. Alot of people dont care about 360, or ESPN. If an isp wants to offer it, then charge per user.

cdru
Go Colts
MVM
join:2003-05-14
Fort Wayne, IN

cdru

MVM

Re: Cya ESPN

said by DaveDude:

Alot of people dont care about 360, or ESPN.
I don't know about 360, but I wouldn't say that about ESPN the channel. There is a reason why they can get $3+ per subscriber and the provider doesn't flinch at the price. They know that if they didn't carry it, there would be a large number of people leave. ESPN is probably the one network of channels that would cost more customers then any other network if it wasn't available.

DaveDude
No Fear
join:1999-09-01
New Jersey

DaveDude

Member

Re: Cya ESPN

Well i should have been more clear, i agree the channel yes, the web no. But having to pay for the entire subs base is ridiculous, it should be pay per user.

tschmidt
MVM
join:2000-11-12
Milford, NH
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tschmidt to cdru

MVM

to cdru
said by cdru:

ESPN is probably the one network of channels that would cost more customers then any other network if it wasn't available.
Having content owners charge ISPs for access is just as bad as ISPs negotiating preferential contracts with content owners to the advantage of some and disadvantage of others.

We need a clear line of distinction between carriage and content. Carriage providers have to provide transparent delivery. Content owners are free to offer whatever services they want and either charge customers directly or indirectly through content aggregators.

/tom

Noah Vail
Oh God please no.
Premium Member
join:2004-12-10
SouthAmerica

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Noah Vail

Premium Member

When Businesses Combine Together to Deny Consumer Choices

What do we call that?

Can you say collusion?
I knew that you could.

NV
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

How are consumers being denied choice?

funchords
Hello
MVM
join:2001-03-11
Yarmouth Port, MA

funchords

MVM

Re: When Businesses Combine Together to Deny Consumer Choices

said by openbox9:

How are consumers being denied choice?
If your incumbent ISPs do not subscribe, you cannot either.

This is typical of Cable TV or satellite but it's pretty unusual for the Internet or telephone.
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

Ok, so choose not to subscribe to your incumbents' services if they aren't providing products that you desire. Where's the denial of choice? Personally, I hope ESPN learns a painful lesson from consumer backlash towards their overpriced products, but as long as consumers keep paying, ESPN will keep jacking rates.

funchords
Hello
MVM
join:2001-03-11
Yarmouth Port, MA

funchords

MVM

Re: When Businesses Combine Together to Deny Consumer Choices

said by openbox9:

Ok, so choose not to subscribe to your incumbents' services if they aren't providing products that you desire. Where's the denial of choice?
Given that it's ESPN360, it's easy for me to say "I'm with you" here. As an Internauter, I don't like this business model, but it's ESPN's right to fail (hopefully) at it.

But this isn't the only example. At the end of last year, when Bright House and TWC were negotiating with Viacom at the last minute, Viacom threatened to block INTERNET access to its sites unless those Cable TV providers successfully negotiated. We'll never know if that was an empty threat, because Bright House and TWC did get a contract with Viacom (details sealed, of course).
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

And until the consumers of content flip a big old bird to the content owners, these tactics will continue. Unfortunately most consumers aren't willing to give up their MTV and ESPN...even if they have to pay out the nose for the privilege.

S_engineer
Premium Member
join:2007-05-16
Chicago, IL

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S_engineer

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

Well just what do you consider content. What happens when ISPs decide to promote one companies content via thier best effort traffic shaping over another companies because company [A] reached an agreement with the ISP and company [B] has not. Plus, now you have ISPs endorsing online video content. They can not legitimately argue in favor on caps by signing an agreement with an online video content provider!
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

said by S_engineer:

What happens when ISPs decide to promote one companies content via thier best effort traffic shaping over another companies because company [A] reached an agreement with the ISP and company [B] has not.
Preferential treatment of like data for reasons as you've highlighted is when net neutrality regulation becomes a necessity. I don't think you'll see that from ISPs for fear of spurring heavy handed government regulation.
said by S_engineer:

Plus, now you have ISPs endorsing online video content. They can not legitimately argue in favor on caps by signing an agreement with an online video content provider!
Why not. Just because an ISP has signed an agreement with a content provider doesn't mean that you as a customer has to visit that site. Save your allotted data transfer for something that you're interested in.

S_engineer
Premium Member
join:2007-05-16
Chicago, IL

S_engineer

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

But part of the argument that ISPs have used to ration the consumers usage is the influx of online video chews up too much bandwidth. This undercuts every argument that they've used.
What happens if everybody all at once decides to use 360 at the same time on a shared node?
openbox9
Premium Member
join:2004-01-26
71144

openbox9

Premium Member

Re: When Businesses Combine Together to Deny Consumer Choices

If they've instituted caps to help control the rampant growth of online video, I'd say that ISPs have nothing to worry about...the caps are already in place
glinc
join:2009-04-07
New York, NY

glinc

Member

Noo

hell no!!! i enjoy this service FiOS offers!!

No To ESPN
@sbcglobal.net

No To ESPN

Anon

Answer is Taxation

Sports should be taxed as they are a vice. I suggest that a modest 50% tax be placed on this service. Sounds like a reasonable way of dealing with these clowns and generating some needed cash for what REALLY IS IMPORTANT.

A900MHz Fan
join:2004-07-12
Mitchell, SD

A900MHz Fan

Member

Re: Answer is Taxation

said by No To ESPN :

Sports should be taxed as they are a vice. I suggest that a modest 50% tax be placed on this service. Sounds like a reasonable way of dealing with these clowns and generating some needed cash for what REALLY IS IMPORTANT.
Such as?

Neal

badtrip
Premium Member
join:2004-03-20

badtrip

Premium Member

Re: Answer is Taxation

said by A900MHz Fan:

said by No To ESPN :

Sports should be taxed as they are a vice. I suggest that a modest 50% tax be placed on this service. Sounds like a reasonable way of dealing with these clowns and generating some needed cash for what REALLY IS IMPORTANT.
Such as?

Neal
Poverty relief? Homelessness relief? Health coverage for all? College education for all?

TBH, sports are close to the bottom of important things. As a matter of fact I put sports about on the same level as I do video games. They are fun diversions but hardly important in the grand scheme of things.
sonicmerlin
join:2009-05-24
Cleveland, OH

sonicmerlin

Member

Re: Answer is Taxation

said by badtrip:

said by A900MHz Fan:

said by No To ESPN :

Sports should be taxed as they are a vice. I suggest that a modest 50% tax be placed on this service. Sounds like a reasonable way of dealing with these clowns and generating some needed cash for what REALLY IS IMPORTANT.
Such as?

Neal
Poverty relief? Homelessness relief? Health coverage for all? College education for all?

TBH, sports are close to the bottom of important things. As a matter of fact I put sports about on the same level as I do video games. They are fun diversions but hardly important in the grand scheme of things.
Well you're an idiot for thinking that. Sports do a lot to encourage people to pursue healthier lifestyles, if only to emulate their idols. Having "heroes" as people you look up to plays a huge role in younger people's psyches (and I don't just mean kids). In the past it used to be war heroes, and now in more peaceful times it tends to be sports heroes.

Sports and exercise in general are essential to people's well-being. Just because *you* consider it a diversion doesn't mean it actually is for everyone else.

•••••

epsnshouldbelike
@sbcglobal.net

epsnshouldbelike to No To ESPN

Anon

to No To ESPN
said by No To ESPN :

Sports should be taxed as they are a vice. I suggest that a modest 50% tax be placed on this service. Sounds like a reasonable way of dealing with these clowns and generating some needed cash for what REALLY IS IMPORTANT.
so then we can all pay $60 for basic cable / and $80- $100 for exp basic as you are locked in to espn even if you don't want it.

No to ESPN
@sbcglobal.net

No to ESPN

Anon

Re: Answer is Taxation

The agreement for ala carte selection of channels. I piss off the satellite and Comcast phone solicitors when they try and tell me how much money I will save by using their service. I tell them the 10 stations I want in addition to local and make them an offer of $ 30 a month. When they tell me that they can't do that then I tell them I guess it's back to the antenna.

n2jtx
join:2001-01-13
Glen Head, NY

n2jtx

Member

Stop it Now!

From the list of 60, I don't see the major players Comcast and Time-Warner, not to mention Cablevision. Hopefully they will have to stamina to tell Disney where they can go. I have less than zero interest in professional sports and I am perfectly happy to have those that do enjoy it foot the bill.

•••••

Millenniumle
join:2007-11-11
Fredonia, NY

1 edit

Millenniumle

Member

The power of content

Isn't it funny that ESPN can get 60 ISP's to pay them for content access while the RIAA and MPAA go about suing and three-striking? Their respective entertainment industries should fire them. Isn't it also funny that remaining smaller ISP's actually care that it isn't affordable for them? Boy, the RIAA and MPAA really aren't that bright are they? With movies and music they could have the internet begging at their doorstep.

I kinda disagree with Karl on this one. I think the model will flourish for those that have content in high enough demand. The American Cable Association would seem to agree, concerned they'll have to pony up to ESPN's demands in order to satisfy their subscribers.

ESPN has the right person(s) on the job managing their internet division. Excellent power play.


battleop
join:2005-09-28
00000

battleop

Member

Speaking from a Small ISP's point of view......

The model sucks. You have to pay a really high price for something a low number of customers want. If you divide the costs by the number of people who are actually using the service you are not making any money on the customers who want the service. It's not really that fair to spread the cost of a service that the minority of users use across the majority of users don't care about.

I would prefer a model where an ISP can buy access for their entire user base OR the consumer can subscribe on their own.

•••

buzz_4_20
join:2003-09-20
Dover, NH
(Software) Sophos UTM Home Edition
Ruckus R310

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buzz_4_20

Member

More of this crap...

Why don't they just charge USERS of the site directly instead of spreading the cost to all ISP customers. Isn't that what 99.999999999999999% of sites with paid content do?

To be fair this is right in line with ESPN's business model anyway, make everyone pay (a lot) for the channel regardless of how many actually want it.

It's about making money that's what it is, if they guarantee money from the ISP there is less risk than relying on users.

ConfusedPipeUser
@sbcglobal.net

ConfusedPipeUser

Anon

err, what happened to not riding "our pipes" for free?

So, if youtube was to begin charging ISPs for customer access to content, then that'd be okay with these ISPs? I'm shocked the same last mile providers that want to charge both sides for usage, particularly video usage, don't have any problem paying content providers to load content onto those same pipes...

F'ing weird. Youtube could make a mint by turning pay-for-access with their huge marketshare. When the ISP's balked, they could just point to the ESPN-360 model and say, "hey, you didn't mind doing it for those guys, so pay up."

Seems like ISP's screwed themselves by setting that precedent. Now every "unique" content provider will start getting dollar signs in their eyes and using the ISP as the intermediary to deal with instead of negotiating w/ only those users that want the service.

Sounds kind of like CATV, where some other middle-man decides what everyone wants access to.

••••

baineschile
2600 ways to live
Premium Member
join:2008-05-10
Sterling Heights, MI

1 edit

baineschile

Premium Member

Sports networks are the demons of cable television

For anyone who has complained about raising cable rates, you have one sect to thanks; sports TV. ESPN, NFL Network, Big Ten network are the epidemy of greed and what we know today as cable terrorism.

Here is a nice little business model. Big company owns rights to certain games. Big network makes spinoff little network (examples: FNB -> Big Ten Network, Espn -> espn2, espnclassic, espnu, espn360). Big network gives little network rights to games. Little network gouges customers for pricing in order to get rights to watch TV. The same is happening with other conferences, the SEC and ACC come to mind.

The NFL network pulled the national rights to their games that used to be broadcast on local channels...where did they move them? Lo and behold, the NFL network! Then, they have the audacity to limit the Sunday ticket to DTV only. God forbid someone want to watch an our of market team that doesnt have a clear view to the southern sky.

360 is the first step of this via broadband. Its inevitable that iPTV will be next gen, and we can only hope and pray someone pops the NFLs balloon before their greed can stretch that far.

Its too damn bad too, cause I love football.
Anyways, thats my rant.

•••••
jmmilner
join:2001-11-20
Yorkville, IL

jmmilner

Member

Nothing new here

ESPN is just trying to do over the net what they do every day in their core market - cable TV. They want the "cable" company (ISP) to pay them and then let the ISP figure out how to pass the cost on to their customers (or cut their own profit margin). It helps that many of the larger ISPs are either true cable companies (e.g. Comcast) or have parallel video delivery businesses (e.g. FiOS and U-Verse). ESPN and the "cable" companies largely share a common objective - they don't want what they provide unbundled so each end-user can pick and choose.
Cyron
join:2002-09-24
Charlotte, NC

Cyron

Member

I think this may be misunderstood

ESPN 360 content is free, if you use one of the specified ISP's. ISP's are paying the fee so they can get people to switch from the smaller ISP's that don't offer it.

It's similar to the NFL Network's deal with Direct TV. I can only get it if I use Direct TV, not cable. Direct TV pays the NFL for this exclusivity.

•••••

C0deZer0
Oc'D To Rhythm And Police
Premium Member
join:2001-10-03
Tempe, AZ

C0deZer0

Premium Member

Show of hands...

Who here could easily do without ESPN (online and on TV) ?

*raises hand* Since ABC is broadcasting the NBA Finals, no reason to really mess with ESPN at all. though trying to keep the faith that the Magic will come out victorious is getting seriously hammered right now

The argument is just as flawed as how ESPN wants all TV packages - including the most basic packages - to have their channel included, even if chances are that the viewers will never tune to that channel.

•••