VC Highlights Problems Inherent in AT&T's 'Sponsored Data'
For years we've talked about how AT&T's long-festering plan to introduce a "1-800 number for mobile data" was a pretty bad idea
, given it gave more power to AT&T, while giving the biggest content companies with the deepest pockets an unfair advantage over smaller content companies and startups. Last week AT&T formally introduced the idea under the moniker of "Sponsored Data
," heavily playing up the benefit of having select content (ESPN, etc.) not count against a user's usage cap.
Many users focused solely on the idea of "free data" and couldn't quite grok the deep problems with such a model.
Aside from content companies simply passing the costs on to you some other way, venture capitalist Fred Wilson pens a blog post
arguing that startups can easily be harmed in a world where giants like ESPN, Facebook and Google get to pay to have their services and content higher on the food chain. He offers up a few examples:
Entrepreneur: I plan to launch a better streaming music service. It leverages the data on what you and your friends currently listen to, combines that with the schedule of new music launches and acts that are touring in your city in the coming months and creates playlists of music that you should be listening to in order to find new acts to listen to and go see live.
VC: Well since Spotify, Beats, and Apple have paid all the telcos so that their services are free on the mobile networks, we are concerned that new music services like yours will have a hard time getting new users to use them because the data plan is so expensive. We like you and the idea very much, but we are going to have to pass.
Entrepreneur: I plan to launch a service that curates the funniest videos from all across the internet and packages them up in a 30 minute daily video show that people will watch on their phones as they are commuting to work on the subway. It's called SubHumor.
VC: Well since YouTube, Hulu, and Netflix have paid all the telcos so that their services are free via a sponsored data plan, I am worried that it will hard to get users to watch any videos on their phones that aren't being served by YouTube, Hulu, or Netflix. We like you and your idea very much, but we are going to have to pass.
With this week's defeat of already fairly wimpy neutrality rules (which already largely excluded wireless services), Wilson worries we've entered "Internet 3.0," where nothing inhibits incumbent fixed and mobile carriers from experimenting with all manner of cumbersome pricing layers, most of which will be to the detriment of those that can't afford to pay to play. Is AT&T's idea setting the stage for the new normal? Or is it an idea destined to fail courtesy of informed consumers?
Re: How is this different... Netflix didn't force anyone to do anything. They're not the only game in town for movie and TV show streaming.
Also, the Open Connect appliances could actually serve to improve the user experience of other services by removing load from an ISP's other peering and transit links. As it is, many of these are congested at various times of the day, and certain ISPs don't seem to see any need to resolve it by adding capacity.
Re: How is this different...
said by TAZ: They are still trying, attempting leverage their current popularity, by manipulating stream quality...only "participating partners" can successfully get a good stream.
Netflix didn't force anyone to do anything.
said by BosstonesOwn: It's not actually free, NETFLIX is paying for this exclusive on network cache.
It's no where near the same. Netflix offered it to the isps for FREE.
said by BosstonesOwn: and their 95th percentile will drop substantially if they only need to send one copy to each device on each ISP's network which can be done during their lowest usage periods, only direct users and the C&C traffic during busy times.
And Netflix doesn't pay the transport out to a provider when I request a movie, they pay a set fee called a 95 percentile
THEY pay less for transport, but buy the device instead giving them better quality and availablity at prices Joe's startup can't match.
done a different way but not a different end effect than AT&T paying for dedicated line transport and even prepaying end delivery "overages" for mobile users, to assure THEIR content is the most available AND cheapest (since that seems to be a big market driver)...at least at first.
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Re: How is this different... Netflix isn't manipulating stream quality. They merely point out ISP's stream quality issues. They offer a solution for free to help relieve traffic congestion, but some ISP's who see Netflix as a threat to their Pay-TV business don't want a "solution", they want Netflix to fail and so will not accept CDN.
If there is a problem with Netflix stream quality, the problem lies with your ISP--- Not Netflix.
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
Re: How is this different... No, Are you deliberately so obtuse? Do you get paid to be rude?
said by BosstonesOwn: Netflix PAYS for the device.
Netflix pays for their gear to be placed inside the isp network ?
said by BosstonesOwn:the 95% is less because they send 1 copy to the device, which then freely send thousands of copies inside the ISP's network rather than sending those thousand of copies to individual customers, and each country/timezone has different peaks NF only need to send one set of content to a local CDN and from there feeds ONE copy to each local ISP's device.
they are paying based on 95% usage which is constant pushes
total bandwidth direct from NF's CDN out to the internet is greatly reduced and because it is mostly not realtime the local distribution can be during local off hours lowering the peak further.
Think about it, very simple math.
said by BosstonesOwn: So YOU receive a payment in gear, dare I say the S word?
have 2 of their CDN boxes in my network for testing with our gear...
I didn't say caches/ local content storage doesn't work, in fact I've advocated that approach before, but this is about WHO is controlling who's content is most available cheapest to use.
Different method same endpoint.
Re: How is this different... No I get paid to architect and secure environments for fortune 500 companies. And sometimes being rude is part of that deal.
Yes Netflix owns the devices. Doesn't mean they are a gift to the provider. They are netflix inventory.
The CDN devices are beneficial to both sides. Not just Netflix, you see there is these things called peering agreements and when they become lopsided one company has to pay to compensate for the traffic differences, or what happens is the provider chokes the pipe down on one side to make it even again ALA Verizon/Cogent. The 95% rule does something for a provider like Netflix, it makes it fair for them.
Now , like I said if you knew how big Netflix was you would see there is no non peak time for them. They are a global streaming provider ! The united states is not the center of the world ! Get your head out of the clouds. They stream all over the world in different time zones, and yes it all propagates from 3 locations.
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