We are entering a digital world in which some broadband content will be delivered to consumers toll-free and other content will come at a cost. The cost won’t be in the form of a subscription charge, but in broadband usage fees charged by the wireless or wireline provider. Those companies — such as Disney — that are able to subsidize consumer access will have a big advantage in the battle for attention. The policy question is not how to stop this eventual distribution of broadband wealth, but what to do about it.
One of the top policy issues in telecom is what to make of usage fees — also known as data caps or tiered pricing — on broadband. Wireless providers have long charged users for the amount of bandwidth they consume and wireline providers are following suit. Consumer advocates are concerned that these pricing models will result in less and more expensive service; consumers will be risk averse in accessing content for fear of exceeding their caps; and providers will be able to penalize upstream competitors by making their services too expensive (e.g., Netflix). Public Knowledge has started a campaign against data caps. The latest wrinkle is that ESPN is considering a deal with wireless carriers that will subsidize bandwidth so that consumers can access ESPN on their mobile devices without being charged. Open internet advocates say this violates net-neutrality principles and the open-Internet.
The FCC’s Open Internet Rules – now in peril at the D.C. Circuit — do not stand in the way of ESPN’s plan. First, because it didn’t take a definitive position on “paid prioritization” which is what ESPN wants to do (it frowned on the practice, but didn’t definitively say that it amounted to prohibited discrimination). And, second, because the non-discrimination provisions of the rules don’t apply to mobile.
More to the point, Congress will never allow the FCC to ban a practice that makes so many consumers happy. It’s just impossible to imagine a rule that tells sports consumers that they can’t have mobile access to sports for free because that wouldn’t be fair to all the other content that wants to reach them. Paid prioritization is going to happen. There will be distributional inequities online that reflect the market position of the content providers.
What do you do about this? How do you ensure that all content providers have a chance to reach the consumer when consumers can’t afford unlimited data and the providers can’t afford to subsidize data usage? There are three ways to address the issue. One is through neutrality/open internet orders, but see above. A second is by banning usage-based pricing, but no one really supports this. Price discrimination is generally an efficient and fair approach to supplying a good like communications networks (note – Public Knowledge distinguishes speed-based pricing from data caps, saying that the former is OK because the worst that happens is that your service is “shaped” or throttled down, but you don’t face overage fees). We need to find points of intervention in media policy that ensure toll-free transit for content. Should there be “public” toll-free access made available as a condition of spectrum that’s auctioned off? Is unlicensed wireless part of the solution? Do we subsidize certain content or content collectives? These questions — long staples of media policy — have returned to relevance in the context of digital networks, but the policy discussions have not caught up.