Klint Finley reports in Wired:
Comcast can’t deliberately block access to particular streaming services and favor its own—or those of a partner. But nothing stops Comcast and others from adopting data limits and charging you when you exceed them. Nor does anything stop it from exempting some data from that limit. It could put Comcast in the position of picking winners and losers in the streaming video market.
Watching Netflix using Comcast is about to get a little easier.
The longtime rivals recently confirmed that Comcast’s X1 interactive television box will offer Netflix, obviating the need for a smart TV or third-party device like a Roku or Chromecast. The two companies said little more than the combination arrives “later this year,” and it remains to be seen whether you’ll pay a separate fee to use Netflix. The answer almost certainly is yes. The bigger question is whether you’ll also need Comcast Internet service to watch Netflix over X1—and, if so, whether watching Netflix will eat into your Internet data plan.
It could put Comcast in the position of picking winners and losers in the streaming video market.Comcast did not respond to request for comment, but content viewed via X1 doesn’t typically count as data because it’s considered television. Making Netflix part of its television service would be great for customers who use Comcast’s television service and worry about exceeding the one terabyte threshold the company is testing in places. But such an arrangement would raise net neutrality questions, since it could put Comcast in the position of choosing sides in the streaming video market.
What Counts as Internet?
Netflix vociferously supports net neutrality—the idea that Internet service providers should treat all Internet traffic equally. It’s easy to see why: the company has much to lose if providers prioritize their streaming services over Netflix’s or otherwise hamper its ability to reach customers. But Netflix doesn’t have as much to lose as smaller competitors. It has name recognition, a huge subscriber base, and, it turns out, the ability to negotiate mutually beneficial agreements with major cable television and Internet providers. Others won’t have those advantages, and could struggle to find footing if they can’t get their own spot on Comcast’s platform.
Last year, the Federal Communications Commission approved the Open Internet Order barring Internet service providers from playing favorites. Comcast can’t deliberately block access to particular streaming services and favor its own—or those of a partner. But nothing stops Comcast and others from adopting data limits and charging you when you exceed them. Nor does anything stop it from exempting some data from that limit, a called zero rating.
What’s more, X1’s interactive TV service doesn’t qualify as an Internet service under the FCC’s rules. It is an IP-cable service, which is explicitly exempt from the Open Internet Order. The FCC made this exception for digital TV so it could continue regulating TV providers as it has for decades, enforcing rules that, for example, require including local programming and emergency broadcast services.But the line between IP-cable and Internet services is blurring. Last year, Comcast confirmed that its streaming video service, Stream TV, won’t count toward a customer’s data plan. It argues that Stream TV is an IP-cable service even though it’s delivered only to computers. Dish, meanwhile, delivers its live television service, Sling TV, over the Internet. As such, Sling does not qualify as an IP-cable service, so it escapes local regulations. Allowing customers to watch Netflix over an IP-cable service would further complicate things.
The FCC can intervene if zero rating or IP-cable are used anti-competitively. But since Comcast would, in this case, be promoting another company’s service, the FCC may not feel compelled to step in. The agency has yet to to challenge T-Mobile’s Music Freedom and Binge On programs, which exempt music and video streaming sites from the data limits.
Battle of the Box
Even if Netflix on X1 would require Internet access and count toward a user’s data plan, its placement on the platform still could harm smaller competitors. A privileged position on Comcast’s set-top boxes makes Netflix easy to watch, while streaming startups would have to convince people to use third-party hardware. The obvious solution is to let customers watch any service through X1, or allow third-party set-top-box services to access Comcast’s channels and on-demand content. The FCC has proposed rules that could do that, but the cable industry says the rules are not only unfeasible, but unnecessary.
On one hand, the Comcast’s partnership with Netflix may seem like an attempt to combat these proposed rules by proving they aren’t necessary. Comcast is opening X1 up to competitors, after all. But in reality, it signals that the set-top-box is the next front in the struggle for net neutrality.
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