Live streaming sports on social media platforms points out further issues with Obama-era net neutrality regime

By Steve Brachmann
June 3, 2017

Live streaming sportsOn Thursday, May 18th, news media was reporting on a broadcast deal which had just been struck between Menlo Park, CA-based social media giant Facebook (NASDAQ:FB) and American professional sports league Major League Baseball (MLB). Reportedly, the terms of the deal involves Facebook providing a free broadcast of one MLB game every Friday on MLB’s Facebook page for a total of 20 games. The social media firm appears to be hopeful that securing rights to MLB broadcasts which are then provided for free to consumers will increase the company’s engagement with its reported 182 million daily active users across North America, including both the United States and Canada. Reports indicate that talks between Facebook and the MLB on this particular deal extend back to at least this February.

This is not the only deal which Facebook has inked in recent days to provide broadcasted content to Internet consumers on its own, proprietary social media platform. Also on May 18th, business publication Fortune reported that Facebook struck a partnership with ESL, formerly the Electronic Sports League, in a bid to capture audiences from the growing eSports sector. The terms of this deal involve ESL livestreaming 30 hours of tournaments from the popular shooting game Counter-Strike every week on Facebook. From June onward, ESL reportedly expects to broadcast a total of 5,500 hours worth of gaming tournaments through Facebook.

Facebook is not the only company seeking to provide content to consumers via their own Internet-based platforms. In early May, the Women’s National Basketball Association (WNBA) announced a deal with San Francisco-based social media firm Twitter (NYSE:TWTR) to livestream 20 games per year over multiple seasons on the social media platform. The first WNBA game livestreamed on Twitter on Sunday, May 14th, earned 1.1 million viewers, nearly one-third the average audience watching National Football League (NFL) games streamed on Twitter during the 2016-17 season. Seattle-based Internet e-commerce giant Amazon.com (NASDAQ:AMZN) will livestream Thursday night NFL games during the 2017-18 season for $50 million, a sum which is reportedly about five times what Twitter paid to broadcast NFL games last year. Twitter’s WNBA deal and Amazon’s NFL deal both include promotional efforts on behalf of the Internet companies to promote either sports league.

It makes perfect sense that these Internet companies would want to make forays towards becoming streaming content providers, especially as the consumer market is experiencing a major shift away from traditional cable broadcast subscription models and towards on-demand and live streaming video. However, given the current political context in Washington, DC, especially at the Federal Communications Commission (FCC), this new role of Internet companies as content broadcasters begs greater scrutiny.

In the days leading up to the FCC’s 2015 Open Internet Order, many people were focused on the great hypothetical evil which was “paid prioritization.” In order to prevent Internet service providers (ISPs) from discriminating between forms of content online, creating “fast lanes” and “slow lanes” for Internet access, the FCC and the Obama Administration assured U.S. consumers that reclassifying ISPs as Title II common carriers, increasing the FCC’s regulatory authority over companies providing Internet access, was the best way to protect their ability to access the Internet without ISPs being able to gouge consumers on price.

And yet, couldn’t it be argued that the aforementioned Facebook, Twitter and Amazon broadcasting activities constitute a form of paid prioritization? In fact, the practice of offering certain content for free on an Internet-based platform is known as zero-rating and it’s arguably illegal under the net neutrality regime set up under former FCC chairman Tom Wheeler. Further, Internet giants like Facebook and Twitter are able to keep sucking up bandwidth on Internet channels and ISPs cannot charge content providing companies in such a way which would make them able to prioritize content in ways that could benefit the American consumer. And it’s not as though Facebook itself hasn’t run into similar net neutrality roadblocks in foreign jurisdictions, most notably having had its Free Basics Internet service banned by India’s telecommunications regulator last February.

Anyone who, at this point, wants to fall back on the traditional argument that FCC’s net neutrality regime must stay in place to counteract the regional monopolies enjoyed by ISPs needs to address the fact that pre-deployment barriers erected by local municipalities are the main reason why some areas only have one ISP to choose from. Giving the FCC federal oversight over the business activities of ISPs achieves nothing in terms of the local activism which is required to address the actual problem of providing cost-effective Internet access to American consumers.

Like it or not, current FCC chairman Ajit Pai and his proposed “light-touch” regulatory framework for Internet companies, whether those firms provide Internet access or content on the Internet, make a great deal of sense. Further, given the fact that the Internet giants are generally in favor of maintaining the net neutrality regime established under former President Barack Obama because it improves their bottom lines, why would American consumers support federal policies which actively make the Internet anti-competitive?

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 5 Comments comments. Join the discussion.

  1. Crowley June 3, 2017 1:17 pm

    These deals to stream te games are the same kind of broadcast right deals that have been made for ages. It is in no way paid prioritization.

    Zero-rating is harmful because of one set of content or service is offered without counting towards someone’s data cap, it offers them an incentive to use that service above another that may be better, but counts towards their monthly data allowance. It’s basically picking winners and losers online using free data.

    It’s not Internet companies “sucking up bandwidth”, it’s consumers. Consumers are using these services because they like them and that causes Netflix, Twitter, Facebook, etc. to be unfairly labeled “bandwidth hogs” by people who think that those companies need to pay ISPs. The idea that Internet companies should pay ISPs because those Internet companies offer popular services that a lot of consumers use is in itself anti-competitive and goes against quite a few free-market principles, I’d say.

    Also, Title II reclassification acknowledges the fact that the Internet is an essential utility in the everyday life of Americans.

  2. Warren Wolfeld June 4, 2017 11:33 am

    Steve, thank you for this post. Maybe my head has been in the sand, but this is the first time I’ve heard a reasoned argument against “net neutrality”. I love your writings and respect your views, so I’d like to understand it better.

    My understanding of the net neutrality issue is that without the rule, ISPs can make deals with favored websites and thereby starve unfavored websites of bandwidth. Are you saying that up and coming streaming platforms like Facebook and Twitter are the real problem, that these platforms are able to make deals with favored content providers and thereby starve unflavored content providers from access to the streaming platform? And that that’s a more significant power than ISP’s have for selecting favored websites?

    If that’s what you are saying, then I don’t think I agree. There’s lots of competition among streaming platforms for content, and if Facebook were to try to starve out a small unfavored content provider, then the small content provider would just go to Twitter, who would welcome the additional business. That’s not possible if an ISP tries to starve out a small website, because as you mention, in many communities there is only one available ISP.

    I agree that the deals made by communities for exclusive ISP service is stupid today, but it’s what we’re stuck with at least for now.

    So what am I missing?

  3. Steve Brachmann June 12, 2017 3:51 pm

    @Warren – Sorry for my delayed response, I had intended on getting back to you much sooner than this. A few thoughts. One of my issues rests with the interpretation of what is a common carrier. As defined by the Communications Act of 1934, a common carrier is “any person engaged as a common carrier for hire, in interstate or foreign communication by wire or radio”. This seems to be a much simpler distinction before the days of the Internet, where the carrier’s platform wasn’t able to be commercialized in quite the same way (i.e.: telemarketers might use phone lines to contact consumers and sell products, but online banking, online gaming, social media are all huge industries which couldn’t exist without the Internet). So where’s the line? If this is all about maintaining Internet access for American consumers to all Internet services, is it that we’re actually concerned about regulating the actions of businesses that engage in interstate or foreign communications by wire or radio, or is it that we just want these things for free? Because what happens, then, if Facebook ever decides to monetize these broadcasts with a paywall? I personally think you’d see a consumer revolt if Facebook ever tried a pay model, but my point is that Facebook is already an Internet service provider; if you don’t have a Facebook account, my guess is that you don’t have access to watch the MLB broadcasts. Further, let’s go to the Telecommunications Act of 1996. Look at Title III (Cable Services), Part V (Video Programming Services Provided by Telephone Companies), Section 651(a)(2) – “Common carriage of video traffic.–To the extent that a common carrier is providing transmission of video programming on a common carrier basis, such carrier shall be subject to the requirements of title II and section 652, but shall not otherwise be subject to the requirements of this title.” I don’t think it’s too far of a stretch to argue that this kind of language presupposes that video broadcasts are a factor in determining an entity’s status as a common carrier.

    I agree with you that good content will find a platform and that, if Facebook tried to squeeze someone out, Twitter or a different social media platform could snap it up. But look at what you’ve just acknowledged here: Those companies are able to do that because they’re not fettered by the net neutrality regulation. Let’s take Netflix as an example here. Under the same reasoning that allows Facebook to broadcast MLB games, it could also broadcast Netflix as an app on the Facebook platform. (Netflix wouldn’t do that, I don’t think, because it’d be giving away its service for free, but MLB’s doing exactly that in a limited fashion) This just adds to Facebook’s consumer bandwidth, which is good for Facebook because it has more leverage with advertisers now. But it’s the Internet access providers like Comcast, AT&T and Time Warner who are given all the responsibility for keeping the door open wide enough so its consumers can keep connecting to Facebook; these Internet access companies have lower subscriber bases (Comcast et. al. can only get subscribers from certain regions, Facebook/Twitter et. al. operate across the globe) and lower market caps. They are the smaller guys in this fight. I don’t have it handy, but I remember covering a Congressional hearing on Internet access where a representative from a rural ISP was speaking to the difficulty of expanding service to rural areas because of the increased regulatory costs brought on by net neutrality. So to my mind, the current net neutrality regime is actively hurting consumer access to Internet services, at least from this perspective of reaching rural areas.

    Further, the way net neutrality has been interpreted overseas has definitely reduced access among at least some consumers to the Internet. I’ll go back to the example of Facebook’s Free Basics in India. It was intended to be a program that gets Internet into underserved areas and yet the telecom regulator in that country nixes it because some apps are zero-rated on the platform. It was free, and that was the government’s problem with it. How does that serve the consumer? If Facebook wants to give access away for free, and consumers want it, why does the government have to get involved to stop it? Now let’s go back to that hypothetical Netflix example. Facebook could offer Netflix as an app on its own platform, but an ISP would run afoul of net neutrality rules if they offered Netflix free to its own subscribers. That’s paid prioritization. But exactly which one of Netflix’s 50.85 million US subscribers as of Q1 2017 (https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/) is going to be upset that they don’t have to pay their $8/month Netflix subscription anymore?

    Also, the fears around paid prioritization, zero rating and “starv[ing] out a small website” seem very anecdotal and unfounded to me. I’ve yet to see/hear an actual example of consumer/content provider harm caused by a violation of net neutrality principles. Yet we get Stephen Colbert talking about the issue on a roller coaster (https://www.youtube.com/watch?v=SiUV5jmfYEU) and John Oliver launching 45,000 public comments to the FCC on net neutrality (http://www.ipwatchdog.com/2015/04/22/net-neutrality-creates-murky-internet-waters-for-consumers/id=57005/). It just strikes me as odd that Colbert and Oliver take up positions that are very favorable to their content provider employers (CBS, HBO) against ISPs. Media companies sold this as a consumer issue, got consumers involved in the fight, and now the resulting regulations are making it more difficult to expand Internet access in rural areas. Honestly, I think it’s a little damaging to the respective reputations of Colbert and Oliver given the way they’ve made their career in presenting political issues in an entertaining way.

    Last point: If we agree that deals made by communities for exclusive ISP service is stupid, can we also agree that two wrongs don’t make a right? I’d like to continue this discussion, but I will note that it would be helpful to have an example where an ISP actually starved out a small content provider. Because I’ve looked and I haven’t found that yet, just anecdotes of a potential consumer evil to stoke fear. And, as a very smart man and former U.S. president once said, “the only thing we have to fear is fear itself.”

    Also, came across this short post on the idea of “net vitality” instead of neutrality, thought it might be of interest to you – http://marconisociety.org/consumer-bandwidth/

  4. Steve Brachmann June 12, 2017 3:59 pm

    @Crowley – Large company profits wildly at their successful use of infrastructure provided by smaller company. Small company wants to charge large company for its use of said infrastructure. Large company gets the government to intervene on its behalf and it gets that intervention because U.S. consumers are convinced that it’s a threat to even smaller content providers. It makes little to no sense to me. All the “Title II acknowledges Internet as a basic utility” propaganda strikes me as little more than a fancy ribbon on a broken gift.

  5. Peter July 16, 2017 5:45 am

    There have been many complaints against ISP’s in slowing internet traffic a quick web search will reveal. Comcast slowing netflix – http://money.cnn.com/2014/08/29/technology/netflix-comcast/index.html. General metering of traffic by all major ISPs – https://www.theguardian.com/technology/2015/jun/22/major-internet-providers-slowing-traffic-speeds. State investigations into deliberate slowdowns of major web services – https://arstechnica.com/business/2015/10/ny-suspects-verizon-twc-and-cablevision-of-slowing-internet-traffic/. So ancedotely and in studies there is well documented effort of ISP’s to slow and direct traffic before and during the current net neutrality regime. Without the rules this would only increase and expand, any other view is naive.

    Many news organizations include a stream of their broadcasts, and offer some version of a paywall. They have been operating in this space for much longer, but there have been no calls to classify them as common carriers. Why no mention of youtube with its content creators? Where is the line drawn for who needs this new expansive reading? These rules are made to prevent and counteract egregious conduct, of which ISP’s have been consistently engaging in, and when a consistent, mainstream version of television is prevalent on the internet, more regulation may be needed then.

Post a Comment

Respectfully add to the discussion.

Name *
Email *
Website