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Could a Twitter-Disney combination help close the digital divide on content?

Posted September 26th, 2016 in Broadband, mobile telephone, sponsored data, Twitter and tagged , , , by Alton Drew

Bloomberg has been reporting for the past few hours that Disney has retained an adviser to help the entertainment company craft a bid for Twitter. As the markets go through pre-debate jitters and are currently on a down note, Twitter is up over one percent while Disney is moving in the other direction. Twitter, while among the big social media three that includes Facebook and LinkedIn, has been struggling to define itself and grow the number of subscribers.  Today’s news comes as no surprise to me and I’m happy a media company is making a play versus your run of the mill advertising company (although Salesforce allegedly is interested in the micro-blog.

Twitter picked up a little notoriety last week when it live streamed a NFL game. I enjoyed watching it via Twitter, especially given the quality of the video. Today’s news has me thinking how minority content producers could benefit from a Disney acquisition of Twitter. According to Pew Research, 27% of blacks that use social media use Twitter versus 21% of whites. Also, blacks and Latinos show a tendency to rely more heavily on their smartphones (12% and 13% respectively) than their white counterparts (4%).

While it’s too early to say what Disney would do with Twitter as part of its portfolio, I think such an acquisition would provide Disney with basically another channel for deploying content, especially niche content such as programming produced for minority cultures. Mobile carrier zero rating or free data services could augment such a strategy by providing cost free access to minority-produced content. Not only would it be less expensive for low-income minorities to access content, but members of other communities could be introduced to another culture’s content at a reduced financial cost.

Until then, first things first. A bid will have to be made. Stay tuned.

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Open network architectures drove innovation, not net neutrality

Just when I was about to enjoy an evening with Nicole Beharie … okay, enjoy an evening watching Nicole Beharie on “Sleepy Hollow“, I get a tweet strongly suggesting that net neutrality drives innovation.  At my advanced age I’m learning to take deep breaths before going ballistic, and the five or six people (hopefully they are people and not spammers) who follow me know that when a net neutrality proponent mumbles anything resembling support for that most intrusive of broadband policies, well, you may as well drop chum in the water and call me Bruce the Shark.

I responded to the tweeter (whose only saving grace was that he is a libertarian … go figure) was that open network architecture, not net neutrality, drove innovation.  An open network architecture as defined on Webopedia.com is:

“An architecture whose specifications are public. This includes officially approved standards as well as privately designed architectures whose specifications are made public by the designers. The opposite of open is closed or proprietary.

The great advantage of open architectures is that anyone can design add-on products for it. By making an architecture public, however, a manufacturer allows others to duplicate its product. Linux, for example, is considered open architecture because its source code is available to the public for free. In contrast, DOS, Windows, and the Macintosh architecture and operating system have been predominantly closed.”

While open network architecture speaks to standards of design for apps and operating systems of the internet, net neutrality speaks to the behavior of the broadband provider.  The Federal Communications Commission’s rules contain three major components of net neutrality:

  • Transparency. Broadband providers must disclose information regarding their network management practices, performance, and the commercial terms of their broadband services.
  • No blocking. Fixed broadband providers (such as DSL, cable modem, or fixed wireless providers) may not block lawful content, applications, services, or non-harmful devices. Mobile broadband providers may not block lawful websites, or applications that compete with their voice or video telephony services.
  • No unreasonable discrimination. Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic over a consumer’s broadband Internet access service. Unreasonable discrimination of network traffic could take the form of particular services or websites appearing slower or degraded in quality.

Net neutrality, with its emphasis on restricting behavior, cannot be argued to drive innovation.  Entrepreneurs seeking to innovate their product don’ t turn to government rules for inspiration and encouragement.  Net neutrality proponents seem to take that view of government regulation; asserting government’s influence on technology development without providing one iota of evidence supporting that view.

We can all agree that the ability of application developers to test and deploy their products have given us Mozilla, Skype, Tweetdeck, and a million other applications.  Imagine, however, if someone came along and said we can’t have high-occupancy vehicle lanes or if you are in the regular lane with three people in your car, an HOV lane cannot be made available to you.  Those types of restrictions would see automobile designers (akin to app developers) building only three-wheel motorized scooters that can seat only one person and hit 40 miles per hour.

That’s not innovation.

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Public Knowledge and Free Press want the state to stifle business judgment

Free Press and Public Knowledge would like the Federal Communications Commission to prevent internet service providers such as AT&T and Verizon from providing an innovative method of giving consumers more access to online content without taking a hit to consumers’ data plans.  Ironically, the pricing method, sponsored data, has some precedence from back in the days when AT&T and other carriers offered 1-800 number services to small businesses.  Unfortunately for consumers, Free Press and Public Knowledge use of selective memory is resulting in consumers receiving misleading information about the impact sponsored data plans may have on their buying power and consumer welfare.

As Richard Bennett describes it in a piece posted today, sponsored data plans, where a content provider would pay an internet service provider to allow the ISP’s customers to view certain pieces of content, is a fee shifting mechanism.  Rather than consumers running the risk of running over their data caps when viewing, say a rebroadcast of my Florida State University Seminoles winning the national championship, the content provider, say ESPN, would pay Verizon to allow customer access.

How would a content provider benefit?  If it can get more eyes streaming an event at no extra charge in terms of data usage, consumers may find themselves wanting to view other paid content or purchase an advertisers goods and services from ESPN’s website.

The internet service provider could also benefit because it is one less piece of content that it would have to pay for in order to provide to its subscribers.

Is there some precedence for this?  For we old heads ( a group that the likes of Free Press and Public Knowledge don’t bother to hire it seems) we remember the 1-800 number days.  Large and small businesses and even residential consumers purchased 1-800 number services from long distance carriers in order to incentivize customers to make the long distance calls necessary to place orders for goods and services.  Heck, even I had one so that my fiance at the time and my mom could call me for free.  No one bitched and moaned at the time about businesses using these numbers.  It was good business judgment and smart competitors jumped on the band wagon and bought the services.

Fast forward over twenty years and all of sudden what is basically a 1-800 number service for content providers is a no-no in the net neutrality world.  All of a sudden the “open internet” is under assault because internet service providers and content providers wish to exercise autonomy in developing a strategic partnership that can increase traffic while earning profits for shareholders.

Let’s take a closer look (let me pause here as I hold my nose) at some of Free Press and Public Knowledge’s arguments.  I’ll start with Public Knowledge’s argument first because it is the most unconscionable.  It comes from Michael Weinberg, Public Knowledge’s acting co-President:

“The FCC needs to protect consumers and creators from internet service providers (ISPs) who want to pick winners and losers online. This is but the latest example of how data caps are increasingly becoming used to threaten the open internet.  As AT&T CEO Randall Stephenson announced in May, data caps are all about forcing content creators to pay and are no longer about any sort of network congestion. In December, Stephenson admitted to investors that they had addressed the network capacity issues that were used to justify data caps in the first place. It is time for the FCC to heed Public Knowledge’s over two year old call to investigate data caps and gather basic information about their use. It is impossible for the FCC to examine the impact of today’s announcement on net neutrality until it develops an understanding of data caps.    

“When it was reported in May that ESPN was in negotiations with a major carrier to pay to be exempt from data caps, Public Knowledge highlighted that this was an obvious violation of net neutrality. The company that connects you to the internet should not be in a position to control what you do on the internet. AT&T’s announcement positions itself to do just that.  

“In addition to being a ripoff for both consumers and content creators, AT&T’s plan erects a massive barrier in front of anyone hoping to be the next big thing online.”

The FCC needs to do what?  At the first sentence it should be game over.  Why would we want the government to step in and regulate a contractual arrangement?  Aren’t firms free to enter into a fee shifting agreement like this?  Is there a rule somewhere in the Communications Act that prohibits this?  How does allowing free access to content violate net neutrality rules?  Is there any mention of tier packaging or tolling of data speeds here?  Public Knowledge’s argument is way off.

Let’s look at Free Press’ argument.  This one comes from Free Press’ policy director Matt Wood (Take a deep breath. Now hold nose and dive in):

“While sponsored data will be pitched as a way to save customers money, it’s really just double charging.  The customer is still paying for the connection, and won’t get a refund just because Facebook or YouTube or ESPN are also paying for some data usage now. Both the customer and the content or app provider are paying for the same data. Only AT&T makes out better.”

Really?  Why wouldn’t the customer pay for their connection?  And why should the customer expect a refund?  If a cable subscriber got access to HBO free for six months as part of a promotion, would Free Press and Public Knowledge expect the customers access to the cable company’s network to be free also for that six months?  I hope not.  There are fixed and variable costs of the network that have to be recaptured regardless of the freebies a consumer may be receiving.  Also, in the days of 1-800 number services, did consumers see their access line and subscriber line charges go to zero when they used an 800 number service?  The answer is no.

Free Press and Public Knowledge are staffed by very bright and articulate people, but there comes a time when you have to allow reason to take over and take a break from singing at the windmills.  AT&T’s sponsored data service is a strategic partnership that the FCC should not intervene in.  Consumers won’t be harmed because it will be up to them to choose whether to access sponsored content.  Smaller content providers are free to find alternative methods of financing their own sponsored data arrangements should they find investors or underwriters who believe that type of business model would be feasible for the content provider.

 

Fee sh, select