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Why Free Services From Telecoms Can Be a Problem On the Internet 89

HughPickens.com writes: T-Mobile said last week that it would let customers watch as many movies as they wanted on services like Netflix and HBO as well as all other kinds of video, without having it count against their monthly data plans. But the NYT editorializes that there are real concerns about whether such promotions could give telecommunications companies the ability to influence what services people use on the Internet, benefiting some businesses and hurting others. Earlier this year, the FCC adopted net neutrality rules to make sure that companies like T-Mobile, Verizon and Comcast did not seek to push users toward some types of Internet services or content — like video — and not others. The rules, which telecom companies are trying to overturn in court, forbid phone and cable companies to accept money from Internet businesses like Amazon to deliver their videos to customers ahead of data from other companies. The rules, however, do not explicitly prevent telecom companies from coming up with "zero rating" plans like the one T-Mobile announced that use them treat, or rate, some content as free.

"Everybody likes free stuff, but the problem with such plans is that they allow phone and cable companies to steer their users to certain types of content. As a result, customers are less likely to visit websites that are not part of the free package." T-Mobile has said that its zero-rating plan, called Binge On, is good for consumers and for Internet businesses because it does not charge companies to be part of its free service. "Binge On is certainly better than plans in which websites pay telecom companies to be included," concludes The Times. "But it is not yet clear whether these free plans will inappropriately distort how consumers use the Internet."
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Why Free Services From Telecoms Can Be a Problem On the Internet

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  • Kind of similar concept and could really hurt providers not large enough or able to jump through the hurdles. If there was some kind of multi party agreed upon open platform offering for this very thing it could work out.
    • Indeed. I can see it hurting the smaller and regional providers. I'm no cellular expert, but wouldn't this negatively impact the load on mobile networks too, specifically cell towers and make things slower for everyone?
      • by darkain ( 749283 )

        In theory, yes. But they started with music streaming services first. Now they're doing it with video. Check the details, when this service is enabled, it forces content to 480p resolution at lower bitrates. Now, why would they want to do this? Firstly, this is actually overall reducing bandwidth. Secondly, it allows them to have a very steady and predictable usage pattern of their network. Browsing web pages or doing other things online are generally very spiky between needing lots of content, then idling

    • Re: (Score:3, Interesting)

      by AK Marc ( 707885 )
      I've seen it done lots of times, and it doesn't make a difference. Zero rating data on a metered service doesn't change usage or affect the marketplace. It causes 1-5% of heavy users to switch carriers to one that makes it cheaper to use the service more, but that's all. That's what it's designed to do, and that's all it actually does.
      • Re:Free vs Fast Lane (Score:4, Informative)

        by JoeMerchant ( 803320 ) on Sunday November 15, 2015 @08:41PM (#50936981)

        To me, it means I will use my Netflix in an airport, when I never would have before. That's a change in usage patterns, it influences my choice of content providers. If another major player like HBO-Go were not included and I decided I would only keep one service: Netflix or HBO-Go, the one that is included on my cellphone plan for free has a huge competitive advantage.

        Now - have you ever heard of MangoFlix? No, you haven't, because all these entrenched services have locked up deals with content providers, and now connectivity providers, making it impossibly expensive to start up a competitive service. You know, like a competitive service that actually streams a decent collection of Movies, and not just stale TV series and in-house produced content.

        • by AK Marc ( 707885 )

          Now - have you ever heard of MangoFlix? No, you haven't, because all these entrenched services have locked up deals with content providers, and now connectivity providers, making it impossibly expensive to start up a competitive service. You know, like a competitive service that actually streams a decent collection of Movies, and not just stale TV series and in-house produced content.

          The primary issue being the content, not the zero rating. If MangoFlix had all the content you wanted, and HBO-Go didn't, would you really pay for HBO-Go, even if it was zero-rated for data use?

          • by AK Marc ( 707885 )
            That, and checking MangoFlix after posting, MangoFlix doesn't exist, which is why I've not heard of it (or it's an online-only company with no online presence, same effect).

            No small player will ever start up, much like no independent TV station will ever start up. The market is full, and there's no room left for a tiny startup.
            • No small player will ever start up, much like no independent TV station will ever start up. The market is full, and there's no room left for a tiny startup.

              My point exactly, and zero rating (of data streamed from the big providers) puts yet another hurdle in place for even medium to large startups that want to compete in a given field.

              • by AK Marc ( 707885 )
                It's a hurdle that nobody will trip over. I'd buy a Ferrari, but I don't have any money, and the dealership is on the other side of town. Which one of those is the bigger hurdle? Not all hurdles are equal. Most mobile data is still WiFi, from the last numbers I saw, so someone could enter without even using cellular data.
                • This is closer to: gasoline is being rationed, you can only get 5 gallons a month, but if you buy this car your gas is free. Oh, and if you weren't sure already, let's spell out that the oil companies and the car manufacturer are in bed together.

                  Again, hard to get worked up over entertainment - and you're right about WiFi, depending on lifestyle. Right now, I only stream Netflix to my phone over WiFi - but I do travel once in awhile, and I could stream it 4G when I'm away from home, but never have because

                  • by KGIII ( 973947 )

                    Do you complain that Tesla is offering free charging stations?

                    • Not really an accurate analogy.
                      It would be better to ask if he would complain if you Tesla allowed Nissan Leaf drivers to charge at their free stations alongside the Tessla drivers but charged for any other cars. There is a fundamental difference between offering your own service free and offering a free access to customers of one other company but not the rest.
                      Now it's arguable how bad that really is, I'm not getting into that - just adjusting your analogy to reflect the situation better.

                    • If there were paid charging stations all over the place, available for a broad market of vehicles, and Tesla cut an exclusive deal with the stations that they would be free only for Tesla customers - that's approaching a problem, but not quite because cost of the Tesla effectively makes cost of charging noise in the equation.

        • Now - have you ever heard of MangoFlix? No, you haven't, because all these entrenched services have locked up deals with content providers, and now connectivity providers, making it impossibly expensive to start up a competitive service.

          These "entrenched services" benefit from efficiencies of scale, both at the contractual and at the technical level. The same thing happens in every maturing industry. It's why Walmart is so much cheaper than your corner convenience market.

          The online music and video markets a

          • And I thought it was about driving prices down through streaming the lowest cost content they can get their hands on.

            To me, this is the real problem, the big players have carved up the field and consumers are in a like-it or forget-it position. Kinda hard to get too worked up over entertainment, but I'm afraid of what this precedent means for other types of service providers (preferential treatment of certain data....)

            • I don't understand what you're getting at. The major streaming services all offer the same content, and that content already has a monopoly based on copyright. How many companies do you need to stream The Walking Dead or Star Trek?

              • I used to rent Netflix DVDs - selection in the DVD rental world was MUCH better than streaming has ever been, and it's only about the cost licensing and willingness to pay for it.

                • I'm not sure whether you're complaining that Netflix streaming has less selection that Netflix DVD or what. But almost everything you want is available online, just not through Netflix. Since video distribution has gone online, there are a lot more distribution channels. For example, I believe you could rent a lot of Criterion as DVDs on Netflix, but if you want to stream it, you have to go to Hulu Plus. Ultimately, the people creating the content hold the copyright and they are going to set the prices, an

                  • The criterion catalog is big, but very old. Back in the day, Netflix DVD selection closely paralleled Blockbuster retail rental selection - and they were both a superset of what was available on any given cable premium channel, release dates might have varied by a month or two from one to the other, but the deeper (5-20 year old) catalogs were very extensive. Streaming seems to have finally killed off the retail rental category, so we haven't had anything in the last few years to compare streaming to. Re

                    • The criterion catalog is big, but very old.

                      You're missing the point. My point is that it isn't like the market has narrowed down, it has indeed expanded, with many more distributors providing streaming distribution and competing with each other. That is, a lot of stuff you could conveniently get from a single source like Netflix now require you to deal with many distributors.

                      The point is: you say you want more competition, but you really don't, because real competition means you as a customer have to think

                    • I don't see that one-stop shopping precludes competition, I would think that a truly competitive market would include several one-stop shopping providers, perhaps WalMart and K-Mart and Target - subtly different, but basically bringing you all the same stuff with a little different spin on the marketing.

                      What I call the current entertainment mess is subscription lock-in fragmentation, wherein you have to buy not one, but several all subscriptions that each simultaneously give you more and less than you want,

                    • I don't see that one-stop shopping precludes competition

                      No, but the diversity of customer interests probably "precludes" it.

                      I would think that a truly competitive market would include several one-stop shopping providers, perhaps WalMart and K-Mart and Target - subtly different, but basically bringing you all the same stuff with a little different spin on the marketing.

                      But Walmart, K-Mart, and Target are not one-stop shopping. For most people, they have maybe 80% of what they need, and for the rest they go s

                    • I would think that a truly competitive market would include several one-stop shopping providers, perhaps WalMart and K-Mart and Target - subtly different, but basically bringing you all the same stuff with a little different spin on the marketing.

                      But Walmart, K-Mart, and Target are not one-stop shopping. For most people, they have maybe 80% of what they need, and for the rest they go somewhere else. And between them, they may have 95% of what people need, and for the rest they still need to go somewhere else. Basically, it's the same situation as with online video, except that there isn't a subscription involved.

                      See, I was happy when Blockbuster had 80% of what I cared about, Netflix DVD had 80% of what I cared about, and the corner 0.99 VCR rental had 40% of what I cared about, covering 95% between them.

                      Now, Hulu has 10% of what I care about, Netflix streaming has 20% of what I care about, Redbox carries 15% - 50% of which is overlapped with the first two, the other local rental shops are out of business (and not missed), and Netflix DVD has gone down the tubes. I was already pissed with Netflix DVD back in the

                    • they can't just let you pay $50/month for broadband and be done with it, no, broadband by itself is $70 a month, but let us give you a $30, 40 or 50 a month bundle including a bunch of other services you don't want / won't use, then at the end of the period jack you back up to $90, 100 or 130 a month. So, with them it's a $240 a year premium to not have to manage their BS

                      Well, it's basically differential pricing: customers that are price conscious will keep up with them and keep their monthly rates as low a

                    • on top of rates that are already some of the highest in the world for marginal broadband

                      I've subscribed to broadband in several countries. In comparison, US broadband is pretty good. It's nominally a bit more expensive than in some other countries, but that's because it's subsidized there; you pay for it through taxes. Conditions, choice of plans, and service in the US are generally better than elsewhere in my experience.

                      Roads and highways are pretty good in the U.S. - it's part of what made our economy strong in the last 70 years.

                      I don't believe that all regulation leads to petulant price gouging, when there are competitors in the market. I do believe that living in fear (amongst the electorate) of being "smacked back" by every person or company in power whenever they catch an unpleasant break from the regulators (legislators, and by proxy: voters) is what keeps the Republican party in power - it's been my most disappoint

                    • I don't believe that all regulation leads to petulant price gouging

                      Did I say anything like that? Regulations actually usually lead to opportunity costs and fairly uniform increases in prices, both of which are imperceptible and insidious effects. That is, with regulations, unlike "price gouging", you usually don't even notice the high price you are paying.

                      Roads and highways are pretty good in the U.S. it's part of what made our economy strong in the last 70 years.

                      We are talking about ISPs not roads. But if

                    • Just because the US market doesn't cater to your personal preferences for content doesn't mean there is anything wrong with it. And, no, I don't think it "would be nice", I like the market the way it is, because I've seen the alternatives, and they are worse.

                      Just because the alternatives you have seen are worse doesn't mean there aren't better alternatives to what we have.

                      Times change, technology changes.

                    • Just because the alternatives you have seen are worse doesn't mean there aren't better alternatives to what we have.

                      There are doubtlessly numerous better alternatives. But I don't presume to know them. And unless you are omniscient and can speak on behalf of 330 million Americans, neither do you. You certainly do not speak for me because I don't want what you want.

                      So, how about we determine the better alternatives through voting? And how about we determine how many votes people get based on the stake and in

                    • And how about we determine how many votes people get based on the stake and interest they actually have in the outcome? Oh, right: we call that process of voting a "free market" and the votes "dollars".

                      And we're back to the "free market solves all," except that without regulation, the free market gives you Rockerfellers, Carnegies, and AT&T, and they served everyone so well.

                    • Roads and highways are pretty good in the U.S. it's part of what made our economy strong in the last 70 years.

                      We are talking about ISPs not roads. But if you do want to use roads as an analogy, they are massively misallocated in the US, with highways in places like the Bay Area perpetually congested, and other highways woefully underutilized. The way highways and roads are funded leads to people settling in faraway places and shifting the burden of paying for their roads to other taxpayers. The fact that roads and highways used to be of fairly nice quality doesn't mean the money was well spent. And we can't even pay for maintaining this poorly conceived highway system anymore because there is no solid business model behind it.

                      That "inefficient" road system, concieved of out of pinko Communism, is a big part of what sets the US apart from China and India - we have a reasonably even level of development - sure there are local variations, but we all have decent transport connectivity, clean water and sanitary sewers, telephone and now internet service. It's an inefficient system, some areas are overutilized while others are hardly used at all, but all areas have some reasonable level of service that gives them the opportunity to d

                    • That "inefficient" road system, concieved of out of pinko Communism,

                      Actually, it was conceived out of brownish progressivism: the major US infrastructure and make-work projects of the 1930's were inspired by Europe, in particular Prussia and Nazi Germany. Furthermore, the highway system, like other such infrastructure systems, were motivated by military and defense use.

                      If you let Arkansas "develop normally" without federally funded roads, utilities, etc., mandated by law and delivered at a net loss, it woul

                    • And we're back to the "free market solves all," except that without regulation, the free market gives you Rockerfellers, Carnegies, and AT&T, and they served everyone so well.

                      Look, I might understand why you aren't familiar enough with history to understand that that statement is bullshit as far as Rockefeller and Carnegie is concerned, but even if you're totally unfamiliar with US economic history, at least you should know that AT&T was a government created and government regulated monopoly. In fac

          • Re: (Score:2, Insightful)

            >It's why Walmart is so much cheaper than your corner convenience market.
            Part of. At least as big a part is a hidden cost you don't even know you're paying. Wallmart's wages is so low that the vast majority of their workers still get poverty-relief welfare (in welfare-to-work states Wallmart is one of the biggest employers of welfare recipients).
            That welfare comes from taxpayers.

            Wallmart didn't reduce the price - they outsourced their wagebill to the taxpayers, you're paying the difference with your taxe

            • Wallmart didn't reduce the price - they outsourced their wagebill to the taxpayers, you're paying the difference with your taxes - and all the people who never shop at Wallmart are forced to subsidize your savings.

              Bullshit. http://www.forbes.com/sites/ti... [forbes.com]

              Whether those kinds of government programs are a good idea or not is another question, but they are not subsidy to Walmart.

              If you ever wondered why a 15 dollar inflation-bound minimum wage is a good idea - there it is right there, so companies cannot outs

  • brought to you (Score:2, Insightful)

    by superwiz ( 655733 )
    By the one of the few newspapers trying to charge for printed content on the Internet: free is bad for you. No self-serving there. I am appalled (appalled!) that there is gambling going on in here.
  • by maorb ( 2578043 ) on Sunday November 15, 2015 @04:49PM (#50935945)

    The problem I had with charging services like Netflix and Hulu for special treatment is that it incentivizes ISPs (especially cellular ISPs) to provide a worse service to their end-users than is needed to fully enjoy streamed video content so they can effectively turn around and charge high bandwidth services a toll to access users on their cellular network.

    This system from T-Mobile has a different incentive structure behind it though based on what I heard. Netflix and Hulu are NOT paying T-Mobile, they are just cooperating to make sure their data is not counted against T-Mobile's customer's data usage caps, which increases the value of all three companies services. T-Mobile has an incentive to offer this deal to any web-service that is well known and desirable enough to their end-users that offering access without a data cap improves the apparent value of T-Mobiles service.

    • by Anonymous Coward

      Hypothetical scenario: Comcast does the same thing, making their xfinity streaming service not count against bandwidth usage, then progressively lowering the bandwidth cap / raising the price of plans with higher cap until netflix can no longer compete (for comcast customers).

      That gaps in the law that allow T-Mobile to partner with netflix/hulu allow for the Comcast scenario too. If all bytes are not equal, someone will find a way to abuse it to create/protect a monopoly.

      In the case of the T-Mobile thing, i

      • Comcast sells video service. T-Mobile does not. Comcast gets money if you subscribe to Xfinity. T-Mobile does not get money if you subscribe to Netflix. Thus, Comcast has a conflict of interest. T-Mobile does not.

        Moreover, at least based on what it said right now, T-Mobile has solely technical requirements to meet in order to be part of BingeOn - whether you're Netflix or Comcast or Verizon Video* or Pornhub, if you meet their technological criteria, you're in**. Thus, in its present state, this isn't truly

      • by maorb ( 2578043 )

        I suspect that your scenario would work itself out like this:

        1. Comcast "zero-rates" only xfinity streaming and progressively decreases bandwidth, data caps or raises prices
        2. At least one of Comcast's competitors decides not to do this. They may or may not also zero-rate Netflix
        3. Customer notices that Netflix is using too much data, buffering too often, or plays in a low resolution. One of three things happens:
        a. Customer asks Comcast representative what's happening, cu

    • This system from T-Mobile has a different incentive structure behind it though based on what I heard. Netflix and Hulu are NOT paying T-Mobile, they are just cooperating to make sure their data is not counted against T-Mobile's customer's data usage caps, which increases the value of all three companies services. T-Mobile has an incentive to offer this deal to any web-service that is well known and desirable enough to their end-users that offering access without a data cap improves the apparent value of T-M

  • by Anonymous Coward on Sunday November 15, 2015 @05:03PM (#50936031)

    As A T-Mobile customer who would potentially benefit from this service: It should be illegal and I do not want it. Its perfectly clear what this kind of perverse bias is going to do, and I don't want my ISP charging me more to watch video if its through my VPN, or from some source they want to censor, or from my home server. They can jack up the data prices and offer free services like this as an easy way to deploy a walled garden for high bandwidth content. Its absolutely unacceptable for my ISP to have both legal immunity for what they enable me to do over the connection, and control over it. They either need to give up their legal protections from being a common carrier, or give up their control.

  • NYT is clueless (Score:5, Interesting)

    by andymadigan ( 792996 ) <amadigan@gmaiCOLAl.com minus caffeine> on Sunday November 15, 2015 @05:09PM (#50936065)
    Once again a dead-tree newspaper demonstrates total lack of technical awareness.

    Though they do mention how Binge On actually works (implement the technical requirements, fill out a form, and it works) they try to imply that T-Mobile will choose to exclude services based on their own non-technical criteria.

    T-Mobile so far has shown they're not going to exclude competitor's services, and said that they won't exclude services based on content. Of course, NYT's editorial staff probably can't understand the technical aspects of the service, and what they know of the business doesn't fit their narrative. While the NYT might think so, "Binge On" does not appear to be designed to steer user's content choices.

    This reminds me of the Washington Post claiming that technical companies could come up with a "golden key" for law enforcement to break encryption and somehow magically prevent criminals from using it (and then accusing tech companies of lying about it). It's just technical illiteracy mixed with contempt for the industry they see as "destroying journalism".
    • Actually, the German CEO did state recently that he considered it a help for startups if they were to give the Telekom (the German mothership) money in order to gain access to a fast lane. He also stated that he'd consider a "few percents of the total revenue" fair.

  • by Dega704 ( 1454673 ) on Sunday November 15, 2015 @05:25PM (#50936123)
    On one hand telecoms are saying "We have to impose data caps because of the strain on our networks!" and then they turn around and make the most popular data heavy applications not count against your cap. Why are they not being called out more frequently and audibly about this blatant self-contradiction?
    • At least in the case of Netflix, it's probably because Netflix has for a while now had a public offer to large ISPs where it will place caches of its servers in the ISP, resulting in a huge amount of Netflix streaming activity happening within the ISP's network rather than required to go over peering links.

      • At least in the case of Netflix, it's probably because Netflix has for a while now had a public offer to large ISPs where it will place caches of its servers in the ISP, resulting in a huge amount of Netflix streaming activity happening within the ISP's network rather than required to go over peering links.

        That would be a valid point if the bottleneck was the carrier's connection to the internet. The reason that cell companies charge considerably more than broadband companies is because the bottleneck is between the carrier and the cell phone. Having caching servers inside the carrier's data center does nothing to help the actual bottleneck.

  • it's very simple to check if something is a problem if you simply take it to it's extreme.

    in this case, you can pay $50 for access to a data plan but your data cap is 1MB. however, if you visit sites X, Y and Z, you can stream several gigs of data without it counting against your data cap. exceeding your data cap incurs a $10 per MB fee. so if you aren't site X, Y or Z then people wont want to use your site... but if you pay the ISP money, they will make it free for people to go to your site too.

    the resu

    • it's very simple to check if something is a problem if you simply take it to it's extreme.

      in this case, you can pay $50 for access to a data plan but your data cap is 1MB. however, if you visit sites X, Y and Z, you can stream several gigs of data without it counting against your data cap. exceeding your data cap incurs a $10 per MB fee. so if you aren't site X, Y or Z then people wont want to use your site... but if you pay the ISP money, they will make it free for people to go to your site too.

      the result is nobody will go to your site unless you pay ISPs money. this is a problem.

      Although I agree with this, if the cell carrier was a common carrier with a fixed rate, then I would be ok with netflix footing the bill for the consumer. Just like we have 800 numbers where the receiving party foots the bill, if set up correctly, it could be reasonable to zero rate services.

  • Make a metered access, so that the price is comparable. Forbid exceptions.

    I don't want a provider who makes deals where "big service a is nice to me and i am nice to big service a" is the deal, i am paying for it. And yes, i will pay for it, since big service a will have no competition, and provider will "offer" big service a colocations at places suitable for the provider. Good for the provider because the traffic across network boundaries is reduced, and they can reduce their bandwidth (which in turn mean

  • There are technical reasons why things be done for cheaper.
    For example if Netflix partners with ISPs to colocate content within the ISP, then it is actually cheaper for the ISP to deliver Netflix. Netflix data isn't traveling outside their network anymore.

    As long as:
    1. Netflix works reasonably with all ISPs to do the same thing.
    2. The ISPs work reasonably with all video streaming servics (if they offer such a thing).

  • This was quite common in New Zealand a few (5, maybe 10) years ago. We had pretty small data caps and not really and unlimited plans.
    I think the cost of international bandwidth has come down a lot since then, so we have unlimited data plans for a reasonable price now and not really much in the way of uncapped services.

  • Some companies are bundling products and services!

    Shocking!

    News at 11.

  • some isps with data caps would post things like Linux distros and other big data hogs on there servers and if you downloaded from there would not count on your data cap.

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