Content Companies Demand Subsidies From ISPs... While ISPs Demand Subsidies From Content Companies

from the regulatory-silliness dept

It's sometimes quite amusing to watch how various economic ecosystems grow, where multiple companies have symbiotic relationships, and then start to freak out when they think that other companies in the ecosystem are somehow earning "too much." That, of course, is at the heart of many recent battles we've seen -- from net neutrality (where the ISPs think Google is earning too much) to the music industry (where record labels think ISPs and Apple are earning too much). But sometimes it leads to rather amusing contrasts. For example, up in Canada, the entertainment industry is complaining that ISPs earn too much, and therefore are pushing for laws that would require broadband providers to pay money to the entertainment industry to develop new content.

But contrast that to the situation in the UK, where there's an ongoing push for content companies to pay extra to help subsidize the cost of broadband deployments. The argument there is that all the content that's being put online is creating a drain on broadband network resources. But, isn't that exactly what the content creators in Canada are saying is a "free ride" for the ISPs?

Basically, it's yet another situation where each side of the debate overvalues its own contribution. The ISPs think that it's the network that is the most important thing, and the content providers should be paying their way to use it. Meanwhile, the content companies think that it's their content that makes the networks valuable, so the ISPs should be paying extra to offer their content. In reality, they're both wrong. The two things work together just fine in a market where each side pays its own way and doesn't have to subsidize the other. Now, if we could just see such contrasting regulations proposed and passed in the same country, we could have an amusing situation where the cross-subsidies cancel each other out.

Filed Under: content companies, isps, regulations

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  1. icon
    TW Burger (profile), 14 Mar 2009 @ 4:21pm

    Result of the Separation of Content and Distribution

    This argument of one side subsidizing the other is due to the separation of content and distribution. When media companies controlled everything all was well. Now that more and more content is distributed through the Internet it's only those media companies that have no idea how to use the internet that are asking for payment rather than taking control.

    It would seem that both the paying of the ISP by the content company and the ISP paying for content is silly. Each needs the other - the relationship is symbiotic.

    Wouldn't it be silly if a small record label has to pay a multi-billion dollar Internet telecommunications giant like AT&T because someone AT&T customers downloaded free samples of some songs the label produced from the music label's site.

    It's also absurd that a huge media company like EMI would have to be paid by a small rural ISP that had a customer that connected to an EMI site and downloaded music samples from EMI.

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