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. identicon
    Expatriate Canadian, 14 Mar 2009 @ 9:31am

    The Canadian situation is quite different. The CRTC is seeking a levy on broadband users to be distributed amongst Canadian content providers, in much the same manner as the CD levy (on blank media) is distributed. It is not a tax inasmuch as the entire proceeds go to the intended source instead of to government general revenue and it is intended to be passed on directly to the consumer.

    The rationale is that Canadian Internet content producers cannot compete directly with U.S. content and need the financial assistance. If the CRTC could figure out how, they would mandate a minimum amount of Canadian content that would have to be passed by Canadian ISPs just as they mandate minimum Canadian content levels on broadcasters and cable companies.

    The fun part will be watching how this ill-gotten booty is distributed. How do they expect to determine who is and who is not a worthy content producer?

    This is not a case of market economics but rather a case of government meddling.

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