Why ESPN's Offer To Pay To Have Its Content Bypass Data Cap Meters Plays Right Into The Hands Of Wireless Providers

from the stop-it,-ESPN.-you'll-just-encourage-them. dept

ESPN has been making a little bit of noise recently about being willing to throw a few bucks towards wireless providers in exchange for letting its content roll through to users without affecting their data caps. While this may sound like a good deal for sports fans stuck with low data caps, there's a whole lot wrong with this "offer," above and beyond the obvious "pay-to-skirt-net-neutrality" issue. Chris Morran has a good rundown of the negative side effects ESPN's data subsidy would unleash. First and foremost, ESPN offering to help out users with data caps plays right into the industry's talking points.

Subsidizing wireless usage in this way would only give rise to this myth that smartphone data plans are capped because of congestion and a supposed high cost of moving data. However, studies show that the cost of delivering content to wireless customers has dropped while the user base has increased.
Morran's right. The last thing the wireless providers need is someone granting credence (albeit in a very roundabout way) to their ongoing myth of congestion and costs. This allows these providers to continue dining out on this story while simultaneously casting themselves as "good guys" in the new narrative. "See, we're allowing you to access popular content without using up a chunk of your data plan!" ESPN gets preferential treatment, the providers make more money and everyone wins. Well, almost.
Well-heeled content providers like ESPN would not be hurt financially by subsidies, but if they became standard, that extra could effectively put up a huge roadblock — or at least a very nasty speed bump — to smaller startups seeking to compete.
Basically, if one content provider is shown preference in exchange for a fee, it makes it tougher for the competition to reach consumers. If FOX Sports is just going to eat away at your data plan, it only makes sense to switch to the "free" data ESPN is providing. Wireless companies will be able to leverage content providers against each other, gradually levelling the playing field with fat stacks of subsidy dollars.

If ESPN is able to follow through on its plan, this will become the norm. Wireless providers will have a new source of income and exactly zero reasons to increase or remove data caps, seeing as the caps themselves are providing the incentive for content providers to ante up for unmetered data to keep consumers hooked.

As unmetered data usage increases, the wireless providers will simply adjust the argument, stating that this new level of network strain requires data caps to stay in place and that the infrastructure improvements needed to support this will require higher overage fees and lower caps.

Morran argues it shouldn't be that way, and again, he's right, but given the track record of most providers when it comes to data caps, nothing will change but the amount of cash flowing towards wireless companies.
If content providers do begin subsidizing wireless plans, then consumers should demand lower monthly rates — or the elimination of data caps entirely, as that extra cost will be borne by ESPN and others. Of course, we all know that will never happen.
Consumers can make all the demands they want, but the simple fact is most of them lack the options to make a stand on principle. Even in areas covered by more than one provider, the differences between the "competing" companies is almost imperceptible.

From a business standpoint, this works out extremely well for ESPN. Even if most customers are in no danger of hitting their data cap, the pull of unmetered data is very strong. Unfortunately, it works out all too well for wireless providers, most of whom have shown little interest in upgrading their infrastructure even as they shed crocodile tears over congestion.

Filed Under: data caps, net neutrality, sports, streaming, wireless


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  1. identicon
    Anonymous Coward, 14 May 2013 @ 8:10pm

    I fucking love sports, but damn this is a bad move that is sure to have a lot of negative impact on wireless data limits.

    I won't even begin to lie because I'd love to have unlimited ESPN on my phone.

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