Net Neutrality and Internet TV Services

President Trump has talked about rolling back Obama-era net neutrality rules since the campaign. This would be an enormous victory for Internet service providers, many of which are also cable companies.

The purpose of net neutrality regulations was to keep the Internet open. What this means is that, under no net neutrality, cable companies are free to slow down service to whatever they want. Suppose you have Time Warner Cable. If you are like me, you realize that the service is terrible and probably overpriced. As a rational consumer, you would like to purchase a Netflix or Hulu account. Time Warner can now slow down your streaming service in order to keep you from using it.

This would be a huge victory for an industry that hasn’t had a lot to cheer for recently. As consumers are continuing to forego their cable packages in favor of more affordable options, cable companies have been clamoring for ways to retain more users. This would certainly help that cause.

Verizon has been one of the companies that have felt the sting of “cord-cutters.” To help make up for this, the company has been securing streaming rights with several television networks in order to pitch a nationwide launch of a live TV Internet service. Unlike regular cable packages that often have potentially hundreds of channels that users don’t want, the Internet service would be far more flexible in terms of being able to pick what you get.

This would be a potential game changer in the industry, especially if net neutrality rules are rolled back. Since Verizon already has a large consumer base using their home Internet service, this is an opportunity for the firm to capitalize. Besides the fact that Verizon’s service will have live TV, as opposed to just movies and television shows, they will now have the ability to slow down future competitors such as Netflix.

It will be interesting to see how live TV internet services play out in the future, regardless of what happens with net neutrality laws. Even to someone like me who has always valued the ability to watch live TV, as cable packages get more expensive and the service almost seems to get worse, switching to services like Netflix, Hulu, or Amazon are beginning to seem like “no-brainers.”

 

Sources:

https://www.bloomberg.com/news/articles/2017-03-30/verizon-said-to-be-planning-online-tv-package-for-summer-launch

https://www.wsj.com/articles/cmo-today-verizon-readying-new-tv-streaming-service-1490961171

https://www.wsj.com/articles/net-neutrality-rules-could-be-eased-under-donald-trump-some-say-1478728957

https://www.nytimes.com/2017/03/30/technology/net-neutrality.html

https://www.washingtonpost.com/news/the-switch/wp/2017/03/31/verizon-is-reportedly-planning-a-new-streaming-tv-service/?utm_term=.b040a0d13418

9 thoughts on “Net Neutrality and Internet TV Services

  1. I think the contradiction between Trump’s populist campaign material and his tendency to favor the interests of big business as opposed to the financial interests of individual Americans speaks volumes about his actual plans for policy. As an individual who has worked within big business his entire life, it seems far fetched that such an individual will have the interests of the “little man” in mind throughout his entire administration.

  2. To me, rolling back net neutrality to the benefit of cable companies almost seems anti-capitalistic. Services such as Netflix and Hulu etc clearly saw the direction in which the market for viewing services was headed, and responded by providing a great product for the modern day consumer. If cable companies are complaining that net neutrality is harming their own business prospects, I see it more as a failure to innovate rather than being hamstrung by rules and regulations.

  3. I don’t think there is any question that the future of TV packaging will be through bundles where users can pick what channels they want. Verizon seems like the first major to provider to jump into this area and I think that will help them retain most of their current subscribers.

    • I totally agree. DIsh and DirecTV have also come out with a similar product. I could be totally wrong, but Verizon seems to me to be a much bigger player than the aforementioned firms. Especially when you consider that they also provide internet, and phone service. While Dish also does this, and DirecTV can be bundled with AT&T, I think Verizon has the most potential to really make some noise in this.

  4. I don’t think that President Trump, in his right mind, would really roll back the net neutrality rules. Allowing internet service providers to disrupt the streaming companies’ performances would cause major backlash by the American public, and I doubt that President Trump would really want to deal with that problem.

    • Yeah, does this violate any amendments from an abstract standpoint? For sure streaming services are more efficient, and in the spirit of good business competition, this strongest product should win out. The government should not take any dramatic moves that can damage competition.

  5. In my opinion the biggest argument against net neutrality is that government regulation may actually provide a disincentive for internet service providers to continue investing in projects that improve their networks. According to cable and telecommunication companies such as Comcast, it is unfair for the government to force internet service providers to load all web sites at the same speed. Doing so prevents them from recovering the high costs for connecting to sites that take up more bandwidth, for example pornography sites or Netflix, whose service accounts for about one third of U.S. online traffic during weekday evening hours. As such, Broadband for America believes that sites with especially heavy traffic should pay more for using extra capacity.

    Enforced net neutrality may also be one of the reasons why internet access remains slow in many parts of the U.S., as there is little incentive to upgrade wiring. Service providers argue that charging content creators based on how much bandwidth they consume, or how fast their content must be delivered, will result in greater market driven motivation to develop faster internet service, which in turn benefits all consumers. Therefore I would not be so quick as to judge this move as being anti-capitalistic.

    Finding the right amount of regulation to promote fair access while not suppressing investment is perhaps the issue that needs to be explored.

    • I think this is an issue of companies needing to figure out a way to innovate to best survive. I do also believe that sites with heavy traffic should pay for more using extra capacity.

  6. I agree with the comment above that sites with heavy traffic need to pay for the extra usage; however, the fact that a company could interfere with services provided seems unlawful. Thus, rolling back net neutrality seems to grant unfair privileges to internet providers who find online television services disruptive. The big takeaway for me remains how effective certain online programs offered by television companies like Verizon could be. This begins to touch on diffusion. How quickly could such programs be adopted by television consumers? A ration consumer should, in theory, switch as soon as the service is offered providing they have the right means to access it. Most subscribers for cable TV have access to hundreds of channels that they do not watch, so with the ability to select what they want, overall prices should decline. Still, does this mean consumers will make rational decisions? Consumers’ knowledge of the services and willingness to exchange the comfort of cable TV for an online service will play vital roles. It should be interesting to see how quickly such technologies could diffuse through the television industry.

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