Thursday, March 17, 2016

YouTube Joins T-Mobile "Binge On" Program, Ilustrates How an ISP Can Add Value to "Dumb Pipe"

Though there were initial complaints by YouTube that Netflix streams were being “throttled” in the same way that content provider video supplied as part of the T-Mobile US “Binge On” program, YouTube has decided to become part of Binge On.

T-Mobile US customers can watch Binge On video without incurring usage charges against their purchased mobile data plans.

T-Mobile US says Binge On partners supply about 70 percent of all video T-Mobile US customers watch on their phones and tablets each month.

Arguably, the new plan has encouraged customers to watch twice as much video each day, in longer and more frequent viewing sessions, than they did before the launch of Binge On.

One video provider has seen the number of active viewers spike 90 percent and watch-times nearly triple from customers with limited high-speed data plans, T-Mobile US says.

One might make several observations. By essentially zero rating Binge On video, T-Mobile US has removed a barrier to use of streaming apps and watching video from a mobile device connected to the mobile network. The resulting boost in usage is therefore not surprising.

And though it might not be so obvious, the Binge On program once again illustrates a key business model issue: an ISP’s primary role in the Internet ecosystem is that of access provider.

In other words, the unique function is providing access to apps. That does not mean the “only” or “sole” role is access, only that the unique, enduring value any ISP supplies is “access.” Keep that in mind whenever you hear executives talking about “dumb pipe,” or “commodity access” or any similar idea.

“Access” is the unchanging and unique role within the ecosystem, if not the “sole” or “only” role. T-Mobile US has made a feature and a benefit out of the way it provides Internet access.

That might not even be the way some app providers or regulators see matters, in this or other markets and countries, where the practice of zero rating might be banned.

But one might argue that app providers, consumers and T-Mobile US itself benefit from the practice. Oddly enough, one actually hears some opponents of such practices admitting that consumers benefit, but that we should not allow it, despite those benefits.

YouTube seems to have made a determination that participation outweighs some other potential concerns.

A service such as HBO, which has for many decades branded itself as a higher-quality service, where image quality, among other attributes is key, might not appreciate being part of a program that trades “no usage” fees for a limitation on resolution.

Content providers, it is quite clear, can choose not to participate, and provide images at any higher resolution that is technically feasible.

Perhaps the main point, however, is that we have in Binge On both a clear example of how an ISP can differentiate a “dumb pipe” function, as well as an example of why it literally is “impossible” for an ISP to avoid supplying “dumb pipe” access (it is U.S. law, where it comes to consumer Internet access) as a basic and foundational service.

The point is that it is fruitless to lament “being a dumb pipe.” Any consumer ISP is, by definition, a supplier of dumb pipe Internet access. But no ISP must "only” supply that end user value. Even when "dumb pipe" is a legal requirement, there are ways to enhance value and differentiate.

So far, Binge On is among the most successful differentiating moves any ISP has made. Some of us would argue Free Basics and other such programs are also prime examples.

Even where "dumb pipe" is a legal requirement, ISPs can find ways to provide genuine additional value. It is not easy. But it is not impossible, either.

Some would argue that is why it is important not to make unlawful other ways ISPs can innovate and provide consumer value, under a net neutrality framework intended to protect consumer access to all lawful apps and protection against predatory ISP behavior.

But innovation by an ISP is not, in and of itself, "predatory."

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