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Some Data Streams Are More Equal

April 5, 2012 | Author: Ibex Marketing

Last week, Microsoft launched three (anticipated) new services on their Xbox Live system. Subscribers can now get Comcast’s XFINITY TV, HBO GO, and MLB.TV. You need to be a subscriber to each of these services in order to get it streamed to your Xbox (just as you have to have a Netflix subscription to access its programming), but it is a big step toward expanding the “what you want, where you want, when you want” choices for streaming entertainment content.

But that’s not the story that created a buzz. It was a little item in a FAQ posted on Comcast’s website:

Q: Will watching XFINITY TV directly on my Xbox 360 use data from my XFINITY  Internet monthly data usage allowance?

A: No; similar to traditional cable television service that is delivered to the set-top box, this content doesn’t count toward our data usage threshold.  The Xbox 360 running our XFINITY TV app essentially acts as an additional cable box for your existing cable service, and our data usage threshold does not apply.

Now, in order to use the XFINITY TV service on your Xbox, you need to subscribe to both the Comcast XFINITY TV with On Demand and XFINITY Internet service, in addition to the subscription to Microsoft’s Xbox LIVE Gold. If you use the XFINITY TV service on your Xbox, the streaming content won’t count toward your 250 GB per month data cap. Streaming content from other services — such as HBO GO or Netflix — does count against your cap. And that’s the problem.

Critics claim that Comcast is providing preferential treatment for its own content over that of other services. In its defense, the cable giant points out that the data never actually “leaves” its own network, so it doesn’t really count as “Internet traffic.”

In my opinion, this is a mighty fine line to draw and the distinction will be lost on the average consumer. The bigger issue is that it could lead to other companies providing similar advantages to their own programming, or even programming provided by their partners. What if Hulu Plus made arrangements with a broadband service provider — such as Comcast — to pipe its content directly to their servers? Comcast could say that wasn’t Internet traffic either, and thus Hulu Plus could “buy” preferential treatment over a competitor such as Netflix.

This could well be the opening salvo in a new sort of “data access warfare” that would effectively eliminate net neutrality. Or it is possible that competition among the services that provide Internet access to consumers will force them to raise their usage caps to such high levels that it’s not an issue. After all, phone companies offer “unlimited” long distance service for a fee; perhaps the Internet access market will head in a similar direction.

We can’t know for certain how this will turn out, so the best we can do for now is to keep an eye on the situation and guard against results of the Law of Unintended Consequences.