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The net neutrality fight received a stomach-punch on Tuesday. A
federal appeals court ruled in a case between
the FCC and Verizon that the FCC cannot bar broadband providers
like Verizon from discriminating
for or against different types of web traffic. That is, the FCC
can't forbid companies like Verizon from blocking some sites or
slowing the time it takes to load others (Verizon
said in a statement it will not block access to "lawful
websites and content").
Tuesday's ruling
heightened fears of a
doomsday scenario; with the FCC's hands tied, the egalitarian
web could become a fiefdom controlled, mediated and priced by the
nation's biggest broadband providers. Broadband providers don't
want rising bandwidth costs weighing down their profit margins and
they're looking for someone else to stick with the bill.
That someone else may be an advertiser.
The
most
discussed
scenarios would see these broadband providers essentially
taxing websites by slowing their page-load speeds unless they cut
those providers a check every month. That could spur more media
companies to adopt subscription models and others to increase their
subscription rates. For example, people who watch a lot of
data-heavy Netflix videos could pay higher subscription fees than
someone who browses lighter fare. In lieu of websites being
packaged like cable-TV bundles, people could pay a la carte fees to
visit a site or watch a video.
Ad-supported bandwidth
However the passed buck could make its way to Madison Avenue.
Advertisers pay a premium to reach audiences through digital video
services like Hulu and could find themselves
paying twice: once for the ad and again for the bandwidth that
keeps the service free.
Last week AT&T announced a way for advertisers to pay
for the data needed to access content on a smartphone or
tablet. As part of this sponsored data service, a company could
foot the bill for AT&T wireless customers to use a specific app
on their smartphones instead of that access being deducted from
their monthly data allowance. For example, UnitedHealth Group plans
to sponsor the cost of streaming a branded video to a mobile device
over AT&T's 4G wireless network, according to an AT&T
spokesperson. As part of the program, advertisers can sponsor
access to other companies' sites or apps.
If the FCC loses its net neutrality fight, AT&T's sponsored
data program could serve as an alternative economic model that
would be less of a financial blow to consumers and bigger content
creators (properties less appealing to advertisers or without
strong ad sales teams would likely suffer more). The pitch? Data
access becomes the new home-page takeover. Imagine Dunkin' Donuts
paying for people to check out The Weather Channel's' Californian
forecasts as the coffee seller preps its West Coast push. Or
Samsung sponsoring access to
BuzzFeed's mobile site.
Verizon Wireless has "talked broadly about [sponsored data
access] in the past – and while the technology and idea
offers many opportunities, but we haven't made any comments around
a product or availability, and have nothing more to share now,"
said spokesperson Debi Lewis in an email. A Time Warner Cable
spokesperson said the company does not offer sponsored data plans
but was unable to say whether the company has considered such a
product.
Another consideration would be advertisers' appetites for such a
product.
"The question is what can be developed that's better than what
advertisers can already do with even more limited or existing uses
of bandwidth. It's not as if all content delivered over the web is
going to be subject to consumers refraining from downloading or
streaming because of the [size] of the data," said Pivotal Research
Group analyst Brian Wieser.
As for the idea of broadband providers and wireless carriers
subsidizing their costs with sponsored data deals, "it's more than
just willing it to happen. That's a whole ad sales force you have
to put out into the marketplace," Mr. Wieser said.
Unless the providers enlist media companies' ad sales teams. In
a variation of media companies paying providers to render their
sites at normal speeds, publishers would secure sponsorship deals
to finance that tax. These sponsored-data deals would function like
home-page takeovers that are even more transparent about the value
exchange -- though just as likely to annoy people.
None of this is ideal -- at all -- but neither is an internet in
which every link carries a fee.
