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Over-the-Top Moves Stir Neutrality Debate

The Federal Communications Commission’s new Open Internet rules appear to be opening up an old can of worms — should video traffic delivered over “managed” IP connections receive different treatment than video that’s piped into homes using “best effort” high-speed Internet connections?

The topic heated up after The Wall Street Journal reported that HBO, Showtime and Sony were talking with Comcast and other providers about delivering their IP-based multiscreen content to consumers using a separately managed portion of an operator’s spectrum, meaning such traffic wouldn’t count toward broadband caps and other usage-based broadband policies, or perhaps be prioritized. Those talks would come as HBO gets ready to launch HBO Now, a standalone over-the-top service, and amid the debut of Sony’s PlayStation Vue.


Some background: Comcast came under fire — primarily from Netflix CEO Reed Hastings — in 2012 after it began to offer video-on-demand content via the Xfinity TV app to Xbox 360 gaming consoles using IP transport. Rather than delivering that content over the public Internet, Comcast uses separately provisioned IP bandwidth that doesn’t co-mingle with traffic and spectrum dedicated to the customer’s high-speed Internet service.

Comcast uses a similar managed IPTV setup for the Xfinity TV app for tablets and smartphones that’s part of X1. Access to the service is limited to the customer’s home network.

According to multiple industry sources, this is precisely what Apple originally had in mind during its discussions with Comcast and Time Warner Cable — Apple had sought access to the MSOs’ managed IPTV services so content could be shipped to the Apple TV box and supported by Apple’s own user interface. Those discussions didn’t result in a deal.

Apple was in similar talks with Liberty Global in recent months, but those fell through as well, according to a person familiar with the discussions. Apple, the Journal reported, is now talking with programmers about distribution rights for a “skinny” pay TV bundle that would debut as early as this fall.

What still isn’t clear is specific business arrangements Apple wanted with the MSOs, and what Sony, HBO, and Showtime might want now.

The talks bubbled to the surface soon after the FCC voted on new network neutrality rules that also reclassify broadband as a telecom service.

Those new rules would allow for special treatment of specialized services, such as VoIP, heart monitors and energy consumption sensors. But the rules warn that using “Non-Broadband Internet Access Service Data Services” as a way to sidestep the rules, including paid prioritization, “will not be tolerated.”

The FCC has already tentatively signaled that linear online video distributors (OVDs) offering services similar to traditional multichannel video programing will be subject to program-access rules.