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A Solution in Search of a Problem

The manufactured controversy over TV-on-demand through the Xbox 360 is more entertaining than enlightening.

When Microsoft announced last October that they were entering into deals with Comcast and Verizon to bring on-demand video content to Xbox Live it seemed like a marvelous development. The National Broadband Plan had called on the FCC to stimulate the market for third party set top boxes (STB) to compete with the likes of TiVo and Silicon Dust by creating rules for an “All-Vid” device, and this seemed to fit the bill.  It was going to provide access to the cable systems’ “on-demand” offerings, something that STBs like TiVo and Silicon Dust’s HD Homerun Prime don’t do, and it would show live TV, and it would connect to Internet video offerings plus support all the gaming that made Xbox famous.

Not only did I think the Xbox Live would make All-Vid advocates happy, I never suspected that it would raise network neutrality complaints because of the clear delineation Tim Wu had laid down in his 2003 “Network Neutrality, Broadband Discrimination” paper: Wu was worried about equal treatment by gateways to the public Internet, but not with management practices local to the broadband networks owned and managed by such firms as Verizon and Comcast:

What follows is a proposed antidiscrimination principle (a rule, only if necessary). The effort is to strike a balance: to forbid broadband operators, absent a showing of harm, from restricting what users do with their Internet connection, while giving the operator general freedom to manage bandwidth consumption and other matters of local concern. The principle achieves this by adopting the basic principle that broadband operators should have full freedom to “police what they own” (the local network) while restrictions based on inter-network indicia should be viewed with suspicion.

This non-discrimination principle works by recognizing a distinction between local network restrictions, which are generally allowable, and inter-network restrictions, which should be viewed as suspect. The principle represents ultimately an effort to develop forbidden and permissible grounds for discrimination in broadband usage restrictions.

The Xbox Live is now fully connected with the Comcast XFinity system and it looks quite impressive. Not only does it provide access to on-demand cable shows, it integrates with HBO Go,, Netflix, and Hulu Plus, and it allows the user to control “trick mode play” features (pause, rewind, fast forward, etc.) through hand gestures (with the optional Kinect feature) and by voice commands. For TV junkies, this is very cool stuff, and for Microsoft it’s a life-extender that helps Xbox users forget the fact that their game consoles can’t handle Blu-Ray discs like the Sony Play Station 3 can. It’s the next thing on my shopping list for TV gadgets, and I can easily justify it by making an exercise program my first purchase for it.

Not everyone is happy, however.

Oddly, the very same interest groups who’ve been banging away at the FCC for the All-Vid rules are upset, as are the interest groups who advocated for the FCC to adopt net neutrality rules after Congress demurred right before the 2010 election. These two groups are actually one group of course, consisting of our friends who style themselves advocates for the public interest. Free Press, the organization that Tim Wu once chaired, complains that the Xbox’ Comcast Xfinity connection feature doesn’t have enough restrictions because on-demand XFinity video consumption doesn’t count against the 250 GB per month usage cap that Comcast imposes on its Internet users:

“Comcast tries to justify preferred treatment for its own video on the Xbox 360 by claiming that the content is delivered over a private IP network rather than the public Internet,” Free Press policy director Matt Wood said in a statement. “But not counting this video against a Comcast customer’s monthly data limit gives the Comcast product an unfair advantage against other Internet video services. Unfortunately, such anti-competitive tricks may be allowed by loopholes in the FCC’s Open Internet rules, proving once again that the FCC failed to deliver on the promise of real Net Neutrality.”

As usual, the Free Press policy complaint is mixed with a technical misapprehension. It’s true that XFinity usage doesn’t count against Comcast’s Internet usage limit, any more than watching Survivor in real time does, regardless of the device that’s acting as a set top box (STB) to make it happen:  TV viewing doesn’t count toward the Internet limit when it comes into the home over Comcast’s STB, and it doesn’t count in the Xbox. That’s because TV viewing through the Comcast network doesn’t involve the Internet, not because of any tricky or misleading claim that Comcast may or may not be making.

So why would you count TV viewing against an Internet limit when it has nothing to do with the Internet? You don’t even need an Internet account with Comcast to watch TV live or on-demand, that capability is part of their cable TV service. If the Xbox user is exempt from irrelevant Internet usage caps while watching TV, he’s on a level playing field with those who watch TV with Comcast’s STB. If the situation were any different, you can bet that Free Press would be complaining to the high heavens even louder about unfair discrimination to force people to use the Comcast STB.

Professor Wu himself seems to have seems to have forgotten his own distinction:

“The whole idea of net neutrality is to try and guarantee that similar content gets treated similarly,” Wu says, “and if you think about it for a second, if something doesn’t count against your cap, obviously it’s getting a preferential treatment. You’re more likely to stream that instead of someone else’s.”

While his 2003 paper clearly separated services local to the broadband network from those that transit the Internet, Tim Wu 2012 treats all content-related services the same, regardless of whether they touch the public Internet or not.  I suppose his views have evolved.

Not to be left out, Public Knowledge once again declares the imminent death of the open Internet:

The reports that Comcast is offering a video product through the Xbox 360 without the data counting toward the customer’s data cap raises questions not only of the justification for the caps but, more importantly, of the survival of an Open Internet.

…The Xbox 360 provides a number of video services to compete for customer dollars, yet only one service is not counted against the data cap — the one provided by Comcast.

Of course, TiVo has worked exactly the same way since it added Netflix, YouTube, and Amazon streaming support. If I watch a movie that my TiVo recorded from HBO, it’s not subject to any usage cap, but if I use my TiVo to watch the same movie from Netflix, it is. This is a reflection of both the contract terms that HBO has with Comcast and the technical means that route the movie into my home, but it’s nothing new. More importantly, it hasn’t prevented Netflix from growing into a blockbuster company with more subscribers than Comcast and more than $3B in revenues per year.

Many people have observed that net neutrality is a solution in search of a problem. The fact that the net neutrality lobby is now changing its definition of this cherished principle to fit the facts regarding Xbox/Xfinity integration suggests that this observation has never been more astute.

The Xbox critics are obsessed with usage caps. In fact, if Comcast didn’t have a usage cap, the critics’ entire range of criticisms would be moot, because they see the usage limit as the vital factor that tilts consumers toward one service and away from another; they believe caps are more important than price, quality, or programming choices. This argument echoes calls for higher usage limits (or no limits at all) for mobile broadband plans.

But usage limits don’t have the same emotional or financial consequences for Comcast users that they have for mobile users. You would have to try very, very hard to use up the 250 GB per month that you get from Comcast, and if you do use it up you can’t buy your way out of it for a few dollars more. Comcast assumes anyone over the 250 GB limit is a business user, and requires you to pay business rates or find another service. In the fifteen years  that I’ve had cable Internet, I’ve never come anywhere close to a usage limit despite heavy use of Netflix and similar services. Usage limits simply have no practical effect for Comcast customers and most have no reason to give them any thought.

So what we have here is a concerted attempt to make a mountain out of molehill by a group of advocates who appear to be supremely out of touch with the actual concerns of genuine consumers. Xbox 360s will continue to fly off the shelves and their owners will love the new features. It’s not the consumers clamoring for more restrictions, it’s only their protectors.

Image credit: XBox Press Center.

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