Sony Delays Online Video Service Due to Comcast Data Cap
Sony Delays Online Video Service Due to Comcast Data Cap
Sony Delays Online Video Service Due to Comcast Data Cap

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    Data caps prevent online video offerings that compete with –
    and potentially replace – cable TV.  But
    don’t take our word for it.  Just ask Sony.

    Last fall, the Wall Street Journal reported that Sony was planning an online
    video service – something like a virtual cable company.  For a fee, Sony would offer you a bunch of channels and
    deliver them over the internet.  This
    model is great because it allows new companies to offer TV content and compete
    with cable companies.  The only problem
    is that it relies on the fat broadband pipes that the cable companies control.

    Fast forward to today. 
    Michael Aragon, VP and GM of global video and music at Sony Network
    Entertainment admitted that the entire plan is on hold.  Why? 
    Because of Comcast’s data cap. 

    As detailed in our recently released whitepaper Know Your Limits, there is nothing
    inherently wrong with data caps. 
    However, because there is a strong possibility (and temptation) to use
    them anticompetitively, it is critical that they are applied in a transparent

    Up until now that has not been the case with any internet
    service provider (ISP) – wired or wireless. 
    While some ISPs make some mention of congestion (a momentary phenomenon
    that data caps are poorly equipped to address), that is not what drives Comcast’s
    cap.  We can be sure because back in 2008
    Comcast told the FCC that its cap was “independent of, and should not be
    confused with” any congestion management practices.  

    We may not know why Comcast has a cap, but we do know at
    least three things about it. 

    • First, it was set at 250 GB back in 2008 and has not changed
      since, even though Comcast has extensively upgraded its network in the intervening
    • Second, 250 GB is just slightly below 288 GB – the amount of
      data that Comcast itself estimates a household would consume by replacing its
      cable service with internet-delivered video. 

    Of course, this concern is not specific to Comcast.  Any ISP with a pay-TV business has a strong
    incentive to protect its pay-TV business with caps. 

    The first step towards responsibly considering data caps is
    to have answers to some fundamental questions: How are caps set?  Once they are set, how are they evaluated
    against their goals?  Under what
    conditions would the caps change?  That
    is why last week we sent letters to the CEOs of the nation’s largest ISPs
    asking them to answer some straightforward questions. 

    If data caps are serving a legitimate purpose, it is time to
    make that purpose known. 

    If all they are doing it stifling competition and gouging
    customers, well, it would be nice to know that too.