ISP-Media Mergers Spell Danger For Streaming Services

The approval of the AT&T/Time Warner merger sets a precedent that could equate to a real threat for streaming services and the companies behind them, among other casualties. Paid fast lanes and throttling are now possible, thanks to the finalization of net neutrality’s repeal, which turns a potentially troublesome precedent into a very urgent source of peril for companies that have to interface with corporations in those two categories. The likes of YouTube, Netflix, Hulu, Crunchyroll, and Crackle now run the risk of having to pay extra to get to customers just as reliably and quickly as services that are owned and favored by ISPs, and in a very concrete sense, they now have far less power than they otherwise would have in any contract negotiations that may pop up.

To quantify the threat in the clearest possible terms, ISPs are now free to throttle any services they don’t like. Many have sworn that they won’t, but in the business world, there’s no such thing as a guarantee without a legal document. Likewise, ISPs are free to zero-rate again for mobile users and are also free to prioritize services that they own or services that they have deals with. While that may not amount to direct throttling, two things happen either way; the preferred services offer a better experience than others, and outside services slow down a bit. Both of these make consumers think twice about continuing to use the outside service, which in turn gravitates them toward the preferred services. This is directly against everything that net neutrality stood for, and it’s now a very plausible path for the future, albeit not one that anybody seems to be pursuing all too actively just yet. AT&T, for example, has only zero-rated its own in-house video streaming services, though it does have an offer on the table for streaming services to negotiate with the company in order to receive the same treatment.

The possible ways that streaming services could address this shift in dynamic all spell serious change for the entire landscape. One possibility is rallying behind Alphabet, who could in turn double down on Google Fiber deployment in order to bring the fight directly to the ISPs in their own arena. This could branch out into a knock-down, drag-out brawl between Alphabet and cable companies on mostly equal footing, or could give Alphabet and its cohorts the negotiating power they need to keep things mostly as they are now. Alternatively, streaming services could all get into connectivity themselves somehow, whether that’s with sponsored Wi-Fi, MNVO deals, or even building out their very own networks using cheap equipment like small cells. No matter how it all happens, the simple fact is that the approval of the AT&T and Time Warner’s merger and the demise of net neutrality have laid the groundwork for a content and services war unlike any seen before.

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