ESPN Talks Subsidies to Data Providers for More Sports Streaming

It really shouldn't come as a surprise to anyone that ESPN would prefer it if viewers watched more sports, since the entire network is built around them. But what ESPN is talking about, in an effort to get more viewers to its array of sports videos online, is likely to raise a few eyebrows with regulators, and potentially with users.

ESPN is reportedly in talks with at least one big-name carrier regarding its line of sports videos online, looking to offer carriers subsidies in exchange for excluding ESPN content from applying toward a user's mobile data cap. The talks are still at very early stages, with reports suggesting that the economics of any deal are still being worked out. The report came from the Wall Street Journal, which in turn suggested that telecom regulators would likely not approve of such a measure, since it would violate at least the spirit of net neutrality principles by allowing one kind of content to be prioritized above other kinds.

A similar idea took place around a year ago, when Comcast declared its Infinity app on Xbox Live not subject to bandwidth limits on its own network, and that brought down the Department of Justice on Comcast with a full antitrust probe. Things would likely be somewhat different in ESPN's case, as the Open Internet rules from the FCC mostly don't apply to mobile data--due to the bandwidth issues--but such a move would likely draw the FCC's attention into reconsideration.

But for the companies involved, meanwhile, this could be a welcome arrangement. Even for the consumer this has some potential to be worthwhile. The carriers get a new revenue stream--both AT&T and Verizon had previously noted that content providers could readily contribute to data costs--and from there are better able to build out a network. ESPN gets its content pushed front and center, allowing for more advertising and revenue growth. Additionally, the customers get more of the videos desired, without having to worry about the potential impact to data caps. With one carrier already suggesting that customers are hitting data caps every month, it's clear that something needs to change here.

But if companies are paying for video to be exempt from data caps, would the carriers have any incentive to build out networks in the first place and keep such things from happening? With higher--or no--data caps, what value would a subsidy to remove some video from the data cap have?

It's an interesting idea, and one that may have quite a bit of potential for the market. But then, it may have some significant downsides to it. Only time will tell just how it all boils down, but it's clear that it's not just customers suffering under data caps.