August Madness?

August 14, 2006

The latest headache for those pushing so-called neutrality regulation involves “ESPN360”, run by the Disney Corp. According to news reports, Disney is charging Internet providers for the right to carry the ESPN service. If a provider doesn’t pay, then that provider’s subscribers cannot access the service.

Of course the other way to view this is that if a provider does pay, then ALL its subscribers pay higher subscription fees even if they don’t use the ESPN service.

So far, some broadband providers have coughed up the money. Others are holding back, perhaps concerned that other sites might emulate the Disney model thus sending access rates higher.

We’re not sure whether ESPN’s pricing gambit will catch on. Neither is anyone else, which is why it’s received so much attention. But that’s the point. Consumer tastes online are changing rapidly, meaning a few business models will work but most won’t. (Remember how Microsoft was supposed to rule the Internet by bundling MSN with Windows? It had all the charm of a CueCat.)

For government to try to impose pricing regulations on tomorrow’s Internet based on hypothetical fears and conjecture is a springboard to certain failure.



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