Consumer groups angered over ESPN plan to subsidize cellphone data plans

Consumer groups are outraged about a potential plan for ESPN to subsidize smartphone data usage, saying it would violate the principle of net neutrality.

They argue that all Internet traffic should be treated equally and that major corporations should not be able to pay for preferential treatment that wouldn't be available to a small personal blog or a start-up mobile app.

ESPN has had talks with at least one major cellular carrier about paying to exempt its content from monthly data caps, The Wall Street Journal reported last week. The deal could allow customers to stream high-quality sports videos on their phones or tablets without it counting against their monthly data limits. 

The liberal consumer groups argue that the Internet should remain an open platform that provides equal access to all websites, apps and services.

Michael Weinberg, a vice president at consumer advocacy group Public Knowledge, warned that the ESPN deal could lead to a two-tiered Internet — one for wealthy corporations and one for everyone else.

“That becomes a problem for any new entrant,” he said. “It changes the dynamic of how we see competition and growth online.”

Matt Wood, policy director for advocacy group Free Press, said the deal would be “very discriminatory,” and would tilt the marketplace toward “the ESPNs and the other large content providers of the world.”

The Federal Communications Commission (FCC) enacted net neutrality regulations in late 2010, but the order treats landline Internet providers more strictly than wireless service providers. Landline providers are required to treat all Internet traffic equally, but wireless carriers are only prohibited from blocking access to websites or apps.

The commission imposed weaker rules on wireless carriers because it concluded they needed more flexibility to manage their networks due to constraints on the amount of data they can carry at any one time over the airwaves.

The liberal advocacy groups opposed the exemption for cellular carriers when the commission adopted the rules, and they argued that the news of the potential ESPN deal proves the FCC never should have created the distinction in the first place.

Weinberg argued that exempting ESPN data from monthly caps is “exactly the kind of conduct” the FCC was trying to prevent with its rules.

“If the rules as written do not address something like this, that suggests that there are problems with the rules,” he said.

Weinberg argued “there are ways to interpret the rules” that would prohibit the possible ESPN arrangement. He claimed that charging to access some services but not others could be seen as illegal blocking under the rules.

“When you run out of data, you can only access some sites but not others,” he said.

“It definitely would violate any real net neutrality principle, but I do think it's a closer question than we might like with the current rules,” Wood said.

The Journal reported that concern over regulatory scrutiny is a factor that could dissuade ESPN from following through with the plans. It also reported that discussions are in an early stage, and no announcement is imminent.

Berin Szoka, president of libertarian think tank TechFreedom, said there is no question that the FCC's net neutrality order would allow for the ESPN arrangement.

“The entire point of exempting wireless services was to allow them to do things like this,” he said.

Szoka argued that allowing ESPN to subsidize cellular data plans would benefit consumers by allowing them to watch more of the content they enjoy. Such an arrangement could also provide more competition to cable TV providers, he argued.

“If your concept of net neutrality is no discrimination ever, you will necessarily find yourself being upset by things like this that are examples of very pro-consumer innovation,” Szoka said.

He argued that the view of the Internet as an open platform that treats all traffic equally is “profoundly static” and doesn't work with wireless carriers because of network congestion issues.

Hanging over the debate about the possible ESPN deal is Verizon's legal challenge to the FCC's net neutrality rules. The company claims that the FCC overstepped its legal authority with the regulations.

Many observers expect that the D.C. Circuit Court of Appeals will side with Verizon and strike down at least portions of the rules.

Tom Wheeler, President Obama's nominee for FCC chairman, will likely face decisions of whether to keep fighting for the regulations and how broad they should be.