The war between broadcasters and cable companies has spilled over to the Web.

Innovation, the Internet, gadgets, and more.
Oct. 19 2010 5:44 PM

No Hulu For You!

The war between broadcasters and cable companies has spilled over to the Web.

(Continued from Page 1)

Online media outlets already impose a host of restrictions on who can get what, when. If you live outside of the United States, you can't get Hulu. If you live in the United States, you can't get Spotify. The novel thing about Fox's Hulu block was that it was aimed at a particular ISP, not a whole country. But what's wrong with that? Fox's entire corporate mission, after all, consists of selling content to people who pay for it. Shouldn't it have the right to block its shows from a set of customers it believes aren't paying enough?

All of this suggests a blind spot in the neutrality debate. Activists worry that if broadband companies begin charging content companies for access to Internet lines, only big, established sites with deep pockets will be able to afford a place online. But the Fox incident suggests that we should probably be just as concerned about the opposite problem—that content companies might start charging broadband companies to access their content. This would turn the Internet into something like cable TV—your ISP would carry, say, Hulu so long as it paid the site's owners a carriage fee. The cost of those fees, of course, would be passed along to every one of the ISP's subscribers, whether they watch Hulu or not.

This fight isn't academic. Charging ISPs—rather than individual "end users"—for access to certain Web sites or videos is an oft-proposed business model for content companies. There are, in fact, already some ventures making a go of this model. The most famous is ESPN3, the cable sports network's video streaming site, which is available only to customers of "participating providers"—if your ISP doesn't pay ESPN for access, you can't watch ESPN3. Milking the ISPs has also been held up as a viable way to save both the music and newspaper industries.

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To be sure, this isn't a slam-dunk business model. The Internet is a pretty fragmented place, and with so much choice online, few Web companies have the kind of pull that Fox has on TV. If one lonely Web site—or even a collection of sites—demands that ISPs pay for access, I'm not sure you'd see a lot of takers. But there are a few sites online that most people think of as indispensible—Google, Facebook, and Yahoo, for starters. Of those three, Yahoo could be an obvious candidate for demanding a fee from providers. The company has long struggled financially, but it's still one of the most beloved sites online. If Yahoo demanded that ISPs fork over $1 a month per customer, would the providers balk? I doubt it. For many people, the Web without Yahoo isn't the Web at all—if ISPs want to offer the full Web to their subscribers, they'd have no choice but to pay the carriage fee.

For decades, entertainment companies made a killing by conditioning us to pay a huge monthly cable bill. The Internet has long been a haven from this model—we can cut the cable cord, consumer advocates promise, and buy only the TV shows we want. But perhaps Fox's Hulu block has revealed that this haven won't hold up forever. Content companies can easily bring the cable model to your Internet line. The only question is, when are they going to start?

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