On Thursday, May 18th, news media was reporting on a broadcast deal which had just been struck between Menlo Park, CA-based social media giant Facebook (NASDAQ:FB) and American professional sports league Major League Baseball (MLB). Reportedly, the terms of the deal involves Facebook providing a free broadcast of one MLB game every Friday on MLB’s Facebook page for a total of 20 games. The social media firm appears to be hopeful that securing rights to MLB broadcasts which are then provided for free to consumers will increase the company’s engagement with its reported 182 million daily active users across North America, including both the United States and Canada. Reports indicate that talks between Facebook and the MLB on this particular deal extend back to at least this February.
This is not the only deal which Facebook has inked in recent days to provide broadcasted content to Internet consumers on its own, proprietary social media platform. Also on May 18th, business publication Fortune reported that Facebook struck a partnership with ESL, formerly the Electronic Sports League, in a bid to capture audiences from the growing eSports sector. The terms of this deal involve ESL livestreaming 30 hours of tournaments from the popular shooting game Counter-Strike every week on Facebook. From June onward, ESL reportedly expects to broadcast a total of 5,500 hours worth of gaming tournaments through Facebook.
Facebook is not the only company seeking to provide content to consumers via their own Internet-based platforms. In early May, the Women’s National Basketball Association (WNBA) announced a deal with San Francisco-based social media firm Twitter (NYSE:TWTR) to livestream 20 games per year over multiple seasons on the social media platform. The first WNBA game livestreamed on Twitter on Sunday, May 14th, earned 1.1 million viewers, nearly one-third the average audience watching National Football League (NFL) games streamed on Twitter during the 2016-17 season. Seattle-based Internet e-commerce giant Amazon.com (NASDAQ:AMZN) will livestream Thursday night NFL games during the 2017-18 season for $50 million, a sum which is reportedly about five times what Twitter paid to broadcast NFL games last year. Twitter’s WNBA deal and Amazon’s NFL deal both include promotional efforts on behalf of the Internet companies to promote either sports league.
It makes perfect sense that these Internet companies would want to make forays towards becoming streaming content providers, especially as the consumer market is experiencing a major shift away from traditional cable broadcast subscription models and towards on-demand and live streaming video. However, given the current political context in Washington, DC, especially at the Federal Communications Commission (FCC), this new role of Internet companies as content broadcasters begs greater scrutiny.
In the days leading up to the FCC’s 2015 Open Internet Order, many people were focused on the great hypothetical evil which was “paid prioritization.” In order to prevent Internet service providers (ISPs) from discriminating between forms of content online, creating “fast lanes” and “slow lanes” for Internet access, the FCC and the Obama Administration assured U.S. consumers that reclassifying ISPs as Title II common carriers, increasing the FCC’s regulatory authority over companies providing Internet access, was the best way to protect their ability to access the Internet without ISPs being able to gouge consumers on price.
And yet, couldn’t it be argued that the aforementioned Facebook, Twitter and Amazon broadcasting activities constitute a form of paid prioritization? In fact, the practice of offering certain content for free on an Internet-based platform is known as zero-rating and it’s arguably illegal under the net neutrality regime set up under former FCC chairman Tom Wheeler. Further, Internet giants like Facebook and Twitter are able to keep sucking up bandwidth on Internet channels and ISPs cannot charge content providing companies in such a way which would make them able to prioritize content in ways that could benefit the American consumer. And it’s not as though Facebook itself hasn’t run into similar net neutrality roadblocks in foreign jurisdictions, most notably having had its Free Basics Internet service banned by India’s telecommunications regulator last February.
Anyone who, at this point, wants to fall back on the traditional argument that FCC’s net neutrality regime must stay in place to counteract the regional monopolies enjoyed by ISPs needs to address the fact that pre-deployment barriers erected by local municipalities are the main reason why some areas only have one ISP to choose from. Giving the FCC federal oversight over the business activities of ISPs achieves nothing in terms of the local activism which is required to address the actual problem of providing cost-effective Internet access to American consumers.
Like it or not, current FCC chairman Ajit Pai and his proposed “light-touch” regulatory framework for Internet companies, whether those firms provide Internet access or content on the Internet, make a great deal of sense. Further, given the fact that the Internet giants are generally in favor of maintaining the net neutrality regime established under former President Barack Obama because it improves their bottom lines, why would American consumers support federal policies which actively make the Internet anti-competitive?