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Mobile video might make carriers, providers clash

Stephen Lawson | Nov. 15, 2011
As mobile video finally starts to take off, making money from it remains a challenge, and content providers and carriers may clash over economics before they find a way to share the costs and benefits.

"As content providers today, the most expensive way for us to reach our audience is over IP," BBCi's Danker said. "Those sticks on the hill have been there for a long time. They work really well. They reach tens of millions of people for the cost that we spend to reach one person with a program today over IP."

"It's not like content providers just put something up there for free and it's viewed and we're reaping the benefit," said Albert Cheng, executive vice president of digital media at Disney/ABC.

If additional charges for delivery over mobile carrier networks were tacked on, it might not be possible to keep distributing video over mobile, Cheng said.

Cheng pointed out that some of his company's distribution partners, such as broadcasters, cable operators and Apple's iTunes store, pay ABC/Disney for its content. But he didn't go so far as to say the company wants to charge mobile operators for its videos. "We all have to collaborate to figure out how to monetize it," Cheng said.

Mobile video could become a flashpoint of the debate over net neutrality, said Art Brodsky, communications director for Public Knowledge, a public-interest law firm involved in Internet issues. He is not aware of any mobile operators trying to charge a premium for certain video services, but the idea has major implications for the content providers, he said. "They have a lot to lose with a network that is not open and non-discriminatory," Brodsky said.

The net neutrality rules proposed last year by the U.S. Federal Communications Commission, which Congress is now considering whether to block, are more lenient for mobile than for wireline networks. But if a carrier tried to charge a video provider extra for priority, it might lead to an interesting legal challenge, he said.

The two types of players naturally see things differently because their responsibilities are different, said Tolaga Research analyst Phil Marshall.

"The carriers place more value on their networks than the content providers believe that it's worth," Marshall said. "It's a mismatch."

But CDNs (content delivery networks) may eventually bring them together, Marshall believes. Most of the companies distributing video on the Internet already use CDNs, such as the network run by Akamai, to cache their content in data centers closer to viewers. Caching can reduce latency and everyday demands on network links.

Mobile operators may start to bring that practice closer to subscribers, Marshall said. He pointed to a partnership announced in February between Akamai and Ericsson, one of the biggest cellular base-station builders, under which they plan to integrate Akamai's caching capability into the mobile network. Akamai said the companies have ongoing trials showing promising results and expect the technology to be commercialized in the second half of next year.


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