The loophole Comcast is using to threaten the open internet.
Last week, we learned that Comcast and other internet providers believe they'll be able to skirt the Federal Communication Commission's net neutrality rules by providing free data that doesn't count against your home or mobile service data caps. Now we specifically know which parts of the net neutrality order cable companies might cite when arguing that these new services are legal.
Comcast's new Stream TV service allows its internet subscribers to watch as much Comcast video content as they want without it affecting a subscriber's data use under the company's 300 GB data cap, which it is testing in certain markets. Effectively, this is quite similar to T-Mobile's "Binge On" service, which allows mobile users to watch as much streaming video from certain providers on their mobile data plan without it counting against a data cap. But, legally, it looks like Comcast, as a cable provider, may have a bigger loophole to exploit than T-Mobile does.
"Stream TV is an in-home IP-cable service delivered over Comcast's cable network, not over the public Internet," Comcast told me in a statement. "IP-cable is not an 'over-the-top' streaming video service. Stream enables customers to enjoy their cable TV service on mobile devices in the home delivered over the managed cable network, without the need for additional equipment, like a traditional set-top-box."
Comcast referred me to a 2014 FCC Notice of Proposed Rulemaking in which the commission proposed that anyone who delivers cable video services over internet protocol would be considered a "cable operator" rather than an internet service provider. The crux of Comcast's argument is that its service uses "internet protocol," but not "the internet." Because the details matter, I'm going to quote liberally from two FCC documents: that 2014 NPRM and the official rules the FCC ultimately adopted.
"IP-based service provided by a cable operator over its facilities and within its footprint must be regulated as a cable service not only because it is compelled by the statutory definitions," the FCC wrote. "It is also good policy, as it ensures that cable operators will continue to be subject to the pro-competitive, consumer-focused regulations that apply to cable even if they provide their services via IP."
So, Comcast is arguing that its new "Stream TV" is a cable service, not an internet one, which is a convenient argument to make if you wanted to incentivize people to watch your TV service and not Netflix's, of course.
But just because that is Comcast's argument doesn't mean it's necessarily in the free-and-clear with the FCC. The language above did not make it into the final accepted net neutrality rules, though related language did. From the final rule:
"In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should not apply its conduct-based rules to services offered by broadband providers that share capacity with broadband Internet access service over providers' last-mile facilities, while closely monitoring the development of these services to ensure that broadband providers are not circumventing the open Internet rules," the rules state. "After reviewing the record, we believe the best approach is to adopt this tentative conclusion to permit broadband providers to offer these types of services while continuing to closely monitor their development and use."
"Cable TV and internet is delivered with the same wire, there's room for Comcast to define this however they want to."
So, the FCC says that in very specific instances, it would be OK for a broadband provider to offer specific services that don't provide full access to the internet. The FCC then lists several different types of services that are exempt, such as allowing Amazon to offer free data to access its store on the Kindle or allowing a wearable heart monitor to automatically upload data to a server. The FCC calls these non-BIAS data services.
"First, these services are not used to reach large parts of the Internet. Second, these services are not a generic platform—but rather a specific 'application level' service. And third, these services use some form of network management to isolate the capacity used by these services from that used by broadband Internet access services," the FCC noted.
"While [these] services discussed are not broadband Internet access service, and thus the rules we adopt do not apply to these services, we emphasize that we will act decisively in the event that a broadband provider attempts to evade open Internet protections (e.g., by claiming that a service that is the equivalent of Internet access is a non-BIAS data service not subject to the rules we adopt today)," the commission continued.
So, it appears as though Comcast is claiming that Stream TV is a narrowly tailored internet protocol service that is not the internet and is thus not subject to net neutrality rules. The FCC did not formally define what is and is not a non-BIAS service because it said that doing so would stifle innovation, but it appears as though many non-BIAS services are intended to be single app-related. Stream TV clearly does one very specific thing—but that thing, delivering video, is expected to account for 80 percent of all internet traffic within the next four years.
"Comcast has more economies of scale, but they don't have that much more power in each and every market than your run-of-the-mill cable operator"
The FCC has clearly left itself some wiggle room here and it may be able to come down on Comcast and any other cable provider that tries to offer a similar service. The FCC told me Friday that it's "working to make sure it understands the new offering."
"There's no denying there's some weirdness here in that cable TV and internet is delivered with the same wire," Matt Wood, policy director of Free Press, which pushed for the net neutrality rules, told me. "There's room for Comcast to define it however they want to."
Expect other cable companies to follow suit until the FCC does something about it.
"The only difference between Comcast and Charter and smaller cable companies is how many local monopolies they have," he added. "Comcast has more economies of scale, but they don't have that much more power in each and every market than your run-of-the-mill cable operator."
That's why, in the end, the only way the open internet will be preserved is if it's advantageous for a company to maintain open internet policies. The net neutrality rules are no replacement for a more competitive broadband marketplace. The real answer here is Comcast and every other local monopoly needs one or more true competitors, plain and simple.