Online television is taking off in a major way, and now some of the biggest providers are looking for assurances that they can keep delivering their content reliably. According to The Wall Street Journal, HBO, Showtime, and Sony have all been speaking with internet providers, including Comcast, about the possibility of being treated as "specialized services," separating them out from other internet traffic and essentially giving them a fast lane to consumers. Though fast lanes are explicitly prohibited under the FCC's new net neutrality rules, these fast lanes actually fall in a strange gray area that's yet to be explored.
It's a fast lane, but it may not qualify as one
The FCC carves out an exception for special services that don't provide wide access to the internet, such as VoIP and heart monitors. Those services are therefore exempt from net neutrality rules and may be provided over a fast lane. If that sounds confusing, it is — and the FCC basically admits it. It notes that these services "could be provided in a manner that undermines the purpose of the Open Internet rules." If that's the case, they "will not be permitted."
Exactly what counts as a specialized service isn't laid out in the FCC's net neutrality rules. Rather, the commission gives a very broad definition and says that it has the discretion to stop such services if they become problematic. The question, then, is whether HBO, Showtime, and other web TV providers can create a setup that makes them look like they happen to use data but are not actually offering access to the internet. The fact that HBO is specifically trying to offer HBO Now through internet providers — and not on its own — speaks to this. As a service that's bundled with internet access, an internet provider may be able to treat HBO Now like a specialized service, and therefore send it over a fast lane.
"There is nothing that prevents you from doing that in terms of net neutrality," Dan Rayburn, an analyst at Frost & Sullivan who specializes in streaming media, tells The Verge. "Are you prioritizing packets within the last mile? It depends on how you define that and how you set it up from a technical standpoint."
Internet providers might be able to explain this by bundling internet TV channels
Comcast has already been doing something similar to this for a few years now with its own on-demand service. On the Xbox, accessing Comcast's on-demand service over a Comcast internet connection won't count against subscribers' data caps. It was a controversial practice when Comcast first announced it, and concerns will only escalate if it becomes common to loop in other, paying networks. In that instance, Comcast argues that it's merely an extension of its TV service, which viewers must also be subscribed to. The story would be different, however, in the case of an online-only subscription.
This possibility certainly presents some major net neutrality concerns. Smaller video streaming services would be at a major disadvantage if their videos weren't coming through as reliably as videos from major networks. Other services that support net neutrality, like Netflix, could eventually find themselves in a place where they needs to pay for special treatment in order to compete — assuming that these are paid deals. This is, in sum, exactly why the FCC passed net neutrality rules.
Of course, there's still a lot we don't know about the structure of how such a deal would work. The Journal also reports that "most broadband providers" are pushing back against this proposed arrangement because it would be too costly. Comcast is also reported to have told Sony and HBO that it wouldn't agree to an arrangement like this unless it could offer this arrangement to all video providers so that it doesn't run into regulatory issues.
"It makes a mockery of net neutrality."
One major internet TV provider is already calling this out as a bad idea. Roger Lynch, the CEO of Dish-owned Sling TV, tells the Journal that "it makes a mockery of net neutrality." Big companies like Dish could afford to pay, he says, but "it’s a bad thing for consumers and a bad thing for innovation."
The good news for net neutrality advocates is that the FCC gave itself all the room necessary to address this if it doesn't like it. Its description of specialized services is intentionally vague, and it's seemingly intended more for critical or novel infrastructure than TV, such as "services that provide schools with curriculum-approved applications and content." That's not to say that TV couldn't pass as an exception, but the FCC could overrule that if it chose to. "The commission expressly reserves the authority to take action if a service is, in fact, providing the functional equivalent of broadband Internet access service or is being used to evade the open Internet rules," it writes. "The commission will vigilantly watch for such abuse."