March Madness and Network Neutrality

I spent a chunk of yesterday afternoon doing field research. Law professors do much too little of this, so I wanted to step up to do my part.

This means that I watched the end of the Boston College/Pacific game in the first round of the annual NCAA Men’s Basketball tournament, known around the world as March Madness. Of course, I watched the game over the Internet as part of MMOD: March Madness on Demand. No TV set required: just my computer and the bandwidth of the Law School’s network. That makes it research, and not just TV watching.

What did I learn in my visit to the field? (Oh, by the way, Boston College, predicted by some to win the tournament, won, but in double overtime.)

Two hot issues in the Picker house are March Madness and network neutrality. Start with MMOD. The basic idea is simple: online access to all of the live games. Actual implementation is more complicated. According to a background story this week in the New York Times, the system is only set up to serve 200,000 customers simultaneously. Unlike a broadcast TV signal which reaches anyone within a particular distance—independent of the number of people reached—content delivered via online bandwidth faces a much more direct constraint. (I should say that I am interested in more details on how the content is delivered, so please comment if you know more.)

To use the system, you need to register by providing some basic information, including a zip code (more on that in a second). If you registered sufficiently early, you get VIP status. Once you log in, you get placed in the online waiting room, and eventually, you get online access to all of the live games.

Not quite all, actually. The point of the required zip code is to channel viewing. You can watch online only those games not currently available in your local broadcast area. I assume that that is determined by the zip code I registered with. As the Wall Street Journal reported in a front-page story yesterday ($), major league baseball imposes the same restriction for games available online through MLB.com.

What is the point of this restriction? We discussed this at dinner the other night—televised sports + institutional design being the perfect dinner topic at my house. My 12-year old son suggested that given the limited number of viewing spots, CBS and the NCAA didn’t want slots wasted by having folks watching a game online that they could be watching instead on TV. Maximize the net value of the net access. Of course, that doesn’t address my problem yesterday: I don’t have a TV set at the office, so how do I watch my local game over the Law School’s network? (Yes, I do understand that maybe the system shouldn’t be designed to make it easy for us to watch at work, though the software does come with a “Boss button.” Click it and a dummy spreadsheet pops up to block the game window.)

My 16-year old suggested that CBS was concerned about diverting viewers from TV ads, though he noted immediately that the online version might create the possibility for even more ads. And indeed it does: not only can they deliver ads at the standard commercial breaks, but you are required to keep open a separate window that contains navigation tools to the games and, of course, ads. They still seem to be working on delivering the ads. Sometimes at TV commercial breaks, I just got a screen telling me that my game would be returning soon, other times I was stuck with a loop of AIG and Coke ads, one right after the other.

And on the ads, as the NYT story makes clear, CBS doesn’t actually expect the online access to divert many viewers from watching on TV. Instead, CBS anticipates that the people using MMOD are sufficiently hard-core that they will watch both simultaneously. And note that I wasn’t a “diverted” viewer yesterday at work either—at least not in the CBS sense!—as absent MMOD, I couldn’t have watched at all.

And the quality of the online viewing is sufficiently junky that no one would watch the local game online rather than over a readily-available TV, which suggests that the restriction isn’t really necessary but may have been put in place to placate local affiliates. Those affiliates increasingly fear that they are being bypassed as more and more content shows up online at iTunes and Google Video. (You can watch March Madness games after the fact on iTunes.)

Step back and focus on what MMOD means. Broadcasting of TV sports has typically meant regional broadcasts: Big Ten games in the Midwest, the Big East in the Northeast, etc. You watch the Bears in Chicago even if you might prefer to watch the Browns or the Jets (Doug Lichtman’s preference for example). Satellite distributors have moved beyond this with offerings such as the NFL Sunday Ticket. This plays to satellite’s advantage as its core technology requires all of the signals to be delivered to every locality, independent of actual viewer interest. MMOD eliminates geographic restrictions by making all games available to everyone, either over the net or over local TV.

MMOD is also an important form of cable bypass, meaning that CBS is able to reach viewers without having to go through the cable system. Broadcasters would very much like to re-establish direct contact with their viewers and not be beholden to the cable companies, a point I make in a prior post.

Actually, that wasn’t quite right, and that gets us to net neutrality. For most of us, we get our broadband either as DSL from the local phone company or as cable broadband from the local cable company. Network broadcasters are frustrated by the fact that their content flows through the cable TV system; the last thing they want is an intermediary. MMOD—and any other content like it that will be accessed over the Internet—faces another intermediary, either the phone company or the cable company.

I confess to not having fully-formed views on network neutrality. I don’t start from the assumption that it is obvious that only one side—consumers—should pay for the relevant pipes. And we are starting to see other ways in which we will chip away at neutrality, as Esther Dyson argues in an op-ed in today’s New York Times on fee email.

What is interesting about MMOD is the way that it quickly implements non-neutrality. I signed up early for MMOD, so I have VIP status. The site tells me that it is good to be a VIP and that has to do with the fact that only 200,000 customers can be on the system at a time. How to decide who goes first? VIPs of course.

I became a VIP by signing up early. Free this year, fee next year?

Comments

[Jule]

Interesting post. A couple of comments:

(1) MMOD has been offered since 2004, IIRC, and the past two years it has been available for a modest fee of $10 for the entire package of games. There was no "waiting room". I was surprised to see them move to a free, ad-supported model this year. It is the same package of games for which DirecTV charges about $50.

(2) NFL Sunday Ticket and all of the DirecTV sports packages implement similar blackouts as MMOD (preventing you from watching the game being broadcast on your local affiliate) thereby preserving exclusivity for the local network affiliate.

(3) Those looped commercials you mentioned? They are probably where the local affiliate gets to put in its own ads in the broadcast signal, known as "local avails".

[Michael Risch]

Warning - long comment!

The interesting thing about the "non-neutrality" in this case is that it is not just about the size of the pipes, but also the server load.

Case in point - AT&T just sent me an email saying that I could get 2 free tickets at Pac Bell (no SBC (no AT&T)) Park. All I had to do was sign in and pick my spot. Simple, right? No such luck - the server was overloaded, and all I got was "Server Too Busy" over and over and over - for HOURS. I am certain that there was sufficient bandwidth for serving these pages - only a few kilobytes of static text.

It sounds like CBS learned from the Victoria's Secret Fashion Show model and decided that the only way to limit server load is to force it. Perhaps they aren't charging this year because they can't charge AND have terrible quality/waiting time at the same time, but if it's free, who can complain?

As to net neutrality generally, I think it is a bit of a misnomer. As bandwidth across the net increases, someone has to pay for it. Phone companies can offer DSL cheap on the assumption that even a 1.5MB DSL line won't be full most of the time, so the intermediate pipe can be smaller. If those 1.5MB DSL lines are full more often (say due to phone or video), then the intermediate pipe must be bigger. Someone has to pay the phone companies for that pipe - either the consumer or the provider. Under no set of facts is there neutrality.

There is probably a strong argument for the provider to pay for it. One would expect that increased costs will get passed on to the consumers anyway, so doesn't it seem fair that those that use the most bandwidth should pay for it rather than those that don't? That's how we used to pay for our old T1 at the office before we got DSL - by percentage of the pipe we used on a monthly basis. I suspect that those who complain about loss of net neutrality are those who fill the pipes more often.

[jim]

If it is true that you can only watch games not currently available in your local broadcast area, the location determination is made by something other than zip code. This must be so because tonight I watched Kansas play (on a computer and network residing in California) registered with a Kansas zip code.

The most frustrating part of the experience (aside from KU losing) was that the game was "on demand" but not in real time. There was a delay of a few seconds which resulted in the score ticker in the game being televised in my broadcast region to update the KU score quicker than watching the KU game "on demand."

[Ed Felten]

You note briefly the distinction between broadcast, where cost is independent of the number of viewers, and online streaming, where cost is proportional to the number of viewers.

Using BitTorrent-style swarming distribution, you could get video to an arbitrary number of viewers at a cost that was (a) low and (b) independent of the number of viewers. The software tools for doing this aren't quite ready for prime time, but they'll get there soon -- I'd guess by next March.

This is probably the future of TV.

[Bruce]

Both your sons have good points, but another issue here, which will likely persist for some time, is that all of this stuff is subject to long-term agreements entered into 10 years ago or more requiring some form of regional exclusivity -- agreements with network affiliates, agreements with local cable sports channels, agreements with the NCAA or individual teams, etc. Although everyone recognizes the technology and the business is changing, it's unclear exactly how and hard to depart from existing models in drafting new agreements.

[Jason]

I have two quick comments.

1. After my experience with MMOD, most people would be making a poor choice if they paid for VIP access. I made it into MMOD within a minute-and-a-half of being placed into line each time I tried with one exception; it took 40 minutes during the first hour on Thursday. Most of the time I was attempting to jump in for the last minute of close games while at work, which is when you would think demand would be the highest. Why would I pay money simply for quicker access during a brief period of the first-half of the round one games?

The answer is if I am an alum of a 13-16 seeded school who plays in the first set of games on Thursday in a game not being shown in my market. That is a pretty small market segment.

2. Jim, you couldn't view the games in real-time because it takes a few seconds for your computer to buffer the video when you first enter MMOD. Every hiccup where your computer has to re-buffer the video only adds to the delay, but there is nothing (easy) CBS can do to fix these delays.

[Michael Risch]

Ed - BitTorrent is not user independent - you just have to assume that the number of users is high enough to enable better swarming (I have tried downloads with only two or three people sharing the same file, and it is much slower).

Also, even with swarming the pipes are full for a net neutrality view - in fact, it may cause even more bottleneck to the extent that DSL is asynchronous (smaller upload pipe) and to the extent that data is now all over the place instead of from one sender. That said, if the data is coming from anywhere, it would be a lot harder for phone companies to figure out who to charge.

[William Rothwell]

I believe the regional blackout is done by identifying the geographic location of your IP address. You can probably get around it by routing the content through a proxy server hosted in a different region.

[Cory Hojka]

"This plays to satellite’s advantage as its core technology requires all of the signals to be delivered to every locality, independent of actual viewer interest."

Years ago, this statement was partially true. However, in recent years satellite technology has allowed for the use of spot-beam antenna technology in new satellites. As a result, most new satellites are not ones designed to deliver signals on a wide footprint, but instead spot-beam satellites. The reasons for this change is to get away from the major disadvantages of wide footprint antennas.

True, a wide footprint antenna gives you massive coverage, but it wastes energy in undesired markets. Further, it limits your ability to reuse valuable radio frequencies in the total coverage area. Worst of all, there's usually no ability to alter the footprint as the markets change over time.

On the other hand, with spot-beam antennas we can reuse the same frequency in multiple areas covered by the satellite. We also need not waste any resources providing coverage to markets without value (i.e., a desert). Finally, if the markets change (i.e., some fool builds a casino in that formerly undesirable desert, thereby leading to the creation of a fast-growing city), we can alter our coverage without launching another satellite. Instead, we simply reconfigure our coverage pattern with the spot-beam antenna array.

[Bruce]

Here's a news article on affiliate agreements an Internet downloads:

http://www.siliconvalley.com/mld/siliconvalley/news/editorial/14344642.htm