Last week the Federal Communications Commission voted 3-2 to open for public debate new rules to guarantee an open Internet. With the UFC and WWE online networks, both may have an eye as to what may eventually transpire.
Net neutrality is the concept that all Internet content should be treated equally. The issue here is that Broadband providers might be able to prevent or inhibit end-users from accessing certain content simply because it could. In January, we reported on the court ruling that precipitated last week’s vote.
The FCC indicated that it would propose new rules that would allow companies like Disney, Google and Netflix to pay Internet service providers for “fast lanes.” These special, faster lanes would presumably allow for content to flow much quicker than normal. Broadband companies have pushed for this right. This would come into play with services like online streaming. Thus, UFC Fight Pass and the WWE Network would be affected if such fast lanes require extra cost. Thinking along these lines, extra cost for the UFC and WWE would likely mean that it would get passed along to subscribers. However, this proposal has drawn the ire of consumer groups citing it would favor big business and stifle innovation.
There will be much more political wrangling as the sausage is made for net neutrality rules.
Payout Perspective:
It may not necessarily be an issue on the top of the minds of anyone in combat sports, but with business expansion for both UFC and the WWE, each company’s network would be affected by new rules regarding regulation of the Internet. As we know, the WWE finds itself in corporate distress with a declining stock price with a disappointing television deal and news that the network’s cannibalization of its PPV product will affect revenue more than originally thought. Additional distress made by extra “faster lane” fees would increase already hefty network costs and passing them along to subscribers may cause a tipping point. With the WWE already setting network earning expectations for end of year 2015 based on 2 to 2.5 million subscribers, additional “fast lane” fees could make it tough for it to reach its OIBDA goal.
On the other hand, UFC Fight Pass has been a success from all indications. It has already been made available abroad which we assume has increased the number of its subscribers. Still, additional fees to allow for its live streaming could be a concern.
As UFC and WWE online networks depend on unfettered live streaming of its content, one suspects that each company is interested on how the net neutrality debate develops.
It would all depend on the price. Getting high speed band width that isn’t bogged down with every two bit streamer may be what these companies need for their product. Would this help their product and what is the price. Those are the questions. If it is a speed gears to big business only then I’m sure the cost will be huge and would be tantamount to paying cable providers. If it is a speed geared to all internet users. Then I can see the price being reasonable. But then again they could still go after big business by limited the amount of info streamed forcing the big boys to pay up.
As much as it would suck for internet providers to act as a cable provider and charge a cut of sales. It is legal for those in cable to have such a business. I don’t see why the internet providers couldn’t run the same type of business. If radio and tv can charge for what goes to the public then the internet should be any different.