The parent company has managed to avoid ending up in court thus far. News reports suggest that SlingMedia has been on the radar for content industry from the start. In 2006 the company pre-emptively sponsored the EFF Pioneer Awards ceremony at the Computers, Freedom & Privacy conference in Washington, DC. This was a departure from standard practice when start-ups ignore digital activism groups until they are looking at an expensive litigation. SlingMedia’s recent acquisition by the satellite TV network EchoStar may have lent the firm new found legitimacy, and perhaps additional resentment from cable operators.
From the point of view of cable and satellite providers, the Slingbox is disruptive technology, representing potential loss of revenue because of its ability to space-shift content. Today that risk is minimal. Only customers with multiple residences or travelling frequently benefit from maintaining a single subscription and “slinging” the content over on the road. Even that assumes they would be paying for the content twice otherwise; often hotels have extensive channels included and there is always the option of watching the big game at the neighborhod bars. Picture quality is often sub-par even for non-HD content. Viewing experience on a laptop or PC may not be acceptable to customers used to large-screen TVs and it’s not always an option to . On the other hand, the commercial success of video for tiny devices like the iPod suggests that hurdle may be easier to clear.
When extrapolated to higher bandwidth future, the biggest disruption is making content a commodity that can be moved around. This breaks the assumption of one household equals one subscription. Granted it’s unlikely that complex arrangements required to leverage these efficiencies can be developed– eg 50 people sharing 30 subscriptions on the assumption that <60% are watching at anytime, a FlexCar model for cable. But space-shifting already breaks a number of lucrative practices such as discriminatory pricing by market: charging more for the same cable in one area because of the willingness of customers in that zipcode to pay. Similarly blackouts on Internet programming such as the MLB.TV restrictions on local market games are no sustainable given the option of streaming the TV broadcast from a remote location.
Comcast as a provider of TV, Internet and phone services has two incentives for interfering with Slingbox:
- Upholding service quality for other subscribers. Streaming uses significant upstream traffic and the provider typically can not sustain the stated bandwidth for all users at all times. In this regard they are similar to banks: while any one user can empty their account, every user trying to do the same would spell trouble. For this argument to hold, the traffic shaping must be applied indiscriminately to all upstream bandwidth regardless of protocol. If YouTube uploads are not exempt or get higher quota, this argument breaks down. The network does not care whether congestion is caused by an Ingmar Bergman masterpiece or the kid next door.
- Blocking reuse of the subscription at another location. The business case for this is unclear. The signal has already been paid for and the remote location may not even be a Comcast service area. Preventing the recipient from getting decent video quality would not necessarily bring in one more cable subscriber. Rational behavior is to block inbound Slingbox traffic for Comcast internet users– because that customer clearly can purchase the same content. But Comcast gets no direct benefit from restricting the video stream going to a Time-Warner customer. The alternative, a gentlemans’s agreement between ISPs to block streaming to each other’s networks would likely be considered illegal collusion.