Why Are Comcast's Data Cap Exemptions Evil If T-Mobile's Are A-OK?

Image source: Gratisography.com.

Network neutrality can be a tricky concept.

For example, it isn't always obvious what's allowed under current regulations. And whether certain practices are officially OK or not, some companies seem to get away with murder, while others apparently get punished for pretty much the same idea. I'll give you a quick example -- and explain why one of these actions is not like the other.

This month, T-Mobile US (TMUS 0.57%) introduced a new Un-carrier policy under the snappy "Binge On" moniker, where certain digital video services won't count against T-Mobile's data bandwidth limits. Consumers will have to deal with an automatically reduced picture quality, but they are in no danger of running into additional charges or low-speed connections from drinking too deeply from these particular digital video wells.

Critics would say this policy runs afoul of net neutrality rules, in spirit if not in letter. Some popular services are on this vetted list while others are not -- T-Mobile TV is obviously included alongside Netflix (NFLX -3.92%), Hulu, and 21 other services. But ultra-popular video service YouTube, owned by Alphabet's (GOOG 0.74%) (GOOGL 0.55%) Google unit, is nowhere to be seen.

So, what gives? T-Mobile must be trying to shape the video consumption habits of its 30 million postpaid subscribers, right? Hold that thought.

Comcast (CMCSA -0.37%) is rolling out its own live streaming TV service, starting in a couple of test markets, but intended to cover Comcast's entire footprint by 2016. Known as Stream TV, the new service lets Comcast customers watch live TV on smartphones, tablets, and other Internet-connected devices. And if you're doing this inside your Comcast-connected home, hooked up to a Comcast Xfinity router, all of this happens without dipping into the 300-gigabyte data cap the company imposes in some markets.

That is most certainly a power play. High-definition video streams chew through about 3 GB of data per hour, according to Netflix. Similar consumption levels apply to Hulu, or YouTube, or any other online video service. Watching digital video three hours per day would exhaust that monthly 300 GB cap, leaving no room for any other bandwidth uses. With that limit in mind, I'm sure many Comcast subscribers consciously limit their online video viewing. The first time you run over the data cap, the resulting extra charges will quickly hammer that idea home.

But Stream TV does not apply to this limit. Watch all the live TV you want on that tablet, and forget about those bandwidth-hogging online video services. Stream TV actually helps to hold Comcast's traditional TV customers tighter in the same old fold, while Netflix and YouTube are left out in the cold.

Netflix CEO Reed Hastings is outspoken on these issues, openly asking Comcast to "apply caps equally, or not at all."

Comcast's loophole is clearly not an example of net neutrality in any way, shape, or form.

T-Mobile US CEO John Legere. Image source: T-Mobile.

So, what's the difference?
Why does T-Mobile get a free pass while I'm throwing Comcast under the bus? Because the two companies are not doing the same thing at all.

In Comcast's case, it's a largely monopolistic company in control of the broadband connections that Netflix, Hulu, and others depend on for their survival. The cable giant is tightening the thumbscrews in order to keep video viewers where they belong, which is in front of traditional TV stations under the Comcast banner.

After all, video subscriptions still account for 46% of Comcast's quarterly revenues (down from 47.5% a year ago, as the online brigade tramples that sacred ground). It's a crucial business operation that must be protected at all costs.

But T-Mobile threw the doors wide open with 24 approved services at launch. The company also proudly notes that there are "more to come!" And that's not all.

"Binge On is open to any streaming video provider who meets the technical requirements, which are available online at www.t-mobile.com/bingeon," according to the Un-carrier press release. "And it's completely free for video streaming providers to join."

YouTube might be next in line. A recent article in The Wall Street Journal explains that YouTube was left out for technical reasons. The Google-wide encryption policy does not play well with attempts to detect video streams, so your T-Mobile device can request a lower-quality version. The companies are talking about a solution but have nothing to present quite yet.

You say tomato, I say duck-billed platypus
On the surface, it may seem like T-Mobile and Comcast are doing the same thing here. Each one has an approved list of digital video services that don't have to worry about data caps, and neither one covers every video platform in existence.

But T-Mobile is actively looking to expand its list, which already includes some of the most popular video services on the Internet. Meanwhile, Comcast's list of approved services is one name long.

T-Mobile is looking to win over new subscribers with a customer-friendly policy that isn't designed to hurt anyone. If your company wants to join the Binge On club, all you have to do is work it out with T-Mobile's tech team.

Comcast, on the other hand, is just looking out for No. 1. It's all about protecting an outdated business model, even if that means stealing some ideas from the usurpers.

So, no, I don't see a problem with welcoming T-Mobile's Binge On plan while condemning Comcast's seemingly similar offering. They have almost nothing in common, after all.