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TheStreet Open House

The Age of Internet Bundling Is Here

NEW YORK (TheStreet) -- Perhaps the strangest aspect to the "Net neutrality" debate is that Net neutrality hasn't been around for years.

Disney (DIS) killed it almost a decade ago, through its ESPN unit, with ESPN360, now called ESPN3.

Do you get ESPN3? If you don't, you can't. If you do, you probably didn't choose to.

Disney sells ESPN3, an Internet sports service that offers additional programming not available on ESPN's TV channels, only through some cable operators and other Internet Service Providers.

The cost is tacked onto the bills of subscribers to those ISPs whether or not they want ESPN3. Sports fans whose Internet Service Providers don't pay for ESPN3 can't watch its programming.

This has carried over into apps and other services. Sports fans can watch all of ESPN's programming on their computer, tablet smartphone or Xbox, but only if they receive Internet service through one of the cable operators or ISPs that pays for  ESPN content.

Time Warner Cable (TWC) calls this concept "TV Everywhere," and it is everywhere. Both ABC, also owned by Disney, and 21st Century Fox (FOX) deliver second-day access to their network programs through TV Everywhere services, but only to viewers whose ISPs pay for the content.

Comcast (CMCSA - Get Report) subscribed to ESPN3 for its subscribers and was thinking about TV Everywhere when it bid $250 million in 2012 to get the rights for three years of the Barclays Premier League in England (and Wales), 380 games per year.

That's far more games than it could show on its fledgling NBCSN service, so it created NBC Sports Live Extra, a TV Everywhere service, to show them. When NBCSN charges Comcast for Internet carriage rights Comcast takes the money out of one pocket and puts it in the other.

Liberty Media (LMCA - Get Report), which is trying to buy Time Warner Cable through Charter Communications (CHTR), of which it owns 27%, is well aware of this history. Liberty Media owns the Atlanta Braves baseball team, as well as three regional sports networks.

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