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(Street Insider)   Netflix pays ransom to Comcast for broadband access. Verizon, AT&T and others view their wounded prey with glee   (streetinsider.com ) divider line
    More: Followup, Netflix, Comcast, streaming media, internet service provider, broadband  
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2501 clicks; posted to Business » on 23 Feb 2014 at 4:46 PM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-02-23 04:19:33 PM  
Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed."

How much do you want to bet that one of the terms of the agreement is the right to insert Comcast-sponsored ad content into the Neflix stream?

/Netflix: Next-generation's WGN.
 
2014-02-23 04:41:43 PM  
So, Frank Underwood pushed them in front of... never mind. *wink*
 
2014-02-23 04:41:51 PM  
Great.  Just farking great.
 
2014-02-23 04:49:59 PM  
I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.
 
2014-02-23 04:50:37 PM  
Hmm. You would have though they'd wait until they got the merger with TWC pushed through.
 
2014-02-23 04:52:15 PM  
Should have told Comcast members to switch carriers for a steep discount. Maybe $20 for the year.
 
2014-02-23 04:52:44 PM  
I'm going to be moving in a couple of years and you better believe 'non-shiatty ISP availability' is going to be high on my list of things to looking at different areas.

/Yeah, yeah. I know. "Good luck with that."
 
2014-02-23 04:53:42 PM  

SumJackass07: Hmm. You would have though they'd wait until they got the merger with TWC pushed through.


I'm betting they are actually playing nice-ish in order to help the merger go through instead of being complete jerks to Netflix.
 
2014-02-23 05:01:43 PM  

duffblue: Should have told Comcast members to switch carriers for a steep discount. Maybe $20 for the year.


How many people have a second broadband option in their area? I used to have verizon FiOS in my area which had great service, but I had to drop them after Verizon sold them off to Frontier, because Froniter turned the service into absolute crap. They don't even sell FiOS TV with new installs and require you to get satellite service.

I'm really hoping that at some point more tech companies like Google get into the game and start setting up their own networks to ensure that they can roll out broadband services to better sell things like 4k video streams to their customers. Comcast and Verizon can take on smaller operators, but Google, Apple, and Amazon could put up a pretty good fight.
 
2014-02-23 05:04:31 PM  
Oh well, we were warned and we didn't listen. Good luck, everybody.
 
2014-02-23 05:05:39 PM  
Poor Netflix

When the BBC started is online catch up service and spiked net traffic in Britain by 5% a group of ISP's tried to strong arm the BBC into paying money to stop them throttling.

The BBC called their bluff and said if you throttle our content we will run it as a headline on the six and nine o'clock news. That ended the argument stone dead.
 
2014-02-23 05:06:26 PM  

duffblue: Should have told Comcast members to switch carriers for a steep discount. Maybe $20 for the year.


Switch to  what?  Most people in the US don't have the luxury of multiple options for broadband carriers, and even those who do generally are choosing between Evil A and Evil B.

For some reason, regulations guaranteeing a monopoly or duopoly are good, but regulations dictating how they have to behave are  bad.
 
2014-02-23 05:19:02 PM  
Vito Comcorleonecast: Hey Netflix...

saremo.com
 
2014-02-23 05:20:45 PM  

Norfolking Chance: Poor Netflix

When the BBC started is online catch up service and spiked net traffic in Britain by 5% a group of ISP's tried to strong arm the BBC into paying money to stop them throttling.

The BBC called their bluff and said if you throttle our content we will run it as a headline on the six and nine o'clock news. That ended the argument stone dead.


Hopefully this ignites enough outrage on the internet that this actually gets covered to similar effect.  The SOPA protests worked, although that may be temporary because they're trying to bring it back again under a different name.
 
2014-02-23 05:52:51 PM  

TuteTibiImperes: Norfolking Chance: Poor Netflix

When the BBC started is online catch up service and spiked net traffic in Britain by 5% a group of ISP's tried to strong arm the BBC into paying money to stop them throttling.

The BBC called their bluff and said if you throttle our content we will run it as a headline on the six and nine o'clock news. That ended the argument stone dead.

Hopefully this ignites enough outrage on the internet that this actually gets covered to similar effect.  The SOPA protests worked, although that may be temporary because they're trying to bring it back again under a different name.


I'm fairly certain that it won't.  Unlike the BBC, Netflix doesn't have anything to bargain with.  And as you said - SOPA isn't dead, and that's the most successful effort at getting Internet Users to affect change.
 
2014-02-23 05:57:34 PM  
RIP Internet.  If only the FCC weren't practically just a joint venture of the major telecoms at this point...

/please, Mayor Murray, municipal broadband!
//you're our only hope!
 
2014-02-23 05:59:14 PM  

China White Tea: duffblue: Should have told Comcast members to switch carriers for a steep discount. Maybe $20 for the year.

Switch to  what?  Most people in the US don't have the luxury of multiple options for broadband carriers, and even those who do generally are choosing between Evil A and Evil B.

For some reason, regulations guaranteeing a monopoly or duopoly are good, but regulations dictating how they have to behave are  bad.


I should probably consider myself lucky (for various definitions of 'lucky') that I (technically) have three options:
- Brighthouse Networks (which is what I have: 10/1 @ $55/month)
- AT&T (6/1 at about the same price)
- Satellite (ok, you can stop laughing now)

/fml
//how long until netflix rates go up again?
 
2014-02-23 06:08:18 PM  
Everybody's got a price...

static.comicvine.com


/FCC, end the merger!
 
2014-02-23 06:26:53 PM  
SO the net neutrality issue is settled and we lost.  Color me shocked.
 
2014-02-23 06:28:36 PM  

DigitalCoffee: China White Tea: duffblue: Should have told Comcast members to switch carriers for a steep discount. Maybe $20 for the year.

Switch to  what?  Most people in the US don't have the luxury of multiple options for broadband carriers, and even those who do generally are choosing between Evil A and Evil B.

For some reason, regulations guaranteeing a monopoly or duopoly are good, but regulations dictating how they have to behave are  bad.

I should probably consider myself lucky (for various definitions of 'lucky') that I (technically) have three options:
- Brighthouse Networks (which is what I have: 10/1 @ $55/month)
- AT&T (6/1 at about the same price)
- Satellite (ok, you can stop laughing now)

/fml
//how long until netflix rates go up again?


I have several options for broadband as well:
Time Warner (soon to be Comcast) 15/1 @ $34.99/month (1 yr promo)
AT&T 6/1 @ $34.99/month (1 year promo) (capped at 250GB a month)
Verizon LTE (capped)
T-Mobile LTE (capped)
AT&T LTE (capped)
Satellite (which could be barely considered "broadband")

Yes, I am stuck in the land of the Telco who went cheap when doing a "fiber" upgrade, by doing FTTN, instead of FTTP and the cable co who's CEO said that people don't want 1Gb connectivity to the internet. FML
 
2014-02-23 06:35:24 PM  

TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.


It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.
 
2014-02-23 06:45:51 PM  

qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.


That's the issue - any network congestion is a direct result of their own refusal to improve their own network.  They could easily do it, and have more than enough profits to fund it without raising rates, but they have little incentive to do so because they act as an effective monopoly in many areas.

Where I live I have the option of Comcast or DSL that's much slower.  Comcast annoys me quite a bit, but unless I'm willing to trade my 50MB pipe for a 10MB one, I really have no alternatives.
 
2014-02-23 06:53:01 PM  

TuteTibiImperes: qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.

That's the issue - any network congestion is a direct result of their own refusal to improve their own network.  They could easily do it, and have more than enough profits to fund it without raising rates, but they have little incentive to do so because they act as an effective monopoly in many areas.

Where I live I have the option of Comcast or DSL that's much slower.  Comcast annoys me quite a bit, but unless I'm willing to trade my 50MB pipe for a 10MB one, I really have no alternatives.


These pipes you speak of. Are they like......tubes?

unmitigatedword.files.wordpress.com
 
2014-02-23 07:05:13 PM  

TuteTibiImperes: That's the issue - any network congestion is a direct result of their own refusal to improve their own network.  They could easily do it, and have more than enough profits to fund it without raising rates, but they have little incentive to do so because they act as an effective monopoly in many areas.


They not only have little incentive to do so, but actually have the clout to get providers like Netflix to pay for it (thanks largely to the effective monopoly you mention, and as we all know, that's poised to actually get worse). Netflix is building Comcast a new Netflix-only pipe; Comcast is being paid twice for this service, first by the customers for the ability to get Netflix, and then by Netflix for the ability to have customers! How long until Comcast wants Amazon or YouTube to have their own pipes? How long until other providers want their own Netflix-only pipes? I give it six months, and it won't be long until the content providers need to start raising rates in order to fund their expansions of the ISPs' infrastructure.

Welcome to the new "separate but equal" internet.
 
2014-02-23 07:09:35 PM  
dustman81:
[snip]
Satellite (which could be barely considered "broadband")

No it isn't. Not by those of us who use it. Not even close.

http://www.speedtest.net/my-result/3327317840
 
2014-02-23 07:12:42 PM  
I'm sure they are keeping all of their reciepts. When this Net Neutrality issue goes up before the bigger courts and even the Supreme Court, it will be entered as evidence. Fairness in the marketplace? Open competition? Getting paid three times for the same service is what it sounds like to me.
 
2014-02-23 07:18:19 PM  
truthfrequencyradio.com
 
2014-02-23 07:21:59 PM  

qorkfiend: the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else


Then they fail as an ISP. If they're not willing to build up their own network, the FCC should just take them out behind the barn tomorrow and end them.
 
2014-02-23 07:28:08 PM  

qorkfiend: TuteTibiImperes: That's the issue - any network congestion is a direct result of their own refusal to improve their own network.  They could easily do it, and have more than enough profits to fund it without raising rates, but they have little incentive to do so because they act as an effective monopoly in many areas.

They not only have little incentive to do so, but actually have the clout to get providers like Netflix to pay for it (thanks largely to the effective monopoly you mention, and as we all know, that's poised to actually get worse). Netflix is building Comcast a new Netflix-only pipe; Comcast is being paid twice for this service, first by the customers for the ability to get Netflix, and then by Netflix for the ability to have customers! How long until Comcast wants Amazon or YouTube to have their own pipes? How long until other providers want their own Netflix-only pipes? I give it six months, and it won't be long until the content providers need to start raising rates in order to fund their expansions of the ISPs' infrastructure.

Welcome to the new "separate but equal" internet.


"Netflix has been seeking direct access to Comcast's network through an initiative known as Open Connect, in which it would use a third party to deliver its movies and TV shows to its own hardware inside or near Comcast's facilities. It has struck agreements with Internet providers around the world, including British Telecom, Bell Canada, and Cablevision.

But Comcast balked at such an arrangement, seeking an agreement in which Netflix would pay to connect directly to its high-speed network -- as do other large data providers, such as Google Inc.'s YouTube." LINK


This isn't a new thing.
 
2014-02-23 07:35:04 PM  

qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.


How much you want to bet Comcast intends to raise everyone's rates in the name of paying for the building of new infrastructure?
 
2014-02-23 07:39:54 PM  

qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.


You don't understand what net neutrality is
 
2014-02-23 07:55:48 PM  

rugman11: But Comcast balked at such an arrangement, seeking an agreement in which Netflix would pay to connect directly to its high-speed network -- as do other large data providers, such as Google Inc.'s YouTube


So Comcast is engaging in extortion.
 
2014-02-23 08:16:55 PM  

TuteTibiImperes: Norfolking Chance: Poor Netflix

When the BBC started is online catch up service and spiked net traffic in Britain by 5% a group of ISP's tried to strong arm the BBC into paying money to stop them throttling.

The BBC called their bluff and said if you throttle our content we will run it as a headline on the six and nine o'clock news. That ended the argument stone dead.

Hopefully this ignites enough outrage on the internet that this actually gets covered to similar effect.  The SOPA protests worked, although that may be temporary because they're trying to bring it back again under a different name.


Well, maybe of the news wasn't run by companies with major cable revenue interests.
 
2014-02-23 08:22:21 PM  

ZZ9 Plural Z Alpha: qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.

You don't understand what net neutrality is


I do. Net neutrality bars unreasonable discrimination of internet traffic. That's not what's happening here.
 
2014-02-23 08:34:27 PM  
Why don't we just leave things alone and let the Free Market sort it out?
 
2014-02-23 08:35:19 PM  

qorkfiend: ZZ9 Plural Z Alpha: qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.

You don't understand what net neutrality is

I do. Net neutrality bars unreasonable discrimination of internet traffic. That's not what's happening here.


A) No, "unreasonableness" has nothing do with it. Public networks should be neutral regardless of the content, site, or platform.

B) In any case, it is unreasonable for Comcast to avoid building network capacity for years and then have Netflix pay for it. This also makes it harder for any Netflix competitor to provide similar services.
 
2014-02-23 08:54:59 PM  
jesus christ you fedoras are insufferable. Netflix is dropping Cogent as an ISP and tying directly to Comcast backbone to solve congestion issues in the Eastern metro corridor. they're probably doing it via AWS Direct Connect and Equinix' Asburn IBX.

Any farking company in the world can do the same, hell Netflix probably nets out ahead on this since they dont have to pay Cogent for QoS and can talk directly to Comcast engineers now. Its mot a farking conspiracy and its got fark all to do with net neutrality you neckbeards.
 
2014-02-23 09:02:37 PM  

WhyteRaven74: rugman11: But Comcast balked at such an arrangement, seeking an agreement in which Netflix would pay to connect directly to its high-speed network -- as do other large data providers, such as Google Inc.'s YouTube

So Comcast is engaging in extortion.


I wouldn't call it extortion. Think of it this way. Netflix is responsible for an enormous amount of last-mile traffic (the traffic supplie by Comcast, Verizon et al), as much as 30% during peak hours. This is causing cable providers to have to build out their networks in ways they wouldn't have to were it not for Netflix and a few other data hogs.

Somebody has to pay for that. It can either be Comcast (and by extension all of their customers even those who don't use Netflix) or it can be Netflix (and by extension its customers who are actually using the service). As long as it's happening at this level and not the consumer level, isn't this better than having your bill go up to pay for services you don't use?
 
2014-02-23 09:11:52 PM  

rugman11: I wouldn't call it extortion. Think of it this way. Netflix is responsible for an enormous amount of last-mile traffic (the traffic supplie by Comcast, Verizon et al), as much as 30% during peak hours. This is causing cable providers to have to build out their networks in ways they wouldn't have to were it not for Netflix and a few other data hogs.
Somebody has to pay for that. It can either be Comcast (and by extension all of their customers even those who don't use Netflix) or it can be Netflix (and by extension its customers who are actually using the service). As long as it's happening at this level and not the consumer level, isn't this better than having your bill go up to pay for services you don't use?


I would certainly call it extortion - due to the profitability and effective monopoly of Comcast. They are sitting on a mountain of cash - more than enough to upgrade their infrastructure without jacking rates. Instead, they went to Netflix and said "look, we're going to have customers paying for internet whether they can get Netflix or not. You want them to have more bandwidth? You pay for it."

The choices for Netflix are effectively 1) Pay for something that Comcast can easily afford on their own... or 2) Risk losing those subscribers, since consumers in those metro areas can't get streaming-bandwidth internet from anyone else. That's pure extortion.
 
2014-02-23 09:33:40 PM  

qorkfiend: TuteTibiImperes: That's the issue - any network congestion is a direct result of their own refusal to improve their own network.  They could easily do it, and have more than enough profits to fund it without raising rates, but they have little incentive to do so because they act as an effective monopoly in many areas.

They not only have little incentive to do so, but actually have the clout to get providers like Netflix to pay for it (thanks largely to the effective monopoly you mention, and as we all know, that's poised to actually get worse). Netflix is building Comcast a new Netflix-only pipe; Comcast is being paid twice for this service, first by the customers for the ability to get Netflix, and then by Netflix for the ability to have customers! How long until Comcast wants Amazon or YouTube to have their own pipes? How long until other providers want their own Netflix-only pipes? I give it six months, and it won't be long until the content providers need to start raising rates in order to fund their expansions of the ISPs' infrastructure.

Welcome to the new "separate but equal" internet.


Actually. It is hard to tell until we know more details about the deal. It could theoretically be cheaper for Netflix under the new deal because they are dealing with Comcast directly instead of having to go through Cogent and Level 3. Basically, both companies are cutting out the middle man with this deal.
 
2014-02-23 09:35:28 PM  

willfullyobscure: jesus christ you fedoras are insufferable. Netflix is dropping Cogent as an ISP and tying directly to Comcast backbone to solve congestion issues in the Eastern metro corridor. they're probably doing it via AWS Direct Connect and Equinix' Asburn IBX.

Any farking company in the world can do the same, hell Netflix probably nets out ahead on this since they dont have to pay Cogent for QoS and can talk directly to Comcast engineers now. Its mot a farking conspiracy and its got fark all to do with net neutrality you neckbeards.


Should have read down further.
 
2014-02-23 10:01:32 PM  
Nose in the tent.

Next step, a seat on the Netflix board.
 
2014-02-23 10:04:57 PM  
Netflix now needs to put tw screws to the other ISPs to do this for cheap or they'll advertise that Comcast is the way to get better streaming - and point out that's regardless of how much you pay or upgrade on another service.

Flip the tables and put the screws to anyone else.

Not because I want Comcast to get any additional leverage, but because if Netflix can break Verzon et al on this Comcast loses their leverage in 10 years.
 
2014-02-23 10:23:55 PM  
2fm9xz2drvqemrbu.zippykid.netdna-cdn.com


Well, here we are.
 
2014-02-23 10:26:21 PM  

ZZ9 Plural Z Alpha: qorkfiend: TV's Vinnie: I hope the FCC hurries up and closes this Portal To Hell soon. Net Neutrality is vital to civilization.

It's actually not a net neutrality thing, or at least not an unreasonable. From what I understand, the issue basically is that Comcast literally does not have the capacity to handle full-speed Netflix plus everything else, and refuses to build out any more capacity. Now Netflix has agreed to foot the bill to build out Comcast's infrastructure, but what's interesting is that they're not increasing the capacity of the main Comcast pipe; they're building an entirely new Netflix-only pipe.

You don't understand what net neutrality is


Unless Comcast had some sort of rules plugged into their routers to limit traffic from Netflix servers this has nothing to do with net neutrality.  From everything I have read, the route for traffic from netflix to comcast customers was through cogent.  The link between cogent and comcast was not big enough to carry all the traffic.  All traffic on this link was affected equally (i.e. this has nothing to do with net neutrality) and it just so happened that the effect of it was most evident in poor netflix quality.
 
2014-02-23 10:35:20 PM  

rugman11: WhyteRaven74: rugman11: But Comcast balked at such an arrangement, seeking an agreement in which Netflix would pay to connect directly to its high-speed network -- as do other large data providers, such as Google Inc.'s YouTube

So Comcast is engaging in extortion.

I wouldn't call it extortion. Think of it this way. Netflix is responsible for an enormous amount of last-mile traffic (the traffic supplie by Comcast, Verizon et al), as much as 30% during peak hours. This is causing cable providers to have to build out their networks in ways they wouldn't have to were it not for Netflix and a few other data hogs.

Somebody has to pay for that. It can either be Comcast (and by extension all of their customers even those who don't use Netflix) or it can be Netflix (and by extension its customers who are actually using the service). As long as it's happening at this level and not the consumer level, isn't this better than having your bill go up to pay for services you don't use?


Think of it this way.  My store sells widgets.  An enormous percentage of the sales at my store are green widgets and a fairly high percentage of the customers seem to actually pick up their green widgets when they buy them.  More than we were budgeting based on our earlier experience with blue widgets that we could sell to 6 or 7 customers before someone actually claimed them.

Now, someone has to pay for this because it's cutting into our profits.  We think it should be the green widget factory.  We certainly couldn't just make sure that our pricing and advertising somewhat matches what we are actually able to offer.
 
2014-02-23 10:49:17 PM  
This sounds like extortion - deal with us directly and pay for a private pipe or take whatever half-ass numbers we provide.
 
2014-02-23 11:31:35 PM  

seanpg71: rugman11: WhyteRaven74: rugman11: But Comcast balked at such an arrangement, seeking an agreement in which Netflix would pay to connect directly to its high-speed network -- as do other large data providers, such as Google Inc.'s YouTube

So Comcast is engaging in extortion.

I wouldn't call it extortion. Think of it this way. Netflix is responsible for an enormous amount of last-mile traffic (the traffic supplie by Comcast, Verizon et al), as much as 30% during peak hours. This is causing cable providers to have to build out their networks in ways they wouldn't have to were it not for Netflix and a few other data hogs.

Somebody has to pay for that. It can either be Comcast (and by extension all of their customers even those who don't use Netflix) or it can be Netflix (and by extension its customers who are actually using the service). As long as it's happening at this level and not the consumer level, isn't this better than having your bill go up to pay for services you don't use?

Think of it this way.  My store sells widgets.  An enormous percentage of the sales at my store are green widgets and a fairly high percentage of the customers seem to actually pick up their green widgets when they buy them.  More than we were budgeting based on our earlier experience with blue widgets that we could sell to 6 or 7 customers before someone actually claimed them.

Now, someone has to pay for this because it's cutting into our profits.  We think it should be the green widget factory.  We certainly couldn't just make sure that our pricing and advertising somewhat matches what we are actually able to offer.


That doesn't seem like a very good analogy because there are actually four entities involved here: Netflix, Netflix's ISP (Cogent), Comcast, and the consumers.  The problem isn't between Comcast and Netflix, it's between Comcast and Cogent.  These two have a relationship based on mutual use.  Each one usually sends roughly equivalent traffic to the other so they each build out their networks equally and don't charge each other for traffic.  But recently, thanks to Netflix, Cogent is sending a lot more traffic than they're taking back.  Which means that somebody needs to expand the gateway between the two companies.

Try this analogy: Let's say we're both shipping companies.  I'm the official shipping company for a corn producer and a Mexican restaurant.  You're the official shipping company for a tortilla producer.  Your customer needs my customer's corn and my customer needs your customer's tortillas.  Rather than having each of us buy a full fleet of trucks we strike a deal to each buy a half fleet of trucks and then agree that, after my trucks drop off their corn, they'll pick up a shipment of tortillas to bring back and after your trucks drop off tortillas, they'll pick up a shipment of corn to bring back.

Now, assume there is a huge increase in demand at the Mexican restaurant.  My corn supplier can't supply any more, so your tortilla company finds an additional corn supplier so they can crank out more and more tortillas.  The result is that, while my trucks are always coming back full of your tortillas, your trucks are usually coming back empty.  So I come to you and say, "hey, I'm shipping all of your tortillas and you're not returning the favor."  Your suggestion is that I should just buy more trucks to carry your tortillas, even though I don't really need them to carry any more corn.  My suggestion is that either you buy more trucks to carry your tortillas, or that your customer build a new tortilla factory next to the Mexican restaurant, and then rent my trucks, which can deliver the tortillas much faster and easier.  The latter is what Netflix did here.

I'm sure it's not a perfect analogy, but I'd love to hear what it gets wrong.
 
2014-02-23 11:35:24 PM  

rugman11: This is causing cable providers to have to build out their networks in ways they wouldn't have to were it not for Netflix and a few other data hogs.

Somebody has to pay for that.


Is there any evidence they are using this money to "build out their network"?
 
2014-02-23 11:39:23 PM  
And this appears to be a fantastic overview of what's going on here.  It's not a net neutrality issue, it's simply a common business deal.

"Today's news is very simple to understand. Netflix decided it made sense to pay Comcast for every port they use to connect to Comcast's network, like many other content owners and network providers have done. This is how the Internet works, and it's not about providing better access for one content owner over another, it simply comes down to Netflix making a business decision that it makes sense for them to deliver their content directly to Comcast, instead of through a third party. Tied into Netflix's decision is the fact that Comcast guarantees a certain level of quality to Netflix, via their SLA, which could be much better than Netflix was getting from a transit provider. While I don't know the price Comcast is charging Netflix, I can guarantee you it's at the fair market price for transit in the market today and Comcast is not overcharging Netflix like some have implied. Many are quick to want to argue that Netflix should not have to pay Comcast anything, but they are missing the point that Netflix is already paying someone who connects with Comcast. It's not a new cost to them.

There are no major "peering wars", as the media likes to portray, disagreements yes, but they are based off of business decisions, like any other contract for services. Many options exist in the market for exchanging traffic and what is taking place between Netflix and ISPs is not new. These types of commercial arrangements between carriers, ISPs, content owners and transit providers happen every day. This time its simply high profile because it involves Netflix and the media picks up on it and implies or assumes things that simply aren't accurate. "
 
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