7 ms·

Level 3 did a great job spinning this into public outrage. Here's what actually happened: 1. Level3 started offering CDN services. By leveraging their existing

by shimon 16y ago

Level 3 did a great job spinning this into public outrage. Here's what actually happened: 1. Level3 started offering CDN services. By leveraging their existing peering relationships (as a tier 1 ISP) they could essentially subsidize the transit costs of the CDN business, compared to e.g. Akamai which had been paying Comcast for peering to reach Comcast customers. 2. Netflix got a good offer for CDN services from Level3, and switched a bunch of their content from Akamai to Level3's CDN. 3. Comcast therefore saw a bunch of paid traffic turn into unpaid traffic overnight, and complained. This is a business dispute between two self-interested parties. Is it really fair for Level3 to use their position in the ISP business to undercut competitors in a new CDN business? Was it fair a few years ago when Akamai caved and agreed to pay Comcast for peering? Will it be fair for Comcast to use a newly acquired media property to exact revenge on Netflix/Level3? The problem with Network Neutrality is that it takes a complex issue, the product of many complex business relationships, and frames it in a black-or-white context. The history here is complicated, and the only thing I'm sure of is that everyone's a bad guy sometimes.

wmf 16y ago
I agree that either Akamai and Level 3 should both pay (for all traffic flowing into Comcast; whether it's "CDN" traffic or "regular" traffic makes no difference) or neither should pay. Since they're both saving Comcast money, I'm leaning towards neither. It's unfortunate for everyone else that Akamai apparently set this precedent.
leot 16y ago
The problem with Network Neutrality is that it's very easy to see the development of a monopoly/oligopoly that will have near complete control of the world's most valuable man-made resource. When it comes to the corporate behavior, only the most cynical predictions have been at all reliable. Those sanguine about the result of absolute freedom-of-action by internet providers clearly have little sense of history. God forbid that internet access become a relatively unprofitable commodity rather than an utterly complicated, multi-tiered service in which profit is extracted through the creation of an artificial shortage.
- wheaties 16y ago
  Actually if it becomes unprofitable then there will be little incentive to invest in it and it will languish for years. I'm all for net neutrality but I'm also for corporate profitability. If not for the high margins FIOS and the like bring in, then there wouldn't be a decent internet option in my neck of the woods.
  - lukeschlather 16y ago
    How many people have FIOS? Where I'm sitting our costs haven't changed in 5 years, and our bandwidth has held steady. Where I was sitting last year, costs haven't changed in 8 years and bandwidth has held steady. I'd say those eight years are the norm, and FIOS is something of an exception.
  - leot 16y ago
    By "relatively unprofitable" I meant "just profitable enough". When the a product becomes commoditized the market for it becomes (much more) efficient, and thus only minimally profitable, because the principal goal of the actors within it is cost reduction. If internet access becomes a commodity it is _great_ for consumers (c.f. computer memory, public water, electricity, undifferentiated agricultural products) but horrible for the providers/producers. Thus, somewhat ironically, the only incentives corporate lobbyists have to advocate for free-er markets is in order to maintain market inefficiencies or to reduce their supplier's margins.
- stinkytaco 16y ago
  I don't understand why the Internet is not government controlled. Would you leave road maintenance to private companies? How about air traffic, or sewers or water? The Internet is as important, if not more important (in a Constitutional way) than these services, but we leave it in the hands of self-interested parties.
  - MichaelSalib 16y ago
    The difference between these and the internet is right of way and externalities. That is, the government is involved in roads and sewers because (1) you can't have a road network in most places without the ability to forcibly purchase small strips of land from lots of people and (2) until recently, there was no efficient way to charge usage fees in a reasonable way. The internet doesn't really have that problem: charging is quite simple and the flexibility of routing means we're not nearly so beholden to any one set of property owners. Now, I think there might be a case made for making last mile internet either municipally run or a heavily regulated business in the same way that water/power/sewer service in cities is, but that's a very different argument.
stinkytaco 16y ago
The problem is that these complicated business relationships are affecting our access to necessary services. Would you tolerate your sewer being cut off because two private parties didn't want eachother's shit going through their pipes? If this were just about a bunch of TV shows it would be different, but this is about the fundemental communications medium of our society. How can we so tightly regulate utilities and over-the-air television, but be so lax with something just as important?
sagarm 16y ago
Akamai was arguably paying Comcast for carrying their transit traffic. But they never should have been paying for traffic with a final destination in Comcast's network (peering traffic). As a Tier 1 ISP, Level3 does not require Comcast to carry any transit traffic for it. If Level3 has to pay to deliver traffic that Comcast's customers themselves have requested, Comcast is clearly charging Level3 (and by extension, Netflix) for access to the customers on their network. If Comcast broke off its peering agreement with Level3, all that traffic would instead be going through a different transit provider. Comcast would then likely have to pay to receive that traffic. Comcast is in a position to charge for access to their customers because they have a monopoly on access to those customers. Those customers may not even have other choices for broadband internet access, because infrastructure has such high barriers to entry. Because the consumer broadband market has high barriers to entry,[1] there is little competition.[2] That lack of competition in infrastructure is now distorting the market for internet applications, possibly the closest thing to perfectly competitive market that has ever existed,[3] by raising both the barrier to entry and transaction costs. Yes, regulation would distort the market. In a market that is tending towards monopoly or oligopoly, this is a good thing. Net neutrality is an ill-defined idea, but I think we can agree that we want the market for internet applications to remain as free of a market as possible. [1] This is not the case under regulatory regimes that require line-sharing, where the consumer broadband market is decoupled from the infrastructure market. Line sharing is not required in the US. [2] Infrastructure markets are natural monopolies <http://www.linfo.org/natural_monopoly.html&#62 http://www.linfo.org/natural_monopoly.html> due to economies of scale. [3] A definition of perfect competition: http://en.wikipedia.org/wiki/Perfect_competition http://en.wikipedia.org/wiki/Perfect_competition

by shimon 16y ago

wmf 16y ago

I agree that either Akamai and Level 3 should both pay (for all traffic flowing into Comcast; whether it's "CDN" traffic or "regular" traffic makes no difference) or neither should pay. Since they're both saving Comcast money, I'm leaning towards neither. It's unfortunate for everyone else that Akamai apparently set this precedent.

leot 16y ago

The problem with Network Neutrality is that it's very easy to see the development of a monopoly/oligopoly that will have near complete control of the world's most valuable man-made resource. When it comes to the corporate behavior, only the most cynical predictions have been at all reliable. Those sanguine about the result of absolute freedom-of-action by internet providers clearly have little sense of history. God forbid that internet access become a relatively unprofitable commodity rather than an utterly complicated, multi-tiered service in which profit is extracted through the creation of an artificial shortage.

wheaties 16y ago
Actually if it becomes unprofitable then there will be little incentive to invest in it and it will languish for years. I'm all for net neutrality but I'm also for corporate profitability. If not for the high margins FIOS and the like bring in, then there wouldn't be a decent internet option in my neck of the woods.
- lukeschlather 16y ago
  How many people have FIOS? Where I'm sitting our costs haven't changed in 5 years, and our bandwidth has held steady. Where I was sitting last year, costs haven't changed in 8 years and bandwidth has held steady. I'd say those eight years are the norm, and FIOS is something of an exception.
- leot 16y ago
  By "relatively unprofitable" I meant "just profitable enough". When the a product becomes commoditized the market for it becomes (much more) efficient, and thus only minimally profitable, because the principal goal of the actors within it is cost reduction. If internet access becomes a commodity it is _great_ for consumers (c.f. computer memory, public water, electricity, undifferentiated agricultural products) but horrible for the providers/producers. Thus, somewhat ironically, the only incentives corporate lobbyists have to advocate for free-er markets is in order to maintain market inefficiencies or to reduce their supplier's margins.
stinkytaco 16y ago
I don't understand why the Internet is not government controlled. Would you leave road maintenance to private companies? How about air traffic, or sewers or water? The Internet is as important, if not more important (in a Constitutional way) than these services, but we leave it in the hands of self-interested parties.
- MichaelSalib 16y ago
  The difference between these and the internet is right of way and externalities. That is, the government is involved in roads and sewers because (1) you can't have a road network in most places without the ability to forcibly purchase small strips of land from lots of people and (2) until recently, there was no efficient way to charge usage fees in a reasonable way. The internet doesn't really have that problem: charging is quite simple and the flexibility of routing means we're not nearly so beholden to any one set of property owners. Now, I think there might be a case made for making last mile internet either municipally run or a heavily regulated business in the same way that water/power/sewer service in cities is, but that's a very different argument.

stinkytaco 16y ago

The problem is that these complicated business relationships are affecting our access to necessary services. Would you tolerate your sewer being cut off because two private parties didn't want eachother's shit going through their pipes? If this were just about a bunch of TV shows it would be different, but this is about the fundemental communications medium of our society. How can we so tightly regulate utilities and over-the-air television, but be so lax with something just as important?

sagarm 16y ago

Akamai was arguably paying Comcast for carrying their transit traffic. But they never should have been paying for traffic with a final destination in Comcast's network (peering traffic). As a Tier 1 ISP, Level3 does not require Comcast to carry any transit traffic for it. If Level3 has to pay to deliver traffic that Comcast's customers themselves have requested, Comcast is clearly charging Level3 (and by extension, Netflix) for access to the customers on their network. If Comcast broke off its peering agreement with Level3, all that traffic would instead be going through a different transit provider. Comcast would then likely have to pay to receive that traffic. Comcast is in a position to charge for access to their customers because they have a monopoly on access to those customers. Those customers may not even have other choices for broadband internet access, because infrastructure has such high barriers to entry. Because the consumer broadband market has high barriers to entry,[1] there is little competition.[2] That lack of competition in infrastructure is now distorting the market for internet applications, possibly the closest thing to perfectly competitive market that has ever existed,[3] by raising both the barrier to entry and transaction costs. Yes, regulation would distort the market. In a market that is tending towards monopoly or oligopoly, this is a good thing. Net neutrality is an ill-defined idea, but I think we can agree that we want the market for internet applications to remain as free of a market as possible. [1] This is not the case under regulatory regimes that require line-sharing, where the consumer broadband market is decoupled from the infrastructure market. Line sharing is not required in the US. [2] Infrastructure markets are natural monopolies <http://www.linfo.org/natural_monopoly.html&#62 http://www.linfo.org/natural_monopoly.html> due to economies of scale. [3] A definition of perfect competition: http://en.wikipedia.org/wiki/Perfect_competition http://en.wikipedia.org/wiki/Perfect_competition