6 ms·

This is actually good for Netflix and terrible for any competition. While Netflix probably has to hand over a bit of money, they are in a much better position t

by RyanZAG 13y ago

This is actually good for Netflix and terrible for any competition. While Netflix probably has to hand over a bit of money, they are in a much better position to do so than any of their competitors as they're the biggest. In effect this creates a massive entry barrier into the video streaming market. You will now likely need to set up a massive infrastructure and pay massive bribes to various internet providers to be able to compete. So this is probably a smart move by Netflix by creating entry barriers that they should be able to easily pass on to consumers if they can achieve market dominance.

wmf 13y ago
Or you could just use an existing CDN that's already paying the bribes.
- kev009 13y ago
  Bingo. The real story here is that Netflix is trying hard to get off third-party CDNs and that's what is inflicting a lot of the problems lately. I'm sure they figure it out eventually, as they found one solution here, but the internetworking business is a lot harder than it seems on first glance and not something you should try to wing.
danielsiders 13y ago
Not so much established and highly capitalized competition (like Amazon), but disastrous for startups and new entrants. It adds a major barrier to entry in the form of a b2b paywall before you can reach consumers.
- _delirium 13y ago
  Isn't that's already the case by default? My read of this is that they're paying Comcast directly because it's cheaper than the conventional route of paying for commodity transit via a regular ISP (though more expensive than their preferred solution, a no-fee peering arrangement). As a new entrant I don't have much choice but to pay for commodity transit: Comcast is not going to peer directly with me anyway (or let me park my CDN boxes on their network, for that matter), so I need to pay the transit ISP. If I do so, am I at any disadvantage? Afaict, if I'm a new entrant who sets up colocation at he.net, say, and pay he.net for transit, I won't have any trouble getting my data to Comcast users.
dllthomas 13y ago
Any competition other than Comcast.
aleem 13y ago
The same thought came to my mind, a moat around Netflix's current business. However, I don't think that's quite how it will play out. Comcast won't charge new streaming providers from the get go. That will stunt its own business opportunities. Instead it will prefer to let them grow to the point where they can claim network congestion issues. At that point it has a "justifiable claim" as well as more negotiating leverage.
- blazespin 13y ago
  Yeah, but nobody is going to go into the streaming biz because of this. Netflix is scaring off would be competitors.
  - aleem 13y ago
    If you want to get into the streaming content I think a tax on distribution will be much lower down the list of concerns. Content licensing and infrastructure setup is the bigger challenge. The players in this sector all quite major (Apple, Amazon, Google).
toast0 13y ago
This sounds like standard paid peering; there's nothing non-competitive here. If you're a small provider, you tend to buy transit from one or a few providers, and pay per bit in whichever direction has the most traffic. If you're bigger, maybe you can setup peering. If you have relatively balanced flows, and meet other qualifications, you can usually get free (settlement free) peering. If your flows aren't balanced, then the tradition is that whoever is sending more pays. If the networks you're establishing paid peering with are cheaper than your transit provider (usually the case), then peering is still a win for you, and a win for the other network. If Netflix wants to get settlement free peering with Comcast, they need to balance their traffic to Comcast (maybe partner with a backup service, or web crawler)
- wmf 13y ago
  The tradition when backbones peer with each other was for traffic to be balanced. When a content provider peers with an eyeball ISP, free peering makes sense regardless of balance.
  - ajasmin 13y ago
    That makes a lot of sense. Not solving this earlier is a detriment to the customers of both companies.
InclinedPlane 13y ago
Once you pay the danegeld you never get rid of the dane.

by RyanZAG 13y ago

wmf 13y ago

Or you could just use an existing CDN that's already paying the bribes.

kev009 13y ago
Bingo. The real story here is that Netflix is trying hard to get off third-party CDNs and that's what is inflicting a lot of the problems lately. I'm sure they figure it out eventually, as they found one solution here, but the internetworking business is a lot harder than it seems on first glance and not something you should try to wing.

danielsiders 13y ago

Not so much established and highly capitalized competition (like Amazon), but disastrous for startups and new entrants. It adds a major barrier to entry in the form of a b2b paywall before you can reach consumers.

_delirium 13y ago
Isn't that's already the case by default? My read of this is that they're paying Comcast directly because it's cheaper than the conventional route of paying for commodity transit via a regular ISP (though more expensive than their preferred solution, a no-fee peering arrangement). As a new entrant I don't have much choice but to pay for commodity transit: Comcast is not going to peer directly with me anyway (or let me park my CDN boxes on their network, for that matter), so I need to pay the transit ISP. If I do so, am I at any disadvantage? Afaict, if I'm a new entrant who sets up colocation at he.net, say, and pay he.net for transit, I won't have any trouble getting my data to Comcast users.

dllthomas 13y ago

Any competition other than Comcast.

aleem 13y ago

The same thought came to my mind, a moat around Netflix's current business. However, I don't think that's quite how it will play out. Comcast won't charge new streaming providers from the get go. That will stunt its own business opportunities. Instead it will prefer to let them grow to the point where they can claim network congestion issues. At that point it has a "justifiable claim" as well as more negotiating leverage.

blazespin 13y ago
Yeah, but nobody is going to go into the streaming biz because of this. Netflix is scaring off would be competitors.
- aleem 13y ago
  If you want to get into the streaming content I think a tax on distribution will be much lower down the list of concerns. Content licensing and infrastructure setup is the bigger challenge. The players in this sector all quite major (Apple, Amazon, Google).

toast0 13y ago

This sounds like standard paid peering; there's nothing non-competitive here. If you're a small provider, you tend to buy transit from one or a few providers, and pay per bit in whichever direction has the most traffic. If you're bigger, maybe you can setup peering. If you have relatively balanced flows, and meet other qualifications, you can usually get free (settlement free) peering. If your flows aren't balanced, then the tradition is that whoever is sending more pays. If the networks you're establishing paid peering with are cheaper than your transit provider (usually the case), then peering is still a win for you, and a win for the other network. If Netflix wants to get settlement free peering with Comcast, they need to balance their traffic to Comcast (maybe partner with a backup service, or web crawler)

wmf 13y ago
The tradition when backbones peer with each other was for traffic to be balanced. When a content provider peers with an eyeball ISP, free peering makes sense regardless of balance.
- ajasmin 13y ago
  That makes a lot of sense. Not solving this earlier is a detriment to the customers of both companies.

InclinedPlane 13y ago

Once you pay the danegeld you never get rid of the dane.