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Comcast’s deal with Netflix makes network neutrality obsolete
- pcurve 13y agoThose goofy diagrams are wonderfully effective at explaining the situation. Worth noting is that Cogent is small potato and basically has no leverage. It barely does $300 mil in revenue. Compared that to most Tier 1 providers which do $10 bil+.
- _delirium 13y agoThat's the part that makes me suspect the talk about this harming new entrants, startups, etc. is overblown. Afaict, the situation for small players is the same as it's always been: you pay for transit from an ISP with good connectivity, and you get good connectivity. If you have some colo racks somewhere with high-quality connectivity, your customers on just about any network have good access to your content. If not, you find a better colo facility. The controversy here seems to be over what happens when you're a massive player and looking to get your bandwidth for less than typical retail transit prices. Then it enters the whole game of peering politics, which has changed considerably over the past 10 years. But if you're a relatively small startup with some colo racks, I don't see how that game is any more relevant today than 10 years ago: you still just buy transit. I mean, I personally have no trouble delivering my modest amount of content to Comcast users, and I've never paid Comcast. I do think there is a general barrier to entry on the internet, because large players (YouTube, etc.) get free transit from peering agreements while new entrants don't, so any YouTube competitor is at a huge transit-cost disadvantage to Google. But that's a fundamental problem with the way the internet backbone has been built out of a mesh of private peering agreements, ever since it abandoned having a single neutral backbone run as a utility (originally by the NSF). I think going private was a mistake and benefits both big players and politically savvy ones, at the expense of new entrants paying commodity, but that's a (very) big issue to fix at this point. It's not an issue of "net neutrality", though: the traditional peering system is inherently non-neutral, not utility-esque.
- the_ancient 13y agoYou fail to see the big picture, most people do. This is not unlike government regulation that "exempts" small business.... All this does is put an effective ceiling on a business. You will never be allowed to grow beyond X with out having to pay your protection money. This hurts startups because VC and other investors want the business to grow beyond X and knowing their is an upper limit to the growth will make it very hard if not impossible to get investment.
- specialp 13y agoNo it is not that. The internet is largely a collection of privately owned network that has interconnects where networks meet. At that meeting point you can either pay for transit on another network, or agree to settlement free peering if it is mutually agreeable. Google "Cogent peering dispute" you will see they have had problems with nearly every tier 1 out there. They sell bandwidth very cheap and then try to work out settlement free agreements. The problem is their network often times ends up pushing much more traffic onto the peer than they deliver themselves. Netflix is a customer of Cogent's and as many customers of them know they often have disputes. Netflix is large enough now where they can pay at interconnects for transit and not have to deal with Cogent's oversubscribed network. This is not the death of net neutrality. This is how the internet has always worked. To peer settlement free the networks need to be on near equal terms. If you are a small business you simply pay someone who has this peering worked out. In this instance Comcast is not discriminating against traffic from Netflix in particular, it is discriminating against a peer network that is not paying settlement and providing a non mutually beneficial connection. That is business and is how the internet has always worked since it left the NSF.
- comex 13y agoWhat exactly does "mutually beneficial" mean, though? It doesn't necessarily mean traffic is flowing in both directions. Theoretically, when Netflix delivers traffic to residential customers, Netflix benefits through subscription fees, and the residential ISP benefits in that it is able to offer a fast internet experience to its paying customers. If it were easy to switch ISPs, then customers might switch to those with better Netflix streaming, giving Netflix bargaining power. Unfortunately, not only is it not easy to switch, but many areas have effective ISP monopolies... and on the other side, switching from Netflix to competing video services is easy, so customers are much more likely to punish Netflix than their ISP for bad interconnection. But that arguably has elements of market distortion to it.
- doubt_me 13y agoI have no idea how Tier 1 providers work but is it possible that in the future (5 - 10 years) more will be sprung up? Or is it so costly that it will eventually be a single tier 1 in the future?
- manicdee 13y agoThere can be only one. The "competitive marketplace" is a fancy name for modern gladiatorial combat, played out with pens and contract forms instead of swords and shields.
- sureshv 13y agoHow many Tier 1 providers that aren't ILEC's, Cable or Wireless providers are doing $10B in rev? Akamai did $1.6B in rev last year. Edit: Level 3 does around $6B - that's the highest I've found of the independent players.
- alttab 13y agoAnd then we all grow up and realize that little Johnny can't run his competition on his competition without paying protection money. All joking aside, there isn't much you can do. comcast owns the tubes. The world where they have to bend to the masses is a scary world. Is this better? I dunno, only if Netflix goes out of business. This only really shortens comcasts rope long term. They just created a new market with this strong arm. Grab your popcorn folks, this is going to get interesting.
- mbetter 13y ago> All joking aside, there isn't much you can do. comcast owns the tubes. The world where they have to bend to the masses is a scary world. Less scary than the one where they don't have to.
- zanny 13y agoI get the impression satellite Internet might be getting more popular.
- TylerE 13y agospeed of light says it won't, unless you like 400ms ping times.
- mikeyouse 13y agoI don't mind 400ms ping times when streaming Netflix, as long as the bandwidth is there.
- warmwaffles 13y agoOh you'll mind when trying to browse for movies or do any commands. It'll be like waiting in line at the DMV. Sure they have the bandwidth to work with everyone, but you still have to wait.
- grogenaut 13y ago
- drawkbox 13y agoThis may actually backfire on Comcast/Cox/TimeWarner/etc's own online streaming services they will be competing with Netflix on. Netflix hopefully realizes other providers will come asking for tier access that is faster. So then taken further, when Cox wants to deliver content beyond just Cox customers they can't, they'll have to pay. So this will also probably lead to some mergers into even less providers. They have just locked provider based online streaming services into a worse off position in terms of cost to run. Hulu will also be caught in this since Comcast owns it. Netflix or independents that can get big enough and pay all the extortion fees will win. It is a whole new game, lots of toll roads.
- zanny 13y agoI just want to mention the opening quip: "For the past two decades, the Internet has operated as an unregulated, competitive free market." Is just hilarious. Hilariously wrong.
- mikeyouse 13y agoWho's regulating the internet in the US?
- nacs 13y agoThe US government?
- capecodcarl 13y agoIn what way? The US government has done nothing to restrict the growth of the Internet compared to other nations that force national firewalls and web-filtering proxies on their citizens.
- hrkristian 13y agoSure they haven't...
- InclinedPlane 13y agoYou're confusing regulation with censorship. I hope to hell that congress doesn't do the same.
- Perdition 13y agoYou mean apart from domain seizures? http://www.wired.com/threatlevel/2012/03/feds-seize-foreign-sites/ http://www.wired.com/threatlevel/2012/03/feds-seize-foreign-...
- zanny 13y agoI'm not so much striking down the "regulated" part, as I'm striking down the competitive one. In most places around the US coax and twisted pair lines (that were funded by the public purse in the first place) were sold to private companies at hilariously low rates to then milk the market in perpetuity while you are required to get permits to tear up roads and run your own network cable. And of course in most places that could happen, the cable company lobbies to prevent it. So it isn't competitive at all. Though it is honestly hard to be competitive with infrastructure - how would you go about having multiple redundant private highways going to the same place just to maintain competition so that one road doesn't milk toll rates and let the quality degrade because they have a monopoly? Honestly, the latter is happening even now with public roads because without any competition or monetary motivation states just let their infrastructure crumble.
- modeless 13y agoMy hope is that the timing of this deal was calculated by Netflix to focus regulatory scrutiny on the Comcast/Time Warner merger. Netflix can now tell regulators that even though Comcast and TW don't compete for the same customers on the consumer side, the sheer size of the combined beast would make settlement-free peering a thing of the past.
- zeckalpha 13y agoExcept they do compete for the same customers, no? The merger is with Time Warner Cable and not Time Warner. However, even if they did merge with Time Warner, they would still be competing for the same customers, since Comcast is NBC is Universal.
- mattmaroon 13y agoThere are probably not many markets in which Time Warner Cable and Comcast both exist. That's probably what he meant as its been a talking point.
- chimeracoder 13y ago> There are probably not many markets in which Time Warner Cable and Comcast both exist. There are exactly zero such markets. Not approximately. Exactly. http://dealbook.nytimes.com/2014/02/12/comcast-set-to-acquire-time-warner-cable/ http://dealbook.nytimes.com/2014/02/12/comcast-set-to-acquir... http://www.nytimes.com/2014/02/24/opinion/the-comcast-time-warner-cable-merger.html http://www.nytimes.com/2014/02/24/opinion/the-comcast-time-w...
- hgilmoredotcom 13y agoArticle writer - Timothy B. Lee More than a little coincidental.
- gkoberger 13y agoCompletely different person than Tim Berners-Lee, despite the similarities.
- JetSpiegel 13y agoYes, this one writes for Ars Technica.
- grandalf 13y agoResidential broadband is a business model that depends heavily on successful bandwidth utilization speculation. However since Netflix is extremely popular (close to half of all internet traffic in the US), the pattern gets extremely predictable and so there is little advantage to be had in the core business of bandwidth arbitrage, since it's being arbitraged "upstream" of residential ISPs and baked into the larger pipe prices. If any service becomes sufficiently popular, the price of providing bandwidth for it to a large subscriber base approaches the characteristics of a dedicated bandwidth circuit for more and more nodes on the network. Of course, Comcast is using it's last mile power as leverage, but the core issue the economics of bandwidth speculation.
- jberryman 13y agoAlso something I never see mentioned is that this sort of seems to be how popularity works; that is "Popularity" tends to be zipf distributed
- jjoonathan 13y agoA very interesting observation! However, bandwidth speculation would only be the core issue in a competitive market where price was determined primarily by infrastructure costs. What we have is the opposite of that. The core issue is leverage. Bandwidth speculation is a distant second, even though it's much more interesting to us tech folks.
- adventured 13y agoThe best accounting I've seen indicates Netflix is at roughly 1/3 of North American traffic: http://allthingsd.com/20130514/netflix-still-eats-a-third-of-the-web-every-night-amazon-hbo-and-hulu-trail-behind/ http://allthingsd.com/20130514/netflix-still-eats-a-third-of... Similar to where they were at the year prior: http://allthingsd.com/20121107/netflix-has-plenty-of-competitors-and-none-of-them-are-close/ http://allthingsd.com/20121107/netflix-has-plenty-of-competi...
- Retric 13y agoIt's vary time of day dependent. At 10AM EST Netflix is a much lower percentage than at 10PM EST.
- thatthatis 13y agoParaphrasing > the FCC has no good solutions. Yes they do, declare broadband to be a common carrier. Force comcast to sell wholesale access to their retail pipes to other companies who then compete for the end users. We've seen this show before and have good solutions to the problem. It's time to treat the Internet as a mature public utility and regulate it as such, i.e. regulate it to maximize social good
- cdash 13y agoThat people are still fighting this I just can't believe. How can the internet not be viewed as an essential utility in the modern world is just crazy to me.
- btbuildem 13y agoBecause they profit from it.
- anigbrowl 13y agoStupidity and greed. Many people arguing about this at the Wall Street Journal, for example, are convinced that there are no such things as broadband caps or QOS levels and that everyone who uses Netflix streaming is freeloading without paying for the bandwidth they use. In their mind companies like Netflix and people who argue for net neutrality are identified with welfare cheats and socialism. I wish I were making this up.
- espadrine 13y agoFor the purpose of comparison, we have the same issue in France, although we do not have Netflix there. ISPs are slowing down Google services / Cogent / … and asking them to pay[1]. One went so far as to remove Youtube ads on-the-fly without telling (let alone asking) the consumers beforehand. And slowly, not limiting bandwidth becomes an argument for the customer to pay more, as well[2]. They are looking for a target to increase their revenue. Given the targets they pick, I'd say they're mostly driven by envy. [1]: http://www.lemonde.fr/technologies/article/2012/09/20/free-attaque-pour-les-ralentissements-de-youtube_1763130_651865.html http://www.lemonde.fr/technologies/article/2012/09/20/free-a... [2]: http://imgur.com/aHxjUOz http://imgur.com/aHxjUOz
- jbcurtin2 13y agoJust wait until this begins to affect our online gaming sessions.
- cpeterso 13y agoNetflix should pass on the "Comcast tax" to Netflix customers using Comcast. That might encourage Comcast users to switch ISPs (assuming competing broadband services are available to those users).
- jonny_eh 13y agoIt might backfire and encourage Comcast customers to just use their Netflix-ish xfinity online streaming service (gag me).
- r00fus 13y agoI'd like to see someone try. Just read the Comcast "streampix" (wonder where you got that name, Mr. McDowell?) fine print: They don't guarantee the same listings, quality or availability, and you have to have a certain Cable TV subscription level already (i.e., you're already being gouged). I posit that Comcast's streaming customers and Netflix customers have very little overlap.
- higherpurpose 13y agoGood idea. If I were them (and if it was legal to do so) I would even call it the "Comcast tax".
- danielweber 13y agoWhat if this lowers Netflix's costs for Comcast users, since it's now peering closer to the consumer? Should non-Comcast users have to pay a "we haven't signed a peering agreement with your ISP yet" tax to Netflix?
- gemma 13y ago> assuming competing broadband services are available to those users You are hilarious.
- VintageCool 13y agoIf this is just about a peering agreement, then it didn't start with the Netflix - Comcast deal. Riot Games signed a peering agreement with some European providers earlier this year: http://www.reddit.com/r/leagueoflegends/comments/1onydr/ http://www.reddit.com/r/leagueoflegends/comments/1onydr/
- awalton 13y agoThis is some seriously bad precedence. Perhaps it will be good ammunition for Netflix to take to regulators, but it's far more likely it's better ammunition for Comcast to use against Google, Facebook, etc. I think the best thing that can be done is Netflix giving a complete and full account of the extortion that happened here, perhaps in front of congress.
- bifrost 13y agoIf you're not a network operator, you probably should not be guessing how the internet works. I do enjoy some of the speculation (mostly because its ridiculous) but in general it really doesn't help to guess.
- nnnnni 13y agoRight, because net neutrality is ONLY about Comcast throttling Netflix. ಠ_ಠ
- danielweber 13y agoTimothy B Lee is the Rush Limbaugh of Hacker News. Saying things that could technically happen, in the sense that they wouldn't violate the laws of physics, in order to get people good and angry.
- Loic 13y agoFor people telling this is just peering agreement, this is not. It would be peering agreement if Amazon would be paying, because Amazon is providing the bandwidth to Netflix. What I suppose is that under this agreement, Netflix is not paying Amazon anymore outbound bandwidth to Comcast and as such pays it directly to Comcast.
- insaneirish 13y agoNot all of Netflix's infrastructure is on EC2. They have in house built stuff to deliver content at the speeds they need.
- xcrunner529 13y agoEC2 is mostly only used for web hosting and other small infrastructure. Not the streaming parts, especially now that they are running their own CDN.
- Executor 13y agoHave a local common carrier, but make it a coop where customers and employers have 1/n voting right. That way you don't have a company with the benefit of a monopoly and the growth/innovation of the company depends on how much the majority of people want to pay.