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Comcast's customers are paying Comcast to deliver Netflix's bits to them. Why does Comcast need to be paid for those bits twice? If we're going to throw out so

Comcast's customers are paying Comcast to deliver Netflix's bits to them. Why does Comcast need to be paid for those bits twice? If we're going to throw out some numbers, Netflix's net income was just $112M on $4.3B in revenue last year (2.6%). Comcast's net income was $6.82B on $64.66B in revenue (10.5%). Netflix's spend on content acquisition and production is increasing, which means that 2.6% is shrinking; they're already cash flow negative IIRC. Not much room to start doubling up on bandwidth fees they already pay.

exelius 13y ago
Because Comcast does not incur cost per-bit, they incur cost based on the maximum required capacity of their network. Netflix significantly increases those costs on a per-customer basis.
- pdonis 13y ago
  No, customers who want to watch Netflix increase those costs. Which really means, customers who want HD video streaming bandwidth increase those costs. To which the right answer is, build more bandwidth and charge the customers for it. Customers who want to watch Netflix, or any other HD video streaming service, can pay Comcast for "HD streaming" bandwidth; customers who don't can pay for the bandwidth they need. None of this should have anything to do with Netflix. I understand that Comcast doesn't like this because it makes them a simple seller of bandwidth instead of a "provider of premium services", or whatever marketing mantra they're using this week. But if customers do not want their "premium services", but just want bandwidth, the solution to that is to build better premium services, not to try to get paid twice for one stream of bits.
- nitrogen 13y ago
  Customers already pay Comcast to deal with that problem.
- mikeash 13y ago
  No, Comcast customers who use Netflix significantly increase those costs. It's not Netflix's doing. If the usage pattern of Comcast's users is changing such that Comcast's internet offerings are no longer bringing in enough revenue to support usage, that's a problem with the offerings. They need to charge more, or charge differently. However they change it (if indeed they need to change it, and it's not just a money grab, which seems more likely) then they need to charge based on how their users use the service, not what specifically they're using it for. If peak usage is a problem then charge more for peak usage, but there's no reason that A should pay more for the same peak usage as B just because A's peak usage involves Netflix.
dragonwriter 13y ago
> Comcast's customers are paying Comcast to deliver Netflix's bits to them. Why does Comcast need to be paid for those bits twice? Because the customers have to pay for the bits being transmitted to them over Comcast's network, but Netflix has to pay for the privilege of competing with Comcast's own video services. It isn't coincidental that this became an issue after the FCC's Open Internet Order -- which specifically forbade discrimination against competitors to a broadband provider's own video services -- was struck down. This was pretty much the prime example of what it was intended to prevent.
Touche 13y ago
> Comcast's customers are paying Comcast to deliver Netflix's bits to them. Why does Comcast need to be paid for those bits twice? Because Netflix wants a special arrangement that makes their bits deliver more quickly. Why shouldn't they have to pay for that?
- dangrossman 13y ago
  Every single Comcast customer is already paying for a speed that is, at minimum, 5 times higher than required by a Netflix super HD stream. Netflix isn't trying to buy any special handling for its traffic.
  - Touche 13y ago
    It's also much higher that what is required to deliver my blog. Should Comcast peer with me to make my blog deliver faster to their customers?
    - deleted 13y ago
      [deleted]
    - dangrossman 13y ago
      Comcast sells access to the internet to households. To provide the service of access to the internet, Comcast must connect with other networks that the stuff on the internet is connected to. This is the business they're in. That's specifically what customers are paying for when they buy internet access: Comcast gets money from customers, that money goes to connecting Comcast to the internet, then connecting Comcast to the customers' homes. Thus internet service is delivered. One of these networks they must connect to in order to sell internet access is Cogent's. Behind Cogent were hundreds of thousands of sites and services, including Netflix. These customers all pay for their internet connectivity. Cogent's being paid to connect these customers to the internet (Netflix's bandwidth bill was at least in tens of millions per year), Comcast is being paid to connect its customers to the internet, they both need to connect with an adequately sized pipe to meet their obligations to their respective customers. They're both paid handsomely for the service. Comcast was being derelict in its duty to its customers by refusing to maintain a wide enough connection between its network and Cogent's network to reliably deliver access to that part of the internet. Customers are paying for that service (unlimited access to the internet at 15+mbps), but if the part of the internet they wanted to reach was Cogent's, they couldn't get anywhere near the advertised speed, and videos sometimes buffered or downgraded bitrates at prime time. Netflix should not have had to pay to correct this, Comcast should've. The connection between Netflix and Comcast customers wasn't poor because Netflix refused to send the bits fast enough, but only because Comcast refused to accept them fast enough. That's Comcast's responsibility to address. Providing that network on their end is the business they're in. Netflix is not trying to pay for any special "fast lane" speed that other sites don't get, and its' already paid for its internet access, it's just trying to avoid going out of business as a side effect of Comcast screwing its own customers by failing to provide the service it's been paid for.

exelius 13y ago

Because Comcast does not incur cost per-bit, they incur cost based on the maximum required capacity of their network. Netflix significantly increases those costs on a per-customer basis.

pdonis 13y ago
No, customers who want to watch Netflix increase those costs. Which really means, customers who want HD video streaming bandwidth increase those costs. To which the right answer is, build more bandwidth and charge the customers for it. Customers who want to watch Netflix, or any other HD video streaming service, can pay Comcast for "HD streaming" bandwidth; customers who don't can pay for the bandwidth they need. None of this should have anything to do with Netflix. I understand that Comcast doesn't like this because it makes them a simple seller of bandwidth instead of a "provider of premium services", or whatever marketing mantra they're using this week. But if customers do not want their "premium services", but just want bandwidth, the solution to that is to build better premium services, not to try to get paid twice for one stream of bits.
nitrogen 13y ago
Customers already pay Comcast to deal with that problem.
mikeash 13y ago
No, Comcast customers who use Netflix significantly increase those costs. It's not Netflix's doing. If the usage pattern of Comcast's users is changing such that Comcast's internet offerings are no longer bringing in enough revenue to support usage, that's a problem with the offerings. They need to charge more, or charge differently. However they change it (if indeed they need to change it, and it's not just a money grab, which seems more likely) then they need to charge based on how their users use the service, not what specifically they're using it for. If peak usage is a problem then charge more for peak usage, but there's no reason that A should pay more for the same peak usage as B just because A's peak usage involves Netflix.

dragonwriter 13y ago

> Comcast's customers are paying Comcast to deliver Netflix's bits to them. Why does Comcast need to be paid for those bits twice? Because the customers have to pay for the bits being transmitted to them over Comcast's network, but Netflix has to pay for the privilege of competing with Comcast's own video services. It isn't coincidental that this became an issue after the FCC's Open Internet Order -- which specifically forbade discrimination against competitors to a broadband provider's own video services -- was struck down. This was pretty much the prime example of what it was intended to prevent.

Touche 13y ago

> Comcast's customers are paying Comcast to deliver Netflix's bits to them. Why does Comcast need to be paid for those bits twice? Because Netflix wants a special arrangement that makes their bits deliver more quickly. Why shouldn't they have to pay for that?

dangrossman 13y ago
Every single Comcast customer is already paying for a speed that is, at minimum, 5 times higher than required by a Netflix super HD stream. Netflix isn't trying to buy any special handling for its traffic.
- Touche 13y ago
  It's also much higher that what is required to deliver my blog. Should Comcast peer with me to make my blog deliver faster to their customers?
  - deleted 13y ago
    [deleted]
  - dangrossman 13y ago
    Comcast sells access to the internet to households. To provide the service of access to the internet, Comcast must connect with other networks that the stuff on the internet is connected to. This is the business they're in. That's specifically what customers are paying for when they buy internet access: Comcast gets money from customers, that money goes to connecting Comcast to the internet, then connecting Comcast to the customers' homes. Thus internet service is delivered. One of these networks they must connect to in order to sell internet access is Cogent's. Behind Cogent were hundreds of thousands of sites and services, including Netflix. These customers all pay for their internet connectivity. Cogent's being paid to connect these customers to the internet (Netflix's bandwidth bill was at least in tens of millions per year), Comcast is being paid to connect its customers to the internet, they both need to connect with an adequately sized pipe to meet their obligations to their respective customers. They're both paid handsomely for the service. Comcast was being derelict in its duty to its customers by refusing to maintain a wide enough connection between its network and Cogent's network to reliably deliver access to that part of the internet. Customers are paying for that service (unlimited access to the internet at 15+mbps), but if the part of the internet they wanted to reach was Cogent's, they couldn't get anywhere near the advertised speed, and videos sometimes buffered or downgraded bitrates at prime time. Netflix should not have had to pay to correct this, Comcast should've. The connection between Netflix and Comcast customers wasn't poor because Netflix refused to send the bits fast enough, but only because Comcast refused to accept them fast enough. That's Comcast's responsibility to address. Providing that network on their end is the business they're in. Netflix is not trying to pay for any special "fast lane" speed that other sites don't get, and its' already paid for its internet access, it's just trying to avoid going out of business as a side effect of Comcast screwing its own customers by failing to provide the service it's been paid for.