7 ms·

In this case, Comcast has two choices: raise prices on all their customers, or raise prices on Netflix's customers by charging Netflix for their increased usage

by exelius 13y ago

In this case, Comcast has two choices: raise prices on all their customers, or raise prices on Netflix's customers by charging Netflix for their increased usage. Prior to paying Comcast for transit, if Netflix decided to push 4k streams, that decision carried no repercussions for Netflix. Now they have to do a business case to see if the increased cost is worth it. I know it's not a popular opinion on HN, but I don't think it's unreasonable for Comcast to ask Netflix to shoulder some of the cost. It also has the added benefit of incentivizing Comcast to provide faster service. If they can charge Netflix more for pushing more data, then it directly leads to more profit if their users consume more data.

dec0dedab0de 13y ago
It also has the added benefit of incentivizing Comcast to provide faster service. Actually it gives them an incentive to provide slower Internet service. This encourages content providers to pay to use the Comcast private network instead of the Internet.
- nitrogen 13y ago
  Right, a "fast lane" for one service is really just a "slow lane" for everybody else.
nitrogen 13y ago
Once again, it is the user who requested that data from Netflix. The user pays the ISP. The ISP is already immensely profitable. Because of these things, the ISP has no need or ethical right to demand more from the user or from Netflix for providing a service the ISP already promised and the user already purchased.
- Touche 13y ago
  The ISP doesn't promise to make every website / service on the internet as fast as possible. It's up to every service to make themselves fast by using CDNs. In the case of Netflix, they have become big enough where they now want to be their own CDN.
  - nitrogen 13y ago
    The ISP sells "Internet" access, so it's reasonable to expect them to meet customer demand at common Internet peering points, right up to the edge of their net profits plus a reasonable return for investors.
mikeash 13y ago
It incentivizes Comcast to provide faster service for those who pay. It incentivizes them to provide slower service for those who don't. We can comfortably say that 99.9% of the services on the internet are not going to pay Comcast. The big players might, but there's an extremely long tail. Thus, for most of the internet, Comcast encounters a conflict of interest. Its actual paying customers want higher speeds. But it has every incentive to reduce speeds for services that aren't paying for more. I pay my ISP for access to the entire internet. If they screw with my access to a service simply because they didn't pay, that makes no sense. If I'm paying $75/month for high-speed internet access, that means the entire internet, not just the parts they get kickbacks from. I pay my ISP for my access, Netflix pays their ISP for their access, and we get to talk to each other. That's how this stuff works. Comcast charging Netflix is double-dipping, and is directly opposed to their supposed purpose of serving me, their customer. (Hypothetically. I'm no longer a Comcast customer, thank goodness.) Edit: I usually hate real-world analogies, but I think it could be instructive here. Let's take the USPS as an example of something in the real world that looks a lot like an ISP. I can pay USPS $5.60 for a flat rate Priority Mail envelope, and they will deliver the contents anywhere in the country within 2-3 days. Doesn't matter who's getting it, and doesn't matter what's in the envelope as long as it fits. Now, let's imagine that some company ends up receiving a lot of mail. Providing mail service is expensive, right? It takes a lot of trucks and postal workers to deliver all this mail to this one company. Surely they should be charged for what they're using, right? Of course, this company says no. These people who are sending us mail already paid USPS. It's their job to deliver mail to its destination once they get paid to do so. Why should they get paid twice to deliver the same piece of mail? In retaliation, to "convince" this company to pay, USPS starts slowing their mail. Those trucks and mail carriers are expensive, we need some of them elsewhere. You'll just have to wait. And as a result, because USPS is demanding that this company pay to receive mail that I already paid to send them, my "Priority Mail" starts taking 4-5 days to arrive instead of 2-3. I hope it's obvious that USPS is completely unreasonable in this hypothetical scenario. I see no difference between this and Comcast charging Netflix for service I'm already paying Comcast for.
- gergles 13y ago
  This may be the most astute analogy about this I've ever seen. I'm going to steal it to explain this to people. Thank you for posting it.
click170 13y ago
How does this incentivize them to provide faster service? From my point of view, if they're allowed to let their service degrade so that they can turn around and charge Netflix more money to make it go faster again, how is that an incentive to provide a faster service? To me, this is an incentive to provide slower service so that they can charge companies like Google and Netflix more money. Edit: Funny this sentence can be turned around on you by clarifying who requested those streams. Prior to paying Comcast for transit, if Comcast Customers asked Netflix to push 4k streams to them, that decision carried no repercussions for Comcast Customers.
- exelius 13y ago
  Yes, but Netflix has the option to not provide those streams to Comcast customers if it's not economically viable for them. As it stands, most Comcast customers only request 4k streams because Netflix defaults to the highest bitrate. Basically, by changing a default setting, Netflix pushes bandwidth and creates a tragedy of the commons situation.
amalcon 13y ago
> if Netflix decided to push 4k streams, that decision carried no repercussions for Netflix This is not true. Netflix has to pay for transit of the bits leaving their servers just like everyone else. They just pay their transit provider for this, not Comcast (well, except when it is Comcast, but that's beside the point). The right ways for Comcast to keep their costs under control re: video streaming would be to either meter pricing or drop rate limits. The problem is that metering is unpalatable to their customers, and rate limit drops would expose the lie that the entire cable modem marketing engine is based on (that last mile downstream throughput maximum is the only number that matters).
- Touche 13y ago
  > This is not true. Netflix has to pay for transit of the bits leaving their servers just like everyone else. They just pay their transit provider for this, not Comcast (well, except when it is Comcast, but that's beside the point). Netflix doesn't have a transit provider any more. They are piping directly into Comcast and wanted to do so for free. I want my website to be delivered to all Comcast customers for free, do you support that?
  - bdb 13y ago
    The alternative is for Comcast to buy enough transit to receive those bits from Netflix. I'm sure Netflix would be happy enough to deliver those bits to Comcast via transit, if enough capacity was available. Shouldn't Comcast be required to purchase enough capacity to provide high-quality service to their residential customers? SFI between a content provider and an eyeball network should be a mutually beneficial cost reduction, but Comcast has enough market power (captive broadband subs) that they can get away with intentionally not buying enough capacity to serve their customers.
    - Touche 13y ago
      Comcast does transit with many peers, but Netflix doesn't do business with any of them because they want to lower their own costs by cutting out the middlemen. A peering agreement is free when both sides are accepting traffic for the others, but that's not what is happening in this case. Netflix -> Comcast is one way. Still waiting for an answer to my previous question, should Comcast delivery my personal website to their customers for free?
jmileham 13y ago
The decision to push 4k streams certainly would carry repercussions for Netflix both from a storage and transit standpoint, even absent paying interconnect fees to Comcast. As a cable subscriber, I expect that when paying for N Mbps of bandwidth, I'm entitled to N Mbps of bandwidth of the content of my choosing. If Comcast's pricing model needs to change to a cost-per-gigabyte model in order to cope with the increased quantity of data customers consume, so be it. But sneaking the costs onto Netflix's tab effectively shifts Comcast's costs to all Netflix customers, allowing Comcast to artificially lower their prices relative to smaller ISPs without the market share necessary to effectively extract rent from Netflix.
- maxhou 13y ago
  > As a cable subscriber, I expect that when paying for N Mbps of bandwidth, I'm entitled to N Mbps of bandwidth of the content of my choosing 100% of the time ? not going to happen So let's say I'm an ISP and I bring a fiber to your home, and gives you a gigabit ethernet port. You cannot expect all current and future customers to be able to use 1 Gbit/s at the same time. You would need a big non blocking switch with as many ports as subscribers, the technology for this does not exist once you reach a large customer base. Now do you want me to shape your link to 0.1Mbit/s, because that's the only thing I can guarantee if all customers uses their link at the same time ? Or you'd rather have the 1Gbit/s possible bandwidth ? Which one is better: 1) guaranteed 0.1Mbit/s for 10$, 5Mbit/s for 100$, 1Gbit/s for 4000$ 2) possible 1Gbit/s for 20$ ? If you take the globalized approach, you cannot have business like Netflix, they destabilize the equation.
  - wmf 13y ago
    Probably what is better (or at least fairer) is a token bucket with a low guaranteed rate and a very large burst. http://blog.felter.org/post/64832783299/apropos-of-a-recent-hacker-news-thread-about-the http://blog.felter.org/post/64832783299/apropos-of-a-recent-...
  - jmileham 13y ago
    I'll take the non-false dichotomy, please. Having enough capacity to meet the streaming demand of your current customers during peak times is a solvable problem that doesn't require a full gigabit for everybody, all the time. The pricing model required to support this while still looking attractive to customers I'll leave to Comcast's well-funded marketing department. In order to make that happen, of course, we'd have to live in a fanciful world where shifting last-mile delivery cost to content providers wasn't an option so the painful process of exposing this cost to customers couldn't be hidden in a rat's nest of perverse incentives that benefit the most entrenched corporations. (Ironically, and despite its protestations, Netflix's ability to pay this rent is a barrier to entry for its own future competitors.)
SilasX 13y ago
No sensible ISP solution to this should take `is_netflix` as an input. If customers are requesting more data than the last-mile pipes can handle, there are a number of fair ways to handle the overuse: - At peak times, customers are throttled in direct, formulaic proportion to past (peak) usage - Customers are charged more for usage at peak times - Customers are limited to n% of the pipe at peak times Notice how none of that singles out Netflix, just high usage in general.

by exelius 13y ago

dec0dedab0de 13y ago

It also has the added benefit of incentivizing Comcast to provide faster service. Actually it gives them an incentive to provide slower Internet service. This encourages content providers to pay to use the Comcast private network instead of the Internet.

nitrogen 13y ago
Right, a "fast lane" for one service is really just a "slow lane" for everybody else.

nitrogen 13y ago

Once again, it is the user who requested that data from Netflix. The user pays the ISP. The ISP is already immensely profitable. Because of these things, the ISP has no need or ethical right to demand more from the user or from Netflix for providing a service the ISP already promised and the user already purchased.

Touche 13y ago
The ISP doesn't promise to make every website / service on the internet as fast as possible. It's up to every service to make themselves fast by using CDNs. In the case of Netflix, they have become big enough where they now want to be their own CDN.
- nitrogen 13y ago
  The ISP sells "Internet" access, so it's reasonable to expect them to meet customer demand at common Internet peering points, right up to the edge of their net profits plus a reasonable return for investors.

mikeash 13y ago

It incentivizes Comcast to provide faster service for those who pay. It incentivizes them to provide slower service for those who don't. We can comfortably say that 99.9% of the services on the internet are not going to pay Comcast. The big players might, but there's an extremely long tail. Thus, for most of the internet, Comcast encounters a conflict of interest. Its actual paying customers want higher speeds. But it has every incentive to reduce speeds for services that aren't paying for more. I pay my ISP for access to the entire internet. If they screw with my access to a service simply because they didn't pay, that makes no sense. If I'm paying $75/month for high-speed internet access, that means the entire internet, not just the parts they get kickbacks from. I pay my ISP for my access, Netflix pays their ISP for their access, and we get to talk to each other. That's how this stuff works. Comcast charging Netflix is double-dipping, and is directly opposed to their supposed purpose of serving me, their customer. (Hypothetically. I'm no longer a Comcast customer, thank goodness.) Edit: I usually hate real-world analogies, but I think it could be instructive here. Let's take the USPS as an example of something in the real world that looks a lot like an ISP. I can pay USPS $5.60 for a flat rate Priority Mail envelope, and they will deliver the contents anywhere in the country within 2-3 days. Doesn't matter who's getting it, and doesn't matter what's in the envelope as long as it fits. Now, let's imagine that some company ends up receiving a lot of mail. Providing mail service is expensive, right? It takes a lot of trucks and postal workers to deliver all this mail to this one company. Surely they should be charged for what they're using, right? Of course, this company says no. These people who are sending us mail already paid USPS. It's their job to deliver mail to its destination once they get paid to do so. Why should they get paid twice to deliver the same piece of mail? In retaliation, to "convince" this company to pay, USPS starts slowing their mail. Those trucks and mail carriers are expensive, we need some of them elsewhere. You'll just have to wait. And as a result, because USPS is demanding that this company pay to receive mail that I already paid to send them, my "Priority Mail" starts taking 4-5 days to arrive instead of 2-3. I hope it's obvious that USPS is completely unreasonable in this hypothetical scenario. I see no difference between this and Comcast charging Netflix for service I'm already paying Comcast for.

gergles 13y ago
This may be the most astute analogy about this I've ever seen. I'm going to steal it to explain this to people. Thank you for posting it.

click170 13y ago

How does this incentivize them to provide faster service? From my point of view, if they're allowed to let their service degrade so that they can turn around and charge Netflix more money to make it go faster again, how is that an incentive to provide a faster service? To me, this is an incentive to provide slower service so that they can charge companies like Google and Netflix more money. Edit: Funny this sentence can be turned around on you by clarifying who requested those streams. Prior to paying Comcast for transit, if Comcast Customers asked Netflix to push 4k streams to them, that decision carried no repercussions for Comcast Customers.

exelius 13y ago
Yes, but Netflix has the option to not provide those streams to Comcast customers if it's not economically viable for them. As it stands, most Comcast customers only request 4k streams because Netflix defaults to the highest bitrate. Basically, by changing a default setting, Netflix pushes bandwidth and creates a tragedy of the commons situation.

amalcon 13y ago

> if Netflix decided to push 4k streams, that decision carried no repercussions for Netflix This is not true. Netflix has to pay for transit of the bits leaving their servers just like everyone else. They just pay their transit provider for this, not Comcast (well, except when it is Comcast, but that's beside the point). The right ways for Comcast to keep their costs under control re: video streaming would be to either meter pricing or drop rate limits. The problem is that metering is unpalatable to their customers, and rate limit drops would expose the lie that the entire cable modem marketing engine is based on (that last mile downstream throughput maximum is the only number that matters).

Touche 13y ago
> This is not true. Netflix has to pay for transit of the bits leaving their servers just like everyone else. They just pay their transit provider for this, not Comcast (well, except when it is Comcast, but that's beside the point). Netflix doesn't have a transit provider any more. They are piping directly into Comcast and wanted to do so for free. I want my website to be delivered to all Comcast customers for free, do you support that?
- bdb 13y ago
  The alternative is for Comcast to buy enough transit to receive those bits from Netflix. I'm sure Netflix would be happy enough to deliver those bits to Comcast via transit, if enough capacity was available. Shouldn't Comcast be required to purchase enough capacity to provide high-quality service to their residential customers? SFI between a content provider and an eyeball network should be a mutually beneficial cost reduction, but Comcast has enough market power (captive broadband subs) that they can get away with intentionally not buying enough capacity to serve their customers.
  - Touche 13y ago
    Comcast does transit with many peers, but Netflix doesn't do business with any of them because they want to lower their own costs by cutting out the middlemen. A peering agreement is free when both sides are accepting traffic for the others, but that's not what is happening in this case. Netflix -> Comcast is one way. Still waiting for an answer to my previous question, should Comcast delivery my personal website to their customers for free?

jmileham 13y ago

The decision to push 4k streams certainly would carry repercussions for Netflix both from a storage and transit standpoint, even absent paying interconnect fees to Comcast. As a cable subscriber, I expect that when paying for N Mbps of bandwidth, I'm entitled to N Mbps of bandwidth of the content of my choosing. If Comcast's pricing model needs to change to a cost-per-gigabyte model in order to cope with the increased quantity of data customers consume, so be it. But sneaking the costs onto Netflix's tab effectively shifts Comcast's costs to all Netflix customers, allowing Comcast to artificially lower their prices relative to smaller ISPs without the market share necessary to effectively extract rent from Netflix.

maxhou 13y ago
> As a cable subscriber, I expect that when paying for N Mbps of bandwidth, I'm entitled to N Mbps of bandwidth of the content of my choosing 100% of the time ? not going to happen So let's say I'm an ISP and I bring a fiber to your home, and gives you a gigabit ethernet port. You cannot expect all current and future customers to be able to use 1 Gbit/s at the same time. You would need a big non blocking switch with as many ports as subscribers, the technology for this does not exist once you reach a large customer base. Now do you want me to shape your link to 0.1Mbit/s, because that's the only thing I can guarantee if all customers uses their link at the same time ? Or you'd rather have the 1Gbit/s possible bandwidth ? Which one is better: 1) guaranteed 0.1Mbit/s for 10$, 5Mbit/s for 100$, 1Gbit/s for 4000$ 2) possible 1Gbit/s for 20$ ? If you take the globalized approach, you cannot have business like Netflix, they destabilize the equation.
- wmf 13y ago
  Probably what is better (or at least fairer) is a token bucket with a low guaranteed rate and a very large burst. http://blog.felter.org/post/64832783299/apropos-of-a-recent-hacker-news-thread-about-the http://blog.felter.org/post/64832783299/apropos-of-a-recent-...
- jmileham 13y ago
  I'll take the non-false dichotomy, please. Having enough capacity to meet the streaming demand of your current customers during peak times is a solvable problem that doesn't require a full gigabit for everybody, all the time. The pricing model required to support this while still looking attractive to customers I'll leave to Comcast's well-funded marketing department. In order to make that happen, of course, we'd have to live in a fanciful world where shifting last-mile delivery cost to content providers wasn't an option so the painful process of exposing this cost to customers couldn't be hidden in a rat's nest of perverse incentives that benefit the most entrenched corporations. (Ironically, and despite its protestations, Netflix's ability to pay this rent is a barrier to entry for its own future competitors.)

SilasX 13y ago

No sensible ISP solution to this should take `is_netflix` as an input. If customers are requesting more data than the last-mile pipes can handle, there are a number of fair ways to handle the overuse: - At peak times, customers are throttled in direct, formulaic proportion to past (peak) usage - Customers are charged more for usage at peak times - Customers are limited to n% of the pipe at peak times Notice how none of that singles out Netflix, just high usage in general.