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> Gillis Cashman, a managing partner at MC Partners in Boston, says it makes sense to charge extra to big content providers like Netflix, whose services at peak

by jcrites 12y ago

> Gillis Cashman, a managing partner at MC Partners in Boston, says it makes sense to charge extra to big content providers like Netflix, whose services at peak hours can sometimes consume more than 30 percent of total Internet traffic. Video is “significantly congesting these networks, and causing real issues for carriers where they have to spend a lot of money upgrading networks, and pushing fiber deeper into their networks,” he says. “There is currently no model for monetizing that required investment.” This argument doesn't make sense to me. The ISP's customers are using the ISP's network by downloading Internet content. The nature of the content should be irrelevant to the discussion. The ISP's customers are purely responsible for that usage, and it is part of - from what I understand - the service they are already paying for. The ISP's network is only "congested" if it is incapable of delivering on the service that was advertised (assuming for the sake of argument, some particular speed of access). Thus, how can Cashman argue that "there is no model for monetizing the required investment?" Isn't that exactly what ISP customers are buying when they pay for access to the Internet through the ISP? The onus should morally be on the ISP to make a good-faith attempt to build sufficient connections to any content that's popular enough to saturate the links providing it. Furthermore, why isn't it naturally the ISP's responsibility to price their access sufficient to cover current usage and expected growth in usage? New use-cases for the Internet are constantly going to appear. It is the ISP's responsibility to provide Internet access with sufficient throughput that it is not congested for any reasons under the ISP's control; and to price their access sufficient for investment to achieve the throughput. "The latest BigMac hamburger caused hungry residents to swarm McDonalds and caused drive-through lines to be congested today in Cloudville. Gillis Cashman, managing partner at McPartners, Inc. says that, despite selling happy meals in record numbers, delays in drive-through lines will continue, since since there is "currently no model for McDonalds to monetize the required investment" to upgrade its drive-throughs.

bane 12y ago
And there's clearly some models since I can get 1gb internet in Seoul for like $40/mo and Google apparently has some kind of model a well. This just reeks of an attempt to try and build up support for greed and laziness.
Fuxy 12y ago
Can we get rid of the FCC now it's pointless having it if they don't understand what is and is not the responsibility of the ISP regardless of content. The entire FCC is entirely corrupt and in pockets of the cable companies. It is not doing its job worse yet it is harming the system it was designed to protect.
- pessimizer 12y ago
  That's unfair. They're also in the pocket of wireless companies and radio companies^W^WClear Channel.
piqufoh 12y ago
How's this for an analogy; "Electricity supply companies have found that almost 30% of the total electricity capacity in their networks is being consumed by customer's light bulbs. In order to support future demand, the electricity supply companies will begin charging light bulb manufacturers for light bulb users electricity usage." Completely bonkers.
- sschueller 12y ago
  But there is one giant difference between how electricity and internet is sold . Electricity is a metered service. It would probably be much better if internet service was metered but it would not go over well after we all have been used to the unlimited pipe.
  - cs02rm0 12y ago
    I wouldn't be so sure. Lots of UK ISPs charge by usage and they haven't been immune from similar pressures. This was 2008: http://news.bbc.co.uk/1/hi/7336940.stm http://news.bbc.co.uk/1/hi/7336940.stm
  - gnoway 12y ago
    Who knows how well it would go over? I would be pleased to pay a metered rate, provided that the metering was standardized and easy to understand - like the electrical meter outside my home - and the pricing was fair. I would also expect there to be no speed tiers; everyone using a service gets the same nominal speed. I would not be interested in purchasing e.g. bandwidth blocks with f-you overage fees like what we used to have (still have? I don't do mobile data) with mobile carriers. That, I agree, would not go over well. I think that the real problem is not perceived acceptance by customers, but that moving to metered billing makes the service look more like a utility. If I were running an ISP I would want to do everything I could to keep people from equating my service with water or electricity.
    - YokoZar 12y ago
      There's an efficiency argument against metering. Bandwidth is "free" unless service is near capacity, so introducing pricing that discourages use during that off-peak period can create needless problems. So maybe you only want peak-period pricing (kind of like how some cell providers give free minutes on nights and weekends).
pjc50 12y ago
"The onus should morally be on the ISP " This is American capitalism, morality doesn't enter the picture. More seriously, the McDonald's argument doesn't work because McD's business model is profit on turnover. If they sell more, they make more. Comcast's model is renting out wires. The money they make is the price set by the "market" in internet connections. Actually providing a service is a cost, and therefore they want to reduce it as much as possible without driving away customers. Building more won't enable them to charge their customers more, so they're sending a rent bill to Netflix to see if they pay it.
- mgkimsal 12y ago
  "Building more won't enable them to charge their customers more" Why not? If I'm noticing slowdowns due to saturation, and my ISP said "we're expanding in your area and upgrading equipment, capacity, etc, but it's going to add another $9/month on your bill" of course I'd pay it. A) I'd have no choice and B) I want better service.
  - pjc50 12y ago
    I suspect few people will - and there's a limit to this, if they add $9 every few months for a different service, eventually you will refuse to pay $$$/month for the service. Imagine if every speed upgrade from 56k modems had also come with a price increase.
    - mratzloff 12y ago
      Every few months? That's not what he said.
      - pjc50 12y ago
        No, it's not, but if they can increment prices once, why not again? If they can announce extra billing for "infrastructure upgrades" every few years, why not more frequently? Boil the frog as fast as possible. After all, where would it go?
  - 12y ago
staircasebug 12y ago
"causing real issues for carriers where they have to spend a lot of money upgrading networks, and pushing fiber deeper into their networks" I've been reading over and over again how the ISPs should already have this upgrade money allocated and available to spend on network infrastructure upgrades. You've Already Paid $2,000 For A Fiber Connection You'll Never Get - http://www.techdirt.com/articles/20060131/2021240.shtml http://www.techdirt.com/articles/20060131/2021240.shtml
ganeumann 12y ago
> how can Cashman argue... He can argue it because he has a lot of money (indirectly) invested in the outcome going his way. There will be winners and losers if net neutrality is abandoned and it looks like Cashman would be a winner. Most of the rest of us would be losers. I hate when reporters find the most biased people in the debate and quote them as if they were an objective opinion. This reporter, to his credit, immediately follows the Cashman quote by saying "Some less financially invested observers have little sympathy for this argument" and then quotes Rob Faris, who may have strong opinions but at least isn't talking his book.

by jcrites 12y ago

bane 12y ago

And there's clearly some models since I can get 1gb internet in Seoul for like $40/mo and Google apparently has some kind of model a well. This just reeks of an attempt to try and build up support for greed and laziness.

Fuxy 12y ago

Can we get rid of the FCC now it's pointless having it if they don't understand what is and is not the responsibility of the ISP regardless of content. The entire FCC is entirely corrupt and in pockets of the cable companies. It is not doing its job worse yet it is harming the system it was designed to protect.

pessimizer 12y ago
That's unfair. They're also in the pocket of wireless companies and radio companies^W^WClear Channel.

piqufoh 12y ago

How's this for an analogy; "Electricity supply companies have found that almost 30% of the total electricity capacity in their networks is being consumed by customer's light bulbs. In order to support future demand, the electricity supply companies will begin charging light bulb manufacturers for light bulb users electricity usage." Completely bonkers.

sschueller 12y ago
But there is one giant difference between how electricity and internet is sold . Electricity is a metered service. It would probably be much better if internet service was metered but it would not go over well after we all have been used to the unlimited pipe.
- cs02rm0 12y ago
  I wouldn't be so sure. Lots of UK ISPs charge by usage and they haven't been immune from similar pressures. This was 2008: http://news.bbc.co.uk/1/hi/7336940.stm http://news.bbc.co.uk/1/hi/7336940.stm
- gnoway 12y ago
  Who knows how well it would go over? I would be pleased to pay a metered rate, provided that the metering was standardized and easy to understand - like the electrical meter outside my home - and the pricing was fair. I would also expect there to be no speed tiers; everyone using a service gets the same nominal speed. I would not be interested in purchasing e.g. bandwidth blocks with f-you overage fees like what we used to have (still have? I don't do mobile data) with mobile carriers. That, I agree, would not go over well. I think that the real problem is not perceived acceptance by customers, but that moving to metered billing makes the service look more like a utility. If I were running an ISP I would want to do everything I could to keep people from equating my service with water or electricity.
  - YokoZar 12y ago
    There's an efficiency argument against metering. Bandwidth is "free" unless service is near capacity, so introducing pricing that discourages use during that off-peak period can create needless problems. So maybe you only want peak-period pricing (kind of like how some cell providers give free minutes on nights and weekends).

pjc50 12y ago

"The onus should morally be on the ISP " This is American capitalism, morality doesn't enter the picture. More seriously, the McDonald's argument doesn't work because McD's business model is profit on turnover. If they sell more, they make more. Comcast's model is renting out wires. The money they make is the price set by the "market" in internet connections. Actually providing a service is a cost, and therefore they want to reduce it as much as possible without driving away customers. Building more won't enable them to charge their customers more, so they're sending a rent bill to Netflix to see if they pay it.

mgkimsal 12y ago
"Building more won't enable them to charge their customers more" Why not? If I'm noticing slowdowns due to saturation, and my ISP said "we're expanding in your area and upgrading equipment, capacity, etc, but it's going to add another $9/month on your bill" of course I'd pay it. A) I'd have no choice and B) I want better service.
- pjc50 12y ago
  I suspect few people will - and there's a limit to this, if they add $9 every few months for a different service, eventually you will refuse to pay $$$/month for the service. Imagine if every speed upgrade from 56k modems had also come with a price increase.
  - mratzloff 12y ago
    Every few months? That's not what he said.
    - pjc50 12y ago
      No, it's not, but if they can increment prices once, why not again? If they can announce extra billing for "infrastructure upgrades" every few years, why not more frequently? Boil the frog as fast as possible. After all, where would it go?
- 12y ago

staircasebug 12y ago

"causing real issues for carriers where they have to spend a lot of money upgrading networks, and pushing fiber deeper into their networks" I've been reading over and over again how the ISPs should already have this upgrade money allocated and available to spend on network infrastructure upgrades. You've Already Paid $2,000 For A Fiber Connection You'll Never Get - http://www.techdirt.com/articles/20060131/2021240.shtml http://www.techdirt.com/articles/20060131/2021240.shtml

ganeumann 12y ago

> how can Cashman argue... He can argue it because he has a lot of money (indirectly) invested in the outcome going his way. There will be winners and losers if net neutrality is abandoned and it looks like Cashman would be a winner. Most of the rest of us would be losers. I hate when reporters find the most biased people in the debate and quote them as if they were an objective opinion. This reporter, to his credit, immediately follows the Cashman quote by saying "Some less financially invested observers have little sympathy for this argument" and then quotes Rob Faris, who may have strong opinions but at least isn't talking his book.