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Awesome response to the C&D, via spokesman Jonathan Friedland: "This is about consumers not getting what they paid for from their broadband provider. We are tr

by Arjuna 12y ago

Awesome response to the C&D, via spokesman Jonathan Friedland: "This is about consumers not getting what they paid for from their broadband provider. We are trying to provide more transparency, just like we do with the ISP Speed Index, and Verizon is trying to shut down that discussion."

josh2600 12y ago
Playing Devil's advocate here for a second: If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? I'm not taking the stance that this is correct, only querying as to why the dynamics here are such that we automatically assume Netflix is in the right. Guilt tripping Verizon into adding more routers is a major net positive to Netflix's business. Yes, ISP customers are paying for access but the business reality is that the ARPU per subscriber is decreasing every year at a rate lower than additional subscriber acquisition can sate. As Wall Street demands growth, it has to come from somewhere, and since Carriers are not able to sell consumers additional services (no matter how hard they try), they need to find another set of wallets (content providers). They're not utilities and have a profit motive, right? Again, I'm not saying this is correct, simply trying to add another viewpoint to the conversation.
- LeoPanthera 12y ago
  Netflix isn't sending their data to customers unsolicited. Customers are requesting that data, through a pipe which they have already paid for. It is unfair for Verizon, or any other ISP, to ask to be paid twice for the same bits. What bits I am asking for, as a customer, shouldn't make a damn bit of difference.
  - sliverstorm 12y ago
    There's two ends to the pipe though. To my understanding, the upstream ends are linked largely thanks to peering, which is based on mutual benefit. At the upstream level, nobody charges other providers because everybody is interacting with everybody- sort of like, "I bought this round, but I know you'll be buying the next" so you don't worry about balancing the books. Then Netflix comes along, chews up 35% of internet traffic, and basically takes a disproportionate piece of the pie. If I've got everything in my head right, this is against the spirit of how peering is supposed to work, and so it doesn't surprise me if spats start to develop upstream. If Verizon is unhappy because they have to develop their last-mile network to meet promised speeds, that's Verizon's problem. But if Verizon is unhappy because the upstream is becoming distorted and they are becoming beholden to just one peer (Netflix) instead of an environment of free, balanced exchange- maybe that's not Verizon's problem.
    - josh2600 12y ago
      Relevant Wiki article: http://en.wikipedia.org/wiki/Tier_1_network http://en.wikipedia.org/wiki/Tier_1_network
    - Karunamon 12y ago
      The only reason we're having this discussion is because it's "one peer". A thought experiment: Let's pretend it's not Netflix for a moment. Let's pretend there's a bunch of competing streaming media services which happen to take up, combined, the same amount of bandwidth that Netflix does. In this case, Verizon would still have the same problem (if you buy that they have a problem at all, which I personally do not), except they couldn't play at being mafiosos, holding one in particular to what would be a protection racket in any other context since the load is the same amount, just distributed among many much smaller players. What would they do in this case? The fact that it's one large company gives them the ease of threate^H^H^H^H^H^H leveragi^H^H^H^H^H^H^H^H negotiating with one entity instead of upgrading their damn network like they're expected to do.
- djcapelis 12y ago
  If you want to play devil's advocate then let's advocate for all the devils. If Comcast wants to offer their customers video over a traditional cable network, they pay content providers. Why should the Internet be different? Shouldn't ISPs be paying people who provide the content their customers are buying?
  - lukecampbell 12y ago
    I've never thought of it that way. That's a very interesting way to look at it! Isn't netflix driving business up for ISPs? The faster ISP gets business? I could be mistaken though.
    - djcapelis 12y ago
      Aren't content providers always driving up prices for content carriers? Consumers are paying for content delivery and if your business can't deliver the quantity or quality they want and someone switches to your competitors because of it that's your problem.
  - josh2600 12y ago
    I think that the way the cable network works relative to the internet is a historical artifact versus modern parlance. My opinion is that precedent is not actually a guiding factor in how future arrangements should be determined. The Internet is different in many ways, but notably because cable companies aren't doing peering and don't have to deal with the complex settlement of international data trafficking.
  - ganeumann 12y ago
    Remember that when the cable companies started they were competing with over-the-air TV. To convince people to switch to cable, they had to provide something valuable enough to justify the cost. Content was that thing. The reason ISPs can charge both the customers and the content providers is because we have no other choice. Where I live I have a choice of two providers: Comcast or Verizon. My choices are: use one of these two, or have no Internet. Not much of a choice.
- eisa01 12y ago
  If it wasnt't Netflix, it would be another streaming service or a hundred. The total capacity required would still be the same.
  - josh2600 12y ago
    This is evidently not true. Streaming services are a dime a dozen but their distribution of bit volume is not even. Netflix is far and away the biggest user of bits on the Internet and other streaming services are an order of magnitude smaller. It's possible that if Netflix didn't exist someone would fill that vacancy but it's also possible that the aggregate total volume of bits transferred during streaming would be lower if Netflix did not exist.
- mudetroit 12y ago
  For a simple reason. Netflix has to pay for enough bandwidth outbound to supply their customers, regardless of anything else. Their customers are also paying for a certain amount of bandwidth. ISPs typically possess less total bandwidth then they sell. The problem is that the typical users usage is rising faster than the ISPs are willing to handle. If I pay for 50Mb/s, and the other end of my communication has enough bandwidth to provide it, then I should be able to get to that speed. As far as I am aware, there has been no accusations that Netflix does not have enough bandwidth to supply their customers, but that the intermediaries have oversold their networks to the point where they cannot deliver on their promises.
- ljd 12y ago
  An ISP's job is to provide internet access to last mile users, such as ourselves. If they choose to reduce that speed for any reason, or throttle any kind of connection they are entitled to do that but they can't complain when someone else says that is what they are doing. Personally, I think given how much public money has gone into infrastructure and the amount of money I pay in taxes it seems insane for me to first pay for the ISP's infrastructure with taxes then have to pay them again. So while they have a right to throttle, they don't have a right to throttle my connection on infrastructure that they did not pay 100% for. Which probably accounts for the majority of their infrastructure.
  - josh2600 12y ago
    An ISP's job, as a private company, is to maximize shareholder value. The circuit consumers are sold is a "best-effort" connection in stark contrast to, say, a T1, which is a dedicated circuit. It's also very hard to prove that Verizon is throttling, versus, say, simply physically underprovisioning the connection. With respect to public money, I think you've hit the nail on the head. The crux of the Net Neutrality debate, to my mind, is whether these networks are public or private. If they're private, Net Neutrality is bullshit. If they're public, it's obvious. It is in consumer interest for the networks to be public, but the same could be said about the socialization of any number of industries. I'm constantly fascinated by the way folks consider socializing the telecom industry to be incredibly reasonable and socializing, say, the healthcare industry to be insanity. Edit: Maybe I need to tag all of these posts with #DevilsAdvocate to avoid being downvoted into oblivion.
    - toomuchtodo 12y ago
      > I'm constantly fascinated by the way folks consider socializing the telecom industry to be incredibly reasonable and socializing, say, the healthcare industry to be insanity. Can't I want both to be socialized?
      - josh2600 12y ago
        Where do you draw the line? What shouldn't we socialize?
- dkhenry 12y ago
  This is going under the false assumption that when I bought bandwidth from my ISP they didn't _really_ need to provide me with that bandwidth for realzies. This isn't netflix driving network upgrades this is Verizon customers driving network upgrades. If VZ didn't promise the customers the bandwidth they wouldn't need to upgrade their backhaul to provide it. I mean it would be like Verizon wireless charging apple to connect iPhones to their network because "I phones drive up the amount of data customers consume" How is that viewpoint even remotely considered valid ?
  - lnanek2 12y ago
    Amusingly, I've heard carriers use that justification before for pushing phones other than iPhone. Well, that and Apple demands the largest subsidy of all phones. It's a position Apple can sustain because people walk in to the store and ask for Apple and want nothing else, but the carriers really want competition so they will encourage other phones when they can.
    - asn0 12y ago
      > the carriers really want competition so they will encourage other phones when they can. I've yet to meet any carrier who wants competition, for anything. Their ideal world would be that they would decide which phone the customer can have, what limited service the customer can buy, and how much it is, and take-it-or-leave it. That's how AT&T worked, and every major carrier today is a spin-off from AT&T and still thinks pretty much the same way.
  - josh2600 12y ago
    ... Your wireless network service is best effort. This is why your service provider doesn't have to compensate you for dropped calls or dropped packets or towers with insufficient capacity. The word "promise" is not an accurate reading of the legal concepts at play in bandwidth purchase. Dedicated bandwidth for consumers is expensive and completely unavailable on cellular networks. Verizon also doesn't have to let iPhones connect to their network and only does so because they benefit financially from the relationship. Trust me, putting a device onto a major cellular network in the US is highly political, full of peril and financial alchemy. Source: I do lots of telecom stuff specifically around wireless.
- dave_sullivan 12y ago
  That's actually a really good point. Ideally, you're right -- if netflix (and internet video in general) drives growth in internet traffic, maybe it isn't fair to require service providers to upgrade their service out of hand. But then I think that rule primarily applies for a free market. I'd argue that internet providers are not currently participating in a free market and it causes real problems. Without a free market... companies need more supervision. I'll put it this way: 2 competing providers. Average internet usage keeps rising exponentially. People want faster internet. The providers either lower prices or upgrade infrastructure. Netflix is not forcing them to do anything. But then it's probably reasonable for Netflix to say "Your connection is crappy because of your internet bandwidth, it's not us..." But hey, consumers can choose. Problem here is... what are their choices? Even just one other company participating in the market that can make a similar offering (eg cable speeds) would change the whole conversation I think. Suddenly they'd be working harder to keep your business (or take you from the competitor) and they'd stop talking about more and more ways of screwing their customer and taking advantage of de facto monopoly status. The incentives are all messed up and it encourages gouging instead of innovation.
  - josh2600 12y ago
    The question is: are the networks public, and therefore conduits for competition, or private, and therefore competitive infrastructure. In some capacity, the networks have to peer to hit all of the IP blocks, but that's pretty much one of the better examples of free market success (although that might be changing) and arguably quite private. In another narrative, the networks were laid with private investment (in many cases partially public funded as well) and so the question is moot (if it's all private money). Are the networks public or private and why can't we decide?
- stonemetal 12y ago
  >Verizon have to subsidize their costs of business I don't see that argument going very far. Netflix has an ISP and pays for their own bandwidth. Why should they pay twice for their bandwidth? If verizon has a problem with the amount of data their customers are requesting from netflix they could always disallow that or institute data caps etc.
  - sadris 12y ago
    Yep, I still don't understand why land line ISPs don't charge by the MB like cell services do.
- cgman 12y ago
  It's like automatically charging my website visitors for my server costs because my site became more popular and using more resources. If Verizon doesn't want to upgrade - then they shouldn't. If they lose business because of it well, it's their damn fault.
- baddox 12y ago
  > If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? If the ISP's customers are making requests to Netflix' servers, then yes.
- DanBC 12y ago
  Customers should pay for the bandwidth they use. ISPs have been miss-selling Internet connectivity for many years - "UNLIMITED!!" "FAST!!" "CHEAP!!" - and now they ( and their customers) are reaping that harvest.
- drzaiusapelord 12y ago
  > is it really fair to treat them like every other company? Interesting question. I guess from my perspective I buy broadband from AT&T and they tell me under no uncertain terms that I have a cap at x amount of gigabytes. As a customer I expect to use all of that. >Guilt tripping Verizon into adding more routers is a major net positive to Netflix's business. As a customer it shocks me they aren't doing so. Yesterday it was Netflix, today its every kid with an Xbox1 or PS4 buying games digitally as buying physical media is out of style. What's a typical game nowadays? 20gb? That's the equivalant of many netflix movies right there, all at once. What does tomorrow hold? Why aren't they prepared for this?
  - josh2600 12y ago
    I'll reiterate the problem carriers face that I stated earlier. Customer revenue is decreasing and because the market is saturated they cannot add enough customers to combat the atrophy of revenue. As shareholders expect growth every year, ISPs are forced to look for new revenue streams. If you don't think they should be doing this as a private company, reclassify them as a utility. Otherwise shareholder demand is what gets satisfied. Carriers have very specific equipment amortization patterns in their heads and they are financial models that banks accept. If carriers have to change their amortization patterns (more routers, faster) they have to change their financing which damages the value of the stock. Sure we can do this, but what does "fair" mean here? I'm trying to say that the argument is not as black and white as people make it out to be.
    - drzaiusapelord 12y ago
      >If carriers have to change their amortization patterns (more routers, faster) they have to change their financing which damages the value of the stock. Welcome to the world of business. Change is constant, you can't just tell your customers, "Whoops we didn't plan for that." I also disagree that its as hopeless as you make it out to be (in many nations 100mbps or even 1gbps unlimited internet is trivial to get). They can raise prices on customers, lower caps, throttle netflix users, etc if they're in such financial dire straits. Their competitors will love this as customers will migrate to them. Their competitors may have a more nimble management structure and can provide the data at this level. What I don't get, assuming they really are in dire straits and not trying to monetize artificial scarcity, is why don't they just push out a notice, "Due to network limitations, we are throttling streaming video users to 4mbps which is enough for medium quality 720p streaming. The investment to support 1080p streaming is impossible for us. Love Verizon." Actually, I know why they won't do this, because Comcast will pay for the router upgrades and steal all their customers once they find out. So they go around their customers' backs and try dirty dealings with Netflix and others. These guys being duopolies in most markets (substitute AT&T with Verizon in some states) just decided to not compete and simply change the rules at the FCC, which is pretty much a textbook description of collusion.
- gumby 12y ago
  > If Netflix is 35% of global internet traffic at peak capacity..., is it really fair to treat them like every other company? Yes it is. If you solve their problems in the general case, then that solution will also work for the next big user, and for the small users as well. If you special-case handling for them, then it will be harder for the next new entrant (who could even be a Netflix-upending upstart) to become established. They do use more resources, there is no question about that, but they also have higher costs to their ISPs. This cost could be mitigated by them running their own internal network and peering directly with other backbone providers (they already do this to some extent). But in an architectural sense that option is available to anyone (in practice, of course, nobody is doing BGP for their home network). If you believe in the original promise of the end to end network (a promise which is currently lying in the street gasping for breath) then you don't want netflix special cased. It's no surprise that Verizon (with POTS roots) and Comcast (hub and spoke cable provider) don't have end-to-end in their DNA, but rather a tollbooth model of the world. It doesn't mean we have to go along with it.
- sixQuarks 12y ago
  You're looking at this all wrong. It's not that Netflix is taking up 35% of all bandwidth. It's that CONSUMERS are choosing to spend 35% of their consumption on Netflix. The ISPs are punishing consumers for their choices - it's just ridiculous.
  - giovannibajo1 12y ago
    On the other hand, can you swear that Netflix is doing all that it can to minimize bandwidth? There's a conflict of interest: Netflix has a vested interested in provided lightly-compressed, very-high-resolution, bandwidth-hungry movies to its subscribers, especially if it obtains 100% free peering that it demands, as bandwidth would be free for them. On the other hand, ISPs are forced to upgrade network any time Netflix unilaterally decides to increase the bitrate of the movies, without this bringing any benefit to their bottom line. For instance, if Netflix halved the bitrate of all their movies, subscribers will complain, but surely they would be able to deliver them without any buffering to everybody, and at the same time to keep free peering agreement and whatnot; they would go from 35% of total US bandwidth to 17%, and ISPs would be satisfying their customers' choice. So where do you draw the line? Surely Netflix can increase the bitrate at will, at any time; should they be "allowed" to do it any time they want, while keeping a free peering agreement? Should the ISPs be forced to upgrade their network every time?
    - sixQuarks 12y ago
      Fair point. The issue obviously isn't 100% black and white. But what the ISPs are currently doing is not the way to go about it, IMO.
    - sixQuarks 12y ago
      Fair point. The issue obviously isn't 100% black and white. But what the ISPs are currently doing is not the way to go about it, IMO.
    - raarts 12y ago
      > Should the ISPs be forced to upgrade their network every time? Come on, they have been doing this since the internet started. And in the beginning of internet some services were hugely popular as well. Keep in mind that upgrading the network costs money, but once the infrastructure is in place, moving bits is really cheap.
- drusenko 12y ago
  You're not as far off as you think. It seems very few commenters to this thread understand how the internet actually operates from a business perspective. When you install a server in a colo, you don't get free transit. You find a transit provider (like Level3, Cogent, or NTT) and you pay them for bandwidth. You can understand this very intuitively as most hosting services (like AWS) will charge you for bandwidth. As a service provider (like Weebly), you are paying your own transit provider for a certain amount of bandwidth, and they are covering the costs of delivering that bandwidth to (usually) anybody globally and the costs of maintaining their network. If a network gets large enough, they may often negotiate peering agreements with other networks. So Level3 and Cogent may have a peering agreement, or Level3 and Comcast may have a peering agreement. These are generally set up when two networks deliver roughly the same amount of traffic to each other, or it's considered beneficial to both parties to get the networks closer, and it simplifies the working relationship. These peering agreements can often become contentious when they become imbalanced. Very early on, I remember a fight Cogent and France Telecom had over peering -- FT felt like they were getting the raw end of the deal, and de-peered with Cogent. Cogent refused to pay another transit provider for access to FT's network and so traffic from the Cogent network to FT would drop. They resolved about a week later, with lots of unhappy customers caught in the middle. As you can see, it's simply not the case that (a) service providers never pay for bandwidth because the end-user already pays for bandwidth and (b) peering / free transit is guaranteed. Maybe I'm not understanding the nuances here, but it seems to me like Netflix is taking an ideological stance to hide behind the fact that they are trying to negotiate a better business agreement for themselves.
  - whoopdedo 12y ago
    If there is imbalance between the traffic Comcast is sending to other networks versus what they receive that's because of the policy to forbid residential customers from hosting their own servers. Comcast created this situation because they wanted to force the internet to behave more like television.
    - hga 12y ago
      Exactly. The "equal traffic" concept totally fails for consumer last mile providers. In fact, it's technically more expensive for them to provide symmetrical service due to head end noise, but it also fits with their "you're supposed to consume content, especially ours, not supply it" attitude. The latter is something that more people ought to be thinking about, consumers using Netflix are not just consuming more peak bandwidth, they're competing with the video offerings of all of the big last mile providers. Although. AT&T doesn't actually offer U-verse video service to very many of their subscribers; don't know about Verizon's FiOS vs. plain DSL offerings (except that they're shedding small population states and markets as fast as they can), but the others are cable companies so they obviously do.
- higherpurpose 12y ago
  My ISP has provided 100 Mbps for years, and has recently brought 1 Gbps fiber. They've never complained about video services or torrents eating away their bandwidth. Guess why? Because when you're able to provide 100-1000 Mbps to each and every customer, the ~5 Mbps required for Netflix streaming is nothing.
- icambron 12y ago
  >If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? I don't see why not. I think it might make more sense to think of it as streaming video, the category of goods, rather than Netflix, the company. So 35% of global internet traffic is people streaming videos. And who cares that it's video; from Comcast's or Verizon's perspective, it's just an awful lot of bytes. So if the issue is the amount of traffic, it's just Verizon complaining that we're using too much bandwidth (yes, us; we're the ones watching Netflix). I get that's expensive to deliver all those bytes to my home, but that's what precisely what I'm paying for. That a huge number of those bytes comes from the same originator shouldn't enter into it. It's just a site on the internet. EDIT: Also, I wanted to add, that all of the traffic comes from the same source actually helps Verizon from a practical standpoint, since it can solve a lot of it with only a small number of interconnects. Compare to a more fragmented market, where Verizon might have to make specific peering provisions for a bunch of different 5%-market-share content providers to fulfill its customer obligations. > Guilt tripping Verizon into adding more routers is a major net positive to Netflix's business. All sorts of businesses benefit from the ecosystem of other businesses around them. If I run a store in rural Iowa and Acme Co opens a huge factory there, then I stand to make a bunch of money from all these newly employed customers. Should I subsidize Acme? [1] After all, hiring people is expensive. If I open a hardware store near a bunch of planned construction, should I pay those real estate developers? You can expand this to the whole economy being basically just a set of interdependent positive externalities. Maybe Verizon should pay Netflix for making their service more valuable? Or we can use the simpler model, in which you get to charge your customers. Verizon charges us for delivering the content we request. Netflix charges us for the content itself. Cogent (or whomever) charges Netflix for its bandwidth. Everything works. > They're not utilities and have a profit motive, right? They could charge more, and they could even charge per unit bandwidth (or tiered bandwidth) if they wanted. "My business isn't working that well" is not a good excuse to hold your subscribers hostage. You could equally use "Wall Street demands growth!" to defend Comcast's new practice of robbing banks. Imagine I bought a popular TV set in 1980 to watch broadcast content, but after I got it home, the TV maker remotely activated a previously undisclosed filter that would only show certain channels. Then they went to ABC, NBC, and FOX and said, "So guys, you want your content seen? My margins on these TVs keep going down, so somebody's gotta pay." Not cool, right? EDIT: Another point, probably the most important. The "problem" here is ridiculous: it's that demand for Verizon's product (i.e. internet access for end-users) is increasing a lot because it is becoming more useful to its customers. That's what every business wants! "We sell internet access and everyone is now using so much more internet! Whatever shall we do?" The idea that Verizon is up against some sort of profitability wall because of how popular its product is becoming and thus needs to charge the companies responsible for that increased popularity...it's simply not credible. Not sure why I didn't think of this point earlier. Edit: s/Comcast/Verizon, since that's specifically who we're talking about. [1] This actually does happen in the form of tax incentives for companies opening factories. It's a bit messed up.
- byuu 12y ago
  Yes, because I am paying Verizon to connect me to Netflix. If Netflix's traffic is so high, it's because lots of people want to pay Verizon to connect them to Netflix. If Netflix is so expensive, Verizon would need to raise their prices for customers; possibly offering low-bandwidth customers lower prices. If Verizon wants to give me free internet access, then it would make perfect sense to charge Netflix to deliver to me. Otherwise, Netflix paying large sums to Verizon is only going to ensure that we won't get alternatives to Netflix, because the barrier to entry will be too high for smaller startups. And if bandwidth is the issue, do you think Verizon should pay companies it primarily uploads, but not downloads, to (such as cloud hosting services)? Personally, I'd really love to see Netflix start using encrypted peer-to-peer to distribute the bandwidth. See if Verizon would be willing to cripple all VPN and HTTPS users to try and shake down Netflix.
- SilasX 12y ago
  I am also frustrated with people who blur a) net neutrality with b) monopolies/undercapacity issues, and so I agree that people should not be so quick to demand ISP-paid extra capacity as solutions to this, especially on grounds of net neutrality. However, I don't think it follows that Netflix must be treated any differently. The customers are the ones requesting the data. To the extent that anyone (once at capacity) should bear a cost, it should be the requester -- either through a higher fee or a smaller fraction of the pipe. In practice, that will mean "the more Netflix [or anything] you use, the slower your service". But you shouldn't "short-circuit" the process and just start punishing Netflix's packets directly just for being Netflix. Rather, it should be "this customer endures this cost [broadly defined] for using this much, regardless of what it was for".
  - hga 12y ago
    But net neutrality comes into play because these big last mile providers are also offering their customers video services. That's what cable companies started out doing, after all, and Verizon and to a lessor (much lessor, I gather) extent AT&T have implemented the same business model with their FiOS and U-verse offerings. People getting their video from Netflix threatens this business, and it's pretty obvious to me that's one of the reasons we're seeing all this now, especially with Netflix getting big enough in streaming to a) pose a greater threat b) potentially have a lot of voters on their side (particularly relevant because the last mile providers are all government enabled monopolies, cable companies at the municipality level, telcos at the state and Federal level).
- brownbat 12y ago
  I'm more concerned about the fact that everyone seems to give priority to speedtest traffic, then abruptly chokes streaming HD. I'd really like Netflix to offer their own speedtest site that looks to the network almost exactly like streaming video, so the ISPs couldn't game the measurements.
  - prutschman 12y ago
    Try http://movies.netflix.com/WiMovie/Example_Short_23.976/70136810 http://movies.netflix.com/WiMovie/Example_Short_23.976/70136...
- curveship 12y ago
  I've seen this argument about Netflix's oversized traffic slice, but it always seems to me like it should mean the opposite: if Netflix is 35% of the reason people sign up for broadband, isn't Netflix making broadband more valuable? People are willing to pay more for broadband because Netflix makes it worth more to them. So shouldn't the broadband providers be paying Netflix rather than the other way around? You never hear the cable TV providers complaining that a particular channel has gotten too popular. What's different here?
- criley2 12y ago
  "why does Verizon have to subsidize their costs of business?" Because I, a Verizon customer, have paid to access Netflix. I pay monthly for bandwidth to use as I see fit. It doesn't matter if all of the customers are using their bandwidth to go to one source. It doesn't matter: it's our bandwidth to use how we see fit. It is Verizon's responsibility to provide us with the service that we are paying for. They advertise a service, they market this service, and they charge us for the service: but then fail to deliver on their promises because they're charging someone else too? They sell us capped packages and tell us we have a set amount of data. We cannot exceed the data, because the infrastructure can't take it and we have to pay for our usage. We have to pay for our demand, that's the point of caps. Make the users pay for using. That to me implies that we are paying for a set amount of data! That we are paying for it, not anyone else. We pay for the upgrades that are necessary to deliver data to our homes. That is the point of a subscription. This is like saying: all of the telephone customers are calling Pizza Hut, so Pizza Hut needs to pay the phone company to upgrade the switches at the Phone Company. What??? We've already paid for the infrastructure required to deliver the data we're paying for.
- drawkbox 12y ago
  Netflix is not using the capacity, they are selling access to the content. The customers are using 35% of the traffic. The customers who pay for access to content they want. Most people want Netflix because it is a sea/wonderland of content and is replacing tv. Netflix is not consuming the content, they are providing it, the customers, who pay for the access, are consuming the content and bandwidth. Content services should not be harmed for being successful. If the bandwidth customers are desiring certain content providers it is the bandwidth providers responsibility to make sure it is available and fast, per their marketing and products.
  - hga 12y ago
    "Most people want Netflix because it is a sea/wonderland of content and is replacing tv." And that's in direct competition with these big last mile providers. Cablecos by definition, and the two big telcos have their own FiOS and U-verse "TV"/"cable" video offerings (even if AT&T's coverage is meager, and both stopped their build outs except for contractual requirements when the Great Recession started). Which provides additional strong motivation to provide less than stellar service when handling Netflix packets.
- asn0 12y ago
  It's not just Netflix, it's also YouTube (http://www.google.com/get/videoqualityreport/ http://www.google.com/get/videoqualityreport/), and Level3 (http://blog.level3.com/global-connectivity/observations-internet-middleman/ http://blog.level3.com/global-connectivity/observations-inte...) and you can be sure those aren't the exception. Instead of fulfilling their obligations to provide advertised bandwidth to their paying customers (who only pay them in order to access the content provided by someone else), the last-mile providers are using their customers as hostages while they negotiate ransom from the content providers. While they also report record profits (sending their customer's payments back to stockholders instead of into the network), because the economics of their business are compelling on both the consumer side (low expectations, minimal support costs, essentially no competition) and on the technology side (network technologies increase capacity-per-$ as fast or faster than traffic grows). Oh, also, 99% of the last-mile providers operate a sanctioned monopoly that has let them build and grow their networks with essentially guaranteed income from rate-payers and essentially no competition. Hence adding Internet is relatively low-cost and highly-profitable, but apparently not profitable enough.
- dclowd9901 12y ago
  > That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Because that's Verizon's business: to provide internet. That's not up to Netflix, who is an internet-based content provider. If Verizon wants to charge the fuck out of their customers to beef up their network so they are the best Netflix streamer out there, then they're free to do that. People want Netflix because Netflix is doing its job. People can't get Netflix because Verizon's not doing its job. Simple as that. To put it another way, if Netflix was the bottleneck (and thus, the problem), Verizon would only have to show that their bandwidth from Netflix is bottlenecked by Netflix' lack of serving capacity. Of course they can't show that, because that's not the case, and thus not the problem.
- barrynolan 12y ago
  Quick question. When you signed up to your say 20meg broadband contract, did the contract exclude certain services - YouTube, amazon Prime, Netflix?
- FollowSteph3 12y ago
  What about fedex or ups? The customer is paying for x bandwidth and not getting it.
- ColinDabritz 12y ago
  Thank you for the position, this comes up regularly, and I love seeing it discussed and dismissed. It's not that Netflix is 35% of global internet traffic. 100% of my ISPs "global bandwidth" should be content of the end users choosing (usually requests). The user is paying for the right to request this content, and have it delivered. Wether its Netflix, gaming, news, poltiics or Zombo.com doesn't enter into it. At 35% though, it might make sense for Netflix to enter the ISP business. This framing is a tool that ISPs and their supporters use to excuse charging twice for the same service, and more importantly, controlling users access to content through discrimination. Thanks again for the writing prompt though.
- wpietri 12y ago
  Does the devil need any help? Does Verizon's PR department? You might ask yourself why you feel obliged to take the side of an enormously wealthy oligopoly. But to answer your question: I am already paying my ISP to deliver all packets I request to me, up to certain limits that my ISP agreed to when they started my service. If my ISP is failing to live up to that bargain, I'd like to know. Also, the "poor Verizon, helpless in the hands of Wall Street" thing verges on obscene. That they are in a position to shake down people for more money does not justify them doing so. If they don't want to be in the ISP business, they can get out of it. They are also welcome to find new ways to create value. But running a protection racket is not in any way morally defensible.
- fnordfnordfnord 12y ago
  >why does Verizon have to subsidize their costs of business? Verizon isn't some kind of customer owned co-op. It is a profitable for-profit business that has (over)sold a service. They need to deliver that service, not complain when people use it.
- valas 12y ago
  Your argument is invalid, because Verizon holds monopoly in many areas for high-speed broadband. I would entertain your argument only if there was consumer choice. In such case we could perhaps experiment with different business models where content provider subsidizes last mile. Without it, consumers are essentially hostage to a monopoly, which is unacceptable.
- curun1r 12y ago
  Netflix is half the reason why I'm paying Verizon anything. If Netflix is paying for the network, why should any of my money go to Verizon? Well, actually, none of my money goes to Verizon. My provider manages to avoid all warnings from Netflix and the graphs from Google show basically 100% of users getting the HD stream. They give me a legitimate 100mbps symmetric (well, almost: http://www.speedtest.net/my-result/3546047591 http://www.speedtest.net/my-result/3546047591) and I'm paying under $40/mo. If my niche provider can offer that service, Verizon can offer that at scale. The fact that their service is a) worse and b) more expensive means either a) they're less competent in running the business or b) they're overcharging their customers. Either way, I have zero sympathy for them. They're a network provider and people are paying them to connect to the internet. People aren't paying them to connect to the subset of the internet that's willing to pay Verizon. It's already bad enough that TV viewers are seen as the product rather than the customer. Verizon's stance here is, once again, treating their subscribers as a product to be leveraged rather than a customer who's interests matter. That they can do it is due to their mono/duo-poly that keeps customers from having a choice of providers. But that doesn't make it any less offensive. Basically, it boils down to this: if the service costs you more to provide, then charge more to your customers. You can even have a streaming plan that charges customers who stream more than customers who don't. But treating your subscribers as a resource that can be pimped out to all the services on the internet is offensive.
- korzun 12y ago
  If anything ISP's should be thankful that NetFlix exist. They have subscribers because those subscribers want to use stuff like NetFlix. Take away all the good 'content' and why bother having an ISP? Mobile phone can check emails too.
- Natsu 12y ago
  > if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Verizon is paying to provide its own customers with what they want (speed that enables access to Netflix and other entertainment), not to subsidize Netflix. Netflix pays its for its own high-speed internet access already. Verizon offers high-speed access and then doesn't pay for it. Therein lies the conflict.
- aaronchriscohen 12y ago
  Just imagine that you had more than one choice of high speed Internet provider (unlike 95% of Americans who are stuck with the one cable company that happened to successfully bribe their local municipality) and think about what would happen to this issue. Competition would force the ISPs to knock this shit off. It's a product of their entrenched geographic monopolies. Period.
- pdonis 12y ago
  > the business reality is that the ARPU per subscriber is decreasing every year at a rate lower than additional subscriber acquisition can sate...Carriers are not able to sell consumers additional services (no matter how hard they try) In other words, the ISPs are doing a bad job of running their businesses, but rather than do a better job, they want others to pay them more without offering any additional value.
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- Nursie 12y ago
  >> If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Netflix isn't the driver, the Verizon customers who want to use netflix are the driver. They're paying Verizon to get them access to cool stuff like Netflix. It sounds to me like those customers are not getting the service they expect.
- espadrine 12y ago
  Some of these issues feel like a grey area to me, such as peering agreements. However, this move from Verizon felt very black and white. Thanks for trying to be Devil's advocate! However, I feel that this issue is one of misrepresentation. Netflix wants Verizon to be a common carrier, and have its revenue increase linearly with the amount of data it transfers. In that case, Verizon would happily increase their revenue by providing actually faster Internet, because customers would pay more per day if they downloaded more per day, since they'd then pay a fixed amount per GigaBit. On the other hand, I don't understand what Verizon wants to be. I feel like the type of company it wants to be is only sustainable in the very short run, highly dependent on other companies such as Netflix, and incapable of good PR because what clients want, and what they subscribe for, is impossible to deliver (the amount of data clients want to transfer is always above whatever they can promise to offer). That market positioning is tolerable for instant Wall Street growth, but it is detrimental to customers, to website owners, to peering partners, and to the long-term future of the company, were a reasonable competitor to enter the market. I also feel there could be a middle ground, such as Verizon asking customers from every city to tip in for a massive city-wide network upgrade. That would be good for PR and customers would happily donate. It seems fitting, because from what I understand, the real money eater is a one-off upgrade; it doesn't increase maintenance costs much, if at all.
- Terretta 12y ago
  Why add a viewpoint that is not valid? That's like saying climate change deniers have a “valid” viewpoint when you can find 3 crackpots in a sea of 100,000 scientists. You buy an Internet connection from an Internet service provider to consume the Internet. Until the word Internet is dropped from “ISP”, that's the service they sell. They have no more rationale to charge Netflix to “access” Internet service purchasers than they have to charge your grandmother to deliver you her email. And about that profit motive, cable already raises prices at 4x consumer price inflation: “Since the FCC began compiling these reports 19 years ago, the cost of basic, expanded basic and the next-most-popular tier of service have risen at average annual clips of 4.3 percent, 6.1 percent and 5.1 percent, respectively. Inflation has grown at an average annual pace of just 2.4 percent over that time period.” http://www.siliconbeat.com/2014/05/19/pay-tv-prices-continue-to-outpace-inflation/ http://www.siliconbeat.com/2014/05/19/pay-tv-prices-continue...
- supercanuck 12y ago
  >That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Because Netflix has a higher brand affinity and customers of Verizon will be outraged due to what they perceive is shitty customer service buy a quasi monopoly. The consequences is damage to Verizon's business because customers would switch if they could, but they can't. Verizon doesn't HAVE to subsidize Netflix's business but they should if they don't want a legion of pissed off Netflix customers who feel trapped by their ISP.
  - hga 12y ago
    "if they don't want a legion of pissed off Netflix customers who feel trapped by their ISP" This is supremely dangerous to Verizon. Taking the US political area I know best, gun owning households are a majority in the US, but of course those who vote, vote first and foremost on this issue, let alone be politically active are the usual successively smaller fractions of that huge number. And starting in the mid-80s we've been able to move mountains (details on request). The last thing the big incumbent landline last mile providers want is a large percentage of the population getting pissed off and doing the above, voting when they might not otherwise bother, especially in state and local elections, voting on this issue, and becoming politically active on it. I think the incumbents' behavior is so outrageous that this is eventually inevitable, Netflix's PR attack, in part enabled by their being so big, has the potential to substantially move that day of reckoning forward, and is therefore probably the biggest thing to happen in the net neutrality fight since AT&T's Edward Whitacre opened his foolish mouth and really got the issue started 8 years ago.
- deleted 12y ago
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- jonknee 12y ago
  > Yes, ISP customers are paying for access but the business reality is that the ARPU per subscriber is decreasing every year at a rate lower than additional subscriber acquisition can sate. ARPU is going up while Verizon's bandwidth costs are going down (peer with Netflix/Google/YouTube/Facebook and a huge chunk of your traffic is taken care of). http://newscenter.verizon.com/corporate/news-articles/2013/07-18-verizon-reports-2013-2q-earnings/ http://newscenter.verizon.com/corporate/news-articles/2013/0... "FiOS revenues grew 14.7 percent, to $2.7 billion in second-quarter 2013, compared with $2.4 billion in second-quarter 2012." vs. "Verizon added 161,000 net new FiOS Internet connections and 140,000 net new FiOS Video connections in second-quarter 2013. Verizon had a total of 5.8 million FiOS Internet and 5.0 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 12.2 percent and 12.6 percent, respectively." (Revenue growing faster than new customer growth and a very high ARPU.)
- deeviant 12y ago
  If it not Verizon's responsibility to provide a internet connection, to the internet, then what exactly are their internet service customers paying for. Also, I find it interesting that netflix charges ~10-15 bucks a month, while the average internet only service plan in the 40-50$ range per month. This is a guess, but I would also say there are more Comcast/Verizon/Time Warner customers than netflix customers. The amount of money these large service providers rake in must be an order of magnitude higher than Netflix. To me, this money that the big ISP's are trying to get from Netflix looks like some sort of fee applied for forcing them to actually provide the service they promise to their customers.
Alex_MJ 12y ago
Am I the only one who thinks that this could hugely backfire from a PR perspective? The message is "The Verizon Network is Crowded Right Now." not "Verizon is Deliberately Slowing This Right Now." (or some less loaded version of that) It's bad PR for the ISPs, but combined with the fact that most people can hardly spell ISP, and that Comcast and their FCC homies keep describing the new toll booth as a fast lane, if I were a nontechnical consumer my first response would be, "What the hell are they waiting for? Put in the fast lane! I wanna watch my damn movies!"
- Karunamon 12y ago
  Which is why it's so important they used the ISP's name there. Instead of saying "congestion", they say "(ISP)'s congestion". Considering that customer satisfaction with the average telecom company is somewhere between that of the DMV and a crooked tax collector, it plays into the confirmation bias people have that they don't love their ISP, they tolerate their stupidity because its the only way to get online.
- Zancarius 12y ago
  > "What the hell are they waiting for? Put in the fast lane! I wanna watch my damn movies!" Telling a customer they're not getting what they paid for from their service provider is about as plain English as you can get. I daresay we need this sort of rhetoric, and I doubt their response will be levied toward Netflix unless they start getting letters from their ISPs saying "We're throttling you because you're watching Netflix and they won't pay up." This situation could get ugly, though.
  - macavity23 12y ago
    I hope it does get ugly, because that's the only way this 'fast lane' horseshit is going to stop.
    - DanBC 12y ago
      Or perhaps it'll just make ISPs start charging by bandwidth instead of offering "unlimited" and hoping most people don't use it.
poopsintub 12y ago
The question is why didn't they try this with Comcast before shelling out millions of dollars.
jsz0 12y ago
> "This is about consumers not getting what they paid for from their broadband provider" If I pay for a 100Mbit/sec connection from my ISP why doesn't NetFlix send me 100Mbit/sec of data? They choose to limit my speeds (via streaming) and do not offer any options to download or pre-cache video content I plan to watch. Is this a violation of network neutrality? If I ask NetFlix for 4GB of data why are they allowed to limit the speeds?
- emgeee 12y ago
  AFAIK no where in your Netflix terms of use is Netflix obligated to give you content at a specific speed or amount. They are obligated to stream you movies, not stream you movies at 100mb/sec. This is in stark contrast to ISPs who advertise 100Mbit/sec down.

by Arjuna 12y ago

josh2600 12y ago

Playing Devil's advocate here for a second: If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? I'm not taking the stance that this is correct, only querying as to why the dynamics here are such that we automatically assume Netflix is in the right. Guilt tripping Verizon into adding more routers is a major net positive to Netflix's business. Yes, ISP customers are paying for access but the business reality is that the ARPU per subscriber is decreasing every year at a rate lower than additional subscriber acquisition can sate. As Wall Street demands growth, it has to come from somewhere, and since Carriers are not able to sell consumers additional services (no matter how hard they try), they need to find another set of wallets (content providers). They're not utilities and have a profit motive, right? Again, I'm not saying this is correct, simply trying to add another viewpoint to the conversation.

LeoPanthera 12y ago
Netflix isn't sending their data to customers unsolicited. Customers are requesting that data, through a pipe which they have already paid for. It is unfair for Verizon, or any other ISP, to ask to be paid twice for the same bits. What bits I am asking for, as a customer, shouldn't make a damn bit of difference.
- sliverstorm 12y ago
  There's two ends to the pipe though. To my understanding, the upstream ends are linked largely thanks to peering, which is based on mutual benefit. At the upstream level, nobody charges other providers because everybody is interacting with everybody- sort of like, "I bought this round, but I know you'll be buying the next" so you don't worry about balancing the books. Then Netflix comes along, chews up 35% of internet traffic, and basically takes a disproportionate piece of the pie. If I've got everything in my head right, this is against the spirit of how peering is supposed to work, and so it doesn't surprise me if spats start to develop upstream. If Verizon is unhappy because they have to develop their last-mile network to meet promised speeds, that's Verizon's problem. But if Verizon is unhappy because the upstream is becoming distorted and they are becoming beholden to just one peer (Netflix) instead of an environment of free, balanced exchange- maybe that's not Verizon's problem.
  - josh2600 12y ago
    Relevant Wiki article: http://en.wikipedia.org/wiki/Tier_1_network http://en.wikipedia.org/wiki/Tier_1_network
  - Karunamon 12y ago
    The only reason we're having this discussion is because it's "one peer". A thought experiment: Let's pretend it's not Netflix for a moment. Let's pretend there's a bunch of competing streaming media services which happen to take up, combined, the same amount of bandwidth that Netflix does. In this case, Verizon would still have the same problem (if you buy that they have a problem at all, which I personally do not), except they couldn't play at being mafiosos, holding one in particular to what would be a protection racket in any other context since the load is the same amount, just distributed among many much smaller players. What would they do in this case? The fact that it's one large company gives them the ease of threate^H^H^H^H^H^H leveragi^H^H^H^H^H^H^H^H negotiating with one entity instead of upgrading their damn network like they're expected to do.
djcapelis 12y ago
If you want to play devil's advocate then let's advocate for all the devils. If Comcast wants to offer their customers video over a traditional cable network, they pay content providers. Why should the Internet be different? Shouldn't ISPs be paying people who provide the content their customers are buying?
- lukecampbell 12y ago
  I've never thought of it that way. That's a very interesting way to look at it! Isn't netflix driving business up for ISPs? The faster ISP gets business? I could be mistaken though.
  - djcapelis 12y ago
    Aren't content providers always driving up prices for content carriers? Consumers are paying for content delivery and if your business can't deliver the quantity or quality they want and someone switches to your competitors because of it that's your problem.
- josh2600 12y ago
  I think that the way the cable network works relative to the internet is a historical artifact versus modern parlance. My opinion is that precedent is not actually a guiding factor in how future arrangements should be determined. The Internet is different in many ways, but notably because cable companies aren't doing peering and don't have to deal with the complex settlement of international data trafficking.
- ganeumann 12y ago
  Remember that when the cable companies started they were competing with over-the-air TV. To convince people to switch to cable, they had to provide something valuable enough to justify the cost. Content was that thing. The reason ISPs can charge both the customers and the content providers is because we have no other choice. Where I live I have a choice of two providers: Comcast or Verizon. My choices are: use one of these two, or have no Internet. Not much of a choice.
eisa01 12y ago
If it wasnt't Netflix, it would be another streaming service or a hundred. The total capacity required would still be the same.
- josh2600 12y ago
  This is evidently not true. Streaming services are a dime a dozen but their distribution of bit volume is not even. Netflix is far and away the biggest user of bits on the Internet and other streaming services are an order of magnitude smaller. It's possible that if Netflix didn't exist someone would fill that vacancy but it's also possible that the aggregate total volume of bits transferred during streaming would be lower if Netflix did not exist.
mudetroit 12y ago
For a simple reason. Netflix has to pay for enough bandwidth outbound to supply their customers, regardless of anything else. Their customers are also paying for a certain amount of bandwidth. ISPs typically possess less total bandwidth then they sell. The problem is that the typical users usage is rising faster than the ISPs are willing to handle. If I pay for 50Mb/s, and the other end of my communication has enough bandwidth to provide it, then I should be able to get to that speed. As far as I am aware, there has been no accusations that Netflix does not have enough bandwidth to supply their customers, but that the intermediaries have oversold their networks to the point where they cannot deliver on their promises.
ljd 12y ago
An ISP's job is to provide internet access to last mile users, such as ourselves. If they choose to reduce that speed for any reason, or throttle any kind of connection they are entitled to do that but they can't complain when someone else says that is what they are doing. Personally, I think given how much public money has gone into infrastructure and the amount of money I pay in taxes it seems insane for me to first pay for the ISP's infrastructure with taxes then have to pay them again. So while they have a right to throttle, they don't have a right to throttle my connection on infrastructure that they did not pay 100% for. Which probably accounts for the majority of their infrastructure.
- josh2600 12y ago
  An ISP's job, as a private company, is to maximize shareholder value. The circuit consumers are sold is a "best-effort" connection in stark contrast to, say, a T1, which is a dedicated circuit. It's also very hard to prove that Verizon is throttling, versus, say, simply physically underprovisioning the connection. With respect to public money, I think you've hit the nail on the head. The crux of the Net Neutrality debate, to my mind, is whether these networks are public or private. If they're private, Net Neutrality is bullshit. If they're public, it's obvious. It is in consumer interest for the networks to be public, but the same could be said about the socialization of any number of industries. I'm constantly fascinated by the way folks consider socializing the telecom industry to be incredibly reasonable and socializing, say, the healthcare industry to be insanity. Edit: Maybe I need to tag all of these posts with #DevilsAdvocate to avoid being downvoted into oblivion.
  - toomuchtodo 12y ago
    > I'm constantly fascinated by the way folks consider socializing the telecom industry to be incredibly reasonable and socializing, say, the healthcare industry to be insanity. Can't I want both to be socialized?
    - josh2600 12y ago
      Where do you draw the line? What shouldn't we socialize?
dkhenry 12y ago
This is going under the false assumption that when I bought bandwidth from my ISP they didn't _really_ need to provide me with that bandwidth for realzies. This isn't netflix driving network upgrades this is Verizon customers driving network upgrades. If VZ didn't promise the customers the bandwidth they wouldn't need to upgrade their backhaul to provide it. I mean it would be like Verizon wireless charging apple to connect iPhones to their network because "I phones drive up the amount of data customers consume" How is that viewpoint even remotely considered valid ?
- lnanek2 12y ago
  Amusingly, I've heard carriers use that justification before for pushing phones other than iPhone. Well, that and Apple demands the largest subsidy of all phones. It's a position Apple can sustain because people walk in to the store and ask for Apple and want nothing else, but the carriers really want competition so they will encourage other phones when they can.
  - asn0 12y ago
    > the carriers really want competition so they will encourage other phones when they can. I've yet to meet any carrier who wants competition, for anything. Their ideal world would be that they would decide which phone the customer can have, what limited service the customer can buy, and how much it is, and take-it-or-leave it. That's how AT&T worked, and every major carrier today is a spin-off from AT&T and still thinks pretty much the same way.
- josh2600 12y ago
  ... Your wireless network service is best effort. This is why your service provider doesn't have to compensate you for dropped calls or dropped packets or towers with insufficient capacity. The word "promise" is not an accurate reading of the legal concepts at play in bandwidth purchase. Dedicated bandwidth for consumers is expensive and completely unavailable on cellular networks. Verizon also doesn't have to let iPhones connect to their network and only does so because they benefit financially from the relationship. Trust me, putting a device onto a major cellular network in the US is highly political, full of peril and financial alchemy. Source: I do lots of telecom stuff specifically around wireless.
dave_sullivan 12y ago
That's actually a really good point. Ideally, you're right -- if netflix (and internet video in general) drives growth in internet traffic, maybe it isn't fair to require service providers to upgrade their service out of hand. But then I think that rule primarily applies for a free market. I'd argue that internet providers are not currently participating in a free market and it causes real problems. Without a free market... companies need more supervision. I'll put it this way: 2 competing providers. Average internet usage keeps rising exponentially. People want faster internet. The providers either lower prices or upgrade infrastructure. Netflix is not forcing them to do anything. But then it's probably reasonable for Netflix to say "Your connection is crappy because of your internet bandwidth, it's not us..." But hey, consumers can choose. Problem here is... what are their choices? Even just one other company participating in the market that can make a similar offering (eg cable speeds) would change the whole conversation I think. Suddenly they'd be working harder to keep your business (or take you from the competitor) and they'd stop talking about more and more ways of screwing their customer and taking advantage of de facto monopoly status. The incentives are all messed up and it encourages gouging instead of innovation.
- josh2600 12y ago
  The question is: are the networks public, and therefore conduits for competition, or private, and therefore competitive infrastructure. In some capacity, the networks have to peer to hit all of the IP blocks, but that's pretty much one of the better examples of free market success (although that might be changing) and arguably quite private. In another narrative, the networks were laid with private investment (in many cases partially public funded as well) and so the question is moot (if it's all private money). Are the networks public or private and why can't we decide?
stonemetal 12y ago
>Verizon have to subsidize their costs of business I don't see that argument going very far. Netflix has an ISP and pays for their own bandwidth. Why should they pay twice for their bandwidth? If verizon has a problem with the amount of data their customers are requesting from netflix they could always disallow that or institute data caps etc.
- sadris 12y ago
  Yep, I still don't understand why land line ISPs don't charge by the MB like cell services do.
cgman 12y ago
It's like automatically charging my website visitors for my server costs because my site became more popular and using more resources. If Verizon doesn't want to upgrade - then they shouldn't. If they lose business because of it well, it's their damn fault.
baddox 12y ago
> If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? If the ISP's customers are making requests to Netflix' servers, then yes.
DanBC 12y ago
Customers should pay for the bandwidth they use. ISPs have been miss-selling Internet connectivity for many years - "UNLIMITED!!" "FAST!!" "CHEAP!!" - and now they ( and their customers) are reaping that harvest.
drzaiusapelord 12y ago
> is it really fair to treat them like every other company? Interesting question. I guess from my perspective I buy broadband from AT&T and they tell me under no uncertain terms that I have a cap at x amount of gigabytes. As a customer I expect to use all of that. >Guilt tripping Verizon into adding more routers is a major net positive to Netflix's business. As a customer it shocks me they aren't doing so. Yesterday it was Netflix, today its every kid with an Xbox1 or PS4 buying games digitally as buying physical media is out of style. What's a typical game nowadays? 20gb? That's the equivalant of many netflix movies right there, all at once. What does tomorrow hold? Why aren't they prepared for this?
- josh2600 12y ago
  I'll reiterate the problem carriers face that I stated earlier. Customer revenue is decreasing and because the market is saturated they cannot add enough customers to combat the atrophy of revenue. As shareholders expect growth every year, ISPs are forced to look for new revenue streams. If you don't think they should be doing this as a private company, reclassify them as a utility. Otherwise shareholder demand is what gets satisfied. Carriers have very specific equipment amortization patterns in their heads and they are financial models that banks accept. If carriers have to change their amortization patterns (more routers, faster) they have to change their financing which damages the value of the stock. Sure we can do this, but what does "fair" mean here? I'm trying to say that the argument is not as black and white as people make it out to be.
  - drzaiusapelord 12y ago
    >If carriers have to change their amortization patterns (more routers, faster) they have to change their financing which damages the value of the stock. Welcome to the world of business. Change is constant, you can't just tell your customers, "Whoops we didn't plan for that." I also disagree that its as hopeless as you make it out to be (in many nations 100mbps or even 1gbps unlimited internet is trivial to get). They can raise prices on customers, lower caps, throttle netflix users, etc if they're in such financial dire straits. Their competitors will love this as customers will migrate to them. Their competitors may have a more nimble management structure and can provide the data at this level. What I don't get, assuming they really are in dire straits and not trying to monetize artificial scarcity, is why don't they just push out a notice, "Due to network limitations, we are throttling streaming video users to 4mbps which is enough for medium quality 720p streaming. The investment to support 1080p streaming is impossible for us. Love Verizon." Actually, I know why they won't do this, because Comcast will pay for the router upgrades and steal all their customers once they find out. So they go around their customers' backs and try dirty dealings with Netflix and others. These guys being duopolies in most markets (substitute AT&T with Verizon in some states) just decided to not compete and simply change the rules at the FCC, which is pretty much a textbook description of collusion.
gumby 12y ago
> If Netflix is 35% of global internet traffic at peak capacity..., is it really fair to treat them like every other company? Yes it is. If you solve their problems in the general case, then that solution will also work for the next big user, and for the small users as well. If you special-case handling for them, then it will be harder for the next new entrant (who could even be a Netflix-upending upstart) to become established. They do use more resources, there is no question about that, but they also have higher costs to their ISPs. This cost could be mitigated by them running their own internal network and peering directly with other backbone providers (they already do this to some extent). But in an architectural sense that option is available to anyone (in practice, of course, nobody is doing BGP for their home network). If you believe in the original promise of the end to end network (a promise which is currently lying in the street gasping for breath) then you don't want netflix special cased. It's no surprise that Verizon (with POTS roots) and Comcast (hub and spoke cable provider) don't have end-to-end in their DNA, but rather a tollbooth model of the world. It doesn't mean we have to go along with it.
sixQuarks 12y ago
You're looking at this all wrong. It's not that Netflix is taking up 35% of all bandwidth. It's that CONSUMERS are choosing to spend 35% of their consumption on Netflix. The ISPs are punishing consumers for their choices - it's just ridiculous.
- giovannibajo1 12y ago
  On the other hand, can you swear that Netflix is doing all that it can to minimize bandwidth? There's a conflict of interest: Netflix has a vested interested in provided lightly-compressed, very-high-resolution, bandwidth-hungry movies to its subscribers, especially if it obtains 100% free peering that it demands, as bandwidth would be free for them. On the other hand, ISPs are forced to upgrade network any time Netflix unilaterally decides to increase the bitrate of the movies, without this bringing any benefit to their bottom line. For instance, if Netflix halved the bitrate of all their movies, subscribers will complain, but surely they would be able to deliver them without any buffering to everybody, and at the same time to keep free peering agreement and whatnot; they would go from 35% of total US bandwidth to 17%, and ISPs would be satisfying their customers' choice. So where do you draw the line? Surely Netflix can increase the bitrate at will, at any time; should they be "allowed" to do it any time they want, while keeping a free peering agreement? Should the ISPs be forced to upgrade their network every time?
  - sixQuarks 12y ago
    Fair point. The issue obviously isn't 100% black and white. But what the ISPs are currently doing is not the way to go about it, IMO.
  - sixQuarks 12y ago
    Fair point. The issue obviously isn't 100% black and white. But what the ISPs are currently doing is not the way to go about it, IMO.
  - raarts 12y ago
    > Should the ISPs be forced to upgrade their network every time? Come on, they have been doing this since the internet started. And in the beginning of internet some services were hugely popular as well. Keep in mind that upgrading the network costs money, but once the infrastructure is in place, moving bits is really cheap.
drusenko 12y ago
You're not as far off as you think. It seems very few commenters to this thread understand how the internet actually operates from a business perspective. When you install a server in a colo, you don't get free transit. You find a transit provider (like Level3, Cogent, or NTT) and you pay them for bandwidth. You can understand this very intuitively as most hosting services (like AWS) will charge you for bandwidth. As a service provider (like Weebly), you are paying your own transit provider for a certain amount of bandwidth, and they are covering the costs of delivering that bandwidth to (usually) anybody globally and the costs of maintaining their network. If a network gets large enough, they may often negotiate peering agreements with other networks. So Level3 and Cogent may have a peering agreement, or Level3 and Comcast may have a peering agreement. These are generally set up when two networks deliver roughly the same amount of traffic to each other, or it's considered beneficial to both parties to get the networks closer, and it simplifies the working relationship. These peering agreements can often become contentious when they become imbalanced. Very early on, I remember a fight Cogent and France Telecom had over peering -- FT felt like they were getting the raw end of the deal, and de-peered with Cogent. Cogent refused to pay another transit provider for access to FT's network and so traffic from the Cogent network to FT would drop. They resolved about a week later, with lots of unhappy customers caught in the middle. As you can see, it's simply not the case that (a) service providers never pay for bandwidth because the end-user already pays for bandwidth and (b) peering / free transit is guaranteed. Maybe I'm not understanding the nuances here, but it seems to me like Netflix is taking an ideological stance to hide behind the fact that they are trying to negotiate a better business agreement for themselves.
- whoopdedo 12y ago
  If there is imbalance between the traffic Comcast is sending to other networks versus what they receive that's because of the policy to forbid residential customers from hosting their own servers. Comcast created this situation because they wanted to force the internet to behave more like television.
  - hga 12y ago
    Exactly. The "equal traffic" concept totally fails for consumer last mile providers. In fact, it's technically more expensive for them to provide symmetrical service due to head end noise, but it also fits with their "you're supposed to consume content, especially ours, not supply it" attitude. The latter is something that more people ought to be thinking about, consumers using Netflix are not just consuming more peak bandwidth, they're competing with the video offerings of all of the big last mile providers. Although. AT&T doesn't actually offer U-verse video service to very many of their subscribers; don't know about Verizon's FiOS vs. plain DSL offerings (except that they're shedding small population states and markets as fast as they can), but the others are cable companies so they obviously do.
higherpurpose 12y ago
My ISP has provided 100 Mbps for years, and has recently brought 1 Gbps fiber. They've never complained about video services or torrents eating away their bandwidth. Guess why? Because when you're able to provide 100-1000 Mbps to each and every customer, the ~5 Mbps required for Netflix streaming is nothing.
icambron 12y ago
>If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? I don't see why not. I think it might make more sense to think of it as streaming video, the category of goods, rather than Netflix, the company. So 35% of global internet traffic is people streaming videos. And who cares that it's video; from Comcast's or Verizon's perspective, it's just an awful lot of bytes. So if the issue is the amount of traffic, it's just Verizon complaining that we're using too much bandwidth (yes, us; we're the ones watching Netflix). I get that's expensive to deliver all those bytes to my home, but that's what precisely what I'm paying for. That a huge number of those bytes comes from the same originator shouldn't enter into it. It's just a site on the internet. EDIT: Also, I wanted to add, that all of the traffic comes from the same source actually helps Verizon from a practical standpoint, since it can solve a lot of it with only a small number of interconnects. Compare to a more fragmented market, where Verizon might have to make specific peering provisions for a bunch of different 5%-market-share content providers to fulfill its customer obligations. > Guilt tripping Verizon into adding more routers is a major net positive to Netflix's business. All sorts of businesses benefit from the ecosystem of other businesses around them. If I run a store in rural Iowa and Acme Co opens a huge factory there, then I stand to make a bunch of money from all these newly employed customers. Should I subsidize Acme? [1] After all, hiring people is expensive. If I open a hardware store near a bunch of planned construction, should I pay those real estate developers? You can expand this to the whole economy being basically just a set of interdependent positive externalities. Maybe Verizon should pay Netflix for making their service more valuable? Or we can use the simpler model, in which you get to charge your customers. Verizon charges us for delivering the content we request. Netflix charges us for the content itself. Cogent (or whomever) charges Netflix for its bandwidth. Everything works. > They're not utilities and have a profit motive, right? They could charge more, and they could even charge per unit bandwidth (or tiered bandwidth) if they wanted. "My business isn't working that well" is not a good excuse to hold your subscribers hostage. You could equally use "Wall Street demands growth!" to defend Comcast's new practice of robbing banks. Imagine I bought a popular TV set in 1980 to watch broadcast content, but after I got it home, the TV maker remotely activated a previously undisclosed filter that would only show certain channels. Then they went to ABC, NBC, and FOX and said, "So guys, you want your content seen? My margins on these TVs keep going down, so somebody's gotta pay." Not cool, right? EDIT: Another point, probably the most important. The "problem" here is ridiculous: it's that demand for Verizon's product (i.e. internet access for end-users) is increasing a lot because it is becoming more useful to its customers. That's what every business wants! "We sell internet access and everyone is now using so much more internet! Whatever shall we do?" The idea that Verizon is up against some sort of profitability wall because of how popular its product is becoming and thus needs to charge the companies responsible for that increased popularity...it's simply not credible. Not sure why I didn't think of this point earlier. Edit: s/Comcast/Verizon, since that's specifically who we're talking about. [1] This actually does happen in the form of tax incentives for companies opening factories. It's a bit messed up.
byuu 12y ago
Yes, because I am paying Verizon to connect me to Netflix. If Netflix's traffic is so high, it's because lots of people want to pay Verizon to connect them to Netflix. If Netflix is so expensive, Verizon would need to raise their prices for customers; possibly offering low-bandwidth customers lower prices. If Verizon wants to give me free internet access, then it would make perfect sense to charge Netflix to deliver to me. Otherwise, Netflix paying large sums to Verizon is only going to ensure that we won't get alternatives to Netflix, because the barrier to entry will be too high for smaller startups. And if bandwidth is the issue, do you think Verizon should pay companies it primarily uploads, but not downloads, to (such as cloud hosting services)? Personally, I'd really love to see Netflix start using encrypted peer-to-peer to distribute the bandwidth. See if Verizon would be willing to cripple all VPN and HTTPS users to try and shake down Netflix.
SilasX 12y ago
I am also frustrated with people who blur a) net neutrality with b) monopolies/undercapacity issues, and so I agree that people should not be so quick to demand ISP-paid extra capacity as solutions to this, especially on grounds of net neutrality. However, I don't think it follows that Netflix must be treated any differently. The customers are the ones requesting the data. To the extent that anyone (once at capacity) should bear a cost, it should be the requester -- either through a higher fee or a smaller fraction of the pipe. In practice, that will mean "the more Netflix [or anything] you use, the slower your service". But you shouldn't "short-circuit" the process and just start punishing Netflix's packets directly just for being Netflix. Rather, it should be "this customer endures this cost [broadly defined] for using this much, regardless of what it was for".
- hga 12y ago
  But net neutrality comes into play because these big last mile providers are also offering their customers video services. That's what cable companies started out doing, after all, and Verizon and to a lessor (much lessor, I gather) extent AT&T have implemented the same business model with their FiOS and U-verse offerings. People getting their video from Netflix threatens this business, and it's pretty obvious to me that's one of the reasons we're seeing all this now, especially with Netflix getting big enough in streaming to a) pose a greater threat b) potentially have a lot of voters on their side (particularly relevant because the last mile providers are all government enabled monopolies, cable companies at the municipality level, telcos at the state and Federal level).
brownbat 12y ago
I'm more concerned about the fact that everyone seems to give priority to speedtest traffic, then abruptly chokes streaming HD. I'd really like Netflix to offer their own speedtest site that looks to the network almost exactly like streaming video, so the ISPs couldn't game the measurements.
- prutschman 12y ago
  Try http://movies.netflix.com/WiMovie/Example_Short_23.976/70136810 http://movies.netflix.com/WiMovie/Example_Short_23.976/70136...
curveship 12y ago
I've seen this argument about Netflix's oversized traffic slice, but it always seems to me like it should mean the opposite: if Netflix is 35% of the reason people sign up for broadband, isn't Netflix making broadband more valuable? People are willing to pay more for broadband because Netflix makes it worth more to them. So shouldn't the broadband providers be paying Netflix rather than the other way around? You never hear the cable TV providers complaining that a particular channel has gotten too popular. What's different here?
criley2 12y ago
"why does Verizon have to subsidize their costs of business?" Because I, a Verizon customer, have paid to access Netflix. I pay monthly for bandwidth to use as I see fit. It doesn't matter if all of the customers are using their bandwidth to go to one source. It doesn't matter: it's our bandwidth to use how we see fit. It is Verizon's responsibility to provide us with the service that we are paying for. They advertise a service, they market this service, and they charge us for the service: but then fail to deliver on their promises because they're charging someone else too? They sell us capped packages and tell us we have a set amount of data. We cannot exceed the data, because the infrastructure can't take it and we have to pay for our usage. We have to pay for our demand, that's the point of caps. Make the users pay for using. That to me implies that we are paying for a set amount of data! That we are paying for it, not anyone else. We pay for the upgrades that are necessary to deliver data to our homes. That is the point of a subscription. This is like saying: all of the telephone customers are calling Pizza Hut, so Pizza Hut needs to pay the phone company to upgrade the switches at the Phone Company. What??? We've already paid for the infrastructure required to deliver the data we're paying for.
drawkbox 12y ago
Netflix is not using the capacity, they are selling access to the content. The customers are using 35% of the traffic. The customers who pay for access to content they want. Most people want Netflix because it is a sea/wonderland of content and is replacing tv. Netflix is not consuming the content, they are providing it, the customers, who pay for the access, are consuming the content and bandwidth. Content services should not be harmed for being successful. If the bandwidth customers are desiring certain content providers it is the bandwidth providers responsibility to make sure it is available and fast, per their marketing and products.
- hga 12y ago
  "Most people want Netflix because it is a sea/wonderland of content and is replacing tv." And that's in direct competition with these big last mile providers. Cablecos by definition, and the two big telcos have their own FiOS and U-verse "TV"/"cable" video offerings (even if AT&T's coverage is meager, and both stopped their build outs except for contractual requirements when the Great Recession started). Which provides additional strong motivation to provide less than stellar service when handling Netflix packets.
asn0 12y ago
It's not just Netflix, it's also YouTube (http://www.google.com/get/videoqualityreport/ http://www.google.com/get/videoqualityreport/), and Level3 (http://blog.level3.com/global-connectivity/observations-internet-middleman/ http://blog.level3.com/global-connectivity/observations-inte...) and you can be sure those aren't the exception. Instead of fulfilling their obligations to provide advertised bandwidth to their paying customers (who only pay them in order to access the content provided by someone else), the last-mile providers are using their customers as hostages while they negotiate ransom from the content providers. While they also report record profits (sending their customer's payments back to stockholders instead of into the network), because the economics of their business are compelling on both the consumer side (low expectations, minimal support costs, essentially no competition) and on the technology side (network technologies increase capacity-per-$ as fast or faster than traffic grows). Oh, also, 99% of the last-mile providers operate a sanctioned monopoly that has let them build and grow their networks with essentially guaranteed income from rate-payers and essentially no competition. Hence adding Internet is relatively low-cost and highly-profitable, but apparently not profitable enough.
dclowd9901 12y ago
> That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Because that's Verizon's business: to provide internet. That's not up to Netflix, who is an internet-based content provider. If Verizon wants to charge the fuck out of their customers to beef up their network so they are the best Netflix streamer out there, then they're free to do that. People want Netflix because Netflix is doing its job. People can't get Netflix because Verizon's not doing its job. Simple as that. To put it another way, if Netflix was the bottleneck (and thus, the problem), Verizon would only have to show that their bandwidth from Netflix is bottlenecked by Netflix' lack of serving capacity. Of course they can't show that, because that's not the case, and thus not the problem.
barrynolan 12y ago
Quick question. When you signed up to your say 20meg broadband contract, did the contract exclude certain services - YouTube, amazon Prime, Netflix?
FollowSteph3 12y ago
What about fedex or ups? The customer is paying for x bandwidth and not getting it.
ColinDabritz 12y ago
Thank you for the position, this comes up regularly, and I love seeing it discussed and dismissed. It's not that Netflix is 35% of global internet traffic. 100% of my ISPs "global bandwidth" should be content of the end users choosing (usually requests). The user is paying for the right to request this content, and have it delivered. Wether its Netflix, gaming, news, poltiics or Zombo.com doesn't enter into it. At 35% though, it might make sense for Netflix to enter the ISP business. This framing is a tool that ISPs and their supporters use to excuse charging twice for the same service, and more importantly, controlling users access to content through discrimination. Thanks again for the writing prompt though.
wpietri 12y ago
Does the devil need any help? Does Verizon's PR department? You might ask yourself why you feel obliged to take the side of an enormously wealthy oligopoly. But to answer your question: I am already paying my ISP to deliver all packets I request to me, up to certain limits that my ISP agreed to when they started my service. If my ISP is failing to live up to that bargain, I'd like to know. Also, the "poor Verizon, helpless in the hands of Wall Street" thing verges on obscene. That they are in a position to shake down people for more money does not justify them doing so. If they don't want to be in the ISP business, they can get out of it. They are also welcome to find new ways to create value. But running a protection racket is not in any way morally defensible.
fnordfnordfnord 12y ago
>why does Verizon have to subsidize their costs of business? Verizon isn't some kind of customer owned co-op. It is a profitable for-profit business that has (over)sold a service. They need to deliver that service, not complain when people use it.
valas 12y ago
Your argument is invalid, because Verizon holds monopoly in many areas for high-speed broadband. I would entertain your argument only if there was consumer choice. In such case we could perhaps experiment with different business models where content provider subsidizes last mile. Without it, consumers are essentially hostage to a monopoly, which is unacceptable.
curun1r 12y ago
Netflix is half the reason why I'm paying Verizon anything. If Netflix is paying for the network, why should any of my money go to Verizon? Well, actually, none of my money goes to Verizon. My provider manages to avoid all warnings from Netflix and the graphs from Google show basically 100% of users getting the HD stream. They give me a legitimate 100mbps symmetric (well, almost: http://www.speedtest.net/my-result/3546047591 http://www.speedtest.net/my-result/3546047591) and I'm paying under $40/mo. If my niche provider can offer that service, Verizon can offer that at scale. The fact that their service is a) worse and b) more expensive means either a) they're less competent in running the business or b) they're overcharging their customers. Either way, I have zero sympathy for them. They're a network provider and people are paying them to connect to the internet. People aren't paying them to connect to the subset of the internet that's willing to pay Verizon. It's already bad enough that TV viewers are seen as the product rather than the customer. Verizon's stance here is, once again, treating their subscribers as a product to be leveraged rather than a customer who's interests matter. That they can do it is due to their mono/duo-poly that keeps customers from having a choice of providers. But that doesn't make it any less offensive. Basically, it boils down to this: if the service costs you more to provide, then charge more to your customers. You can even have a streaming plan that charges customers who stream more than customers who don't. But treating your subscribers as a resource that can be pimped out to all the services on the internet is offensive.
korzun 12y ago
If anything ISP's should be thankful that NetFlix exist. They have subscribers because those subscribers want to use stuff like NetFlix. Take away all the good 'content' and why bother having an ISP? Mobile phone can check emails too.
Natsu 12y ago
> if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Verizon is paying to provide its own customers with what they want (speed that enables access to Netflix and other entertainment), not to subsidize Netflix. Netflix pays its for its own high-speed internet access already. Verizon offers high-speed access and then doesn't pay for it. Therein lies the conflict.
aaronchriscohen 12y ago
Just imagine that you had more than one choice of high speed Internet provider (unlike 95% of Americans who are stuck with the one cable company that happened to successfully bribe their local municipality) and think about what would happen to this issue. Competition would force the ISPs to knock this shit off. It's a product of their entrenched geographic monopolies. Period.
pdonis 12y ago
> the business reality is that the ARPU per subscriber is decreasing every year at a rate lower than additional subscriber acquisition can sate...Carriers are not able to sell consumers additional services (no matter how hard they try) In other words, the ISPs are doing a bad job of running their businesses, but rather than do a better job, they want others to pay them more without offering any additional value.
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Nursie 12y ago
>> If Netflix is 35% of global internet traffic at peak capacity (as per the Akamai CEO's comments at a number of events), is it really fair to treat them like every other company? That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Netflix isn't the driver, the Verizon customers who want to use netflix are the driver. They're paying Verizon to get them access to cool stuff like Netflix. It sounds to me like those customers are not getting the service they expect.
espadrine 12y ago
Some of these issues feel like a grey area to me, such as peering agreements. However, this move from Verizon felt very black and white. Thanks for trying to be Devil's advocate! However, I feel that this issue is one of misrepresentation. Netflix wants Verizon to be a common carrier, and have its revenue increase linearly with the amount of data it transfers. In that case, Verizon would happily increase their revenue by providing actually faster Internet, because customers would pay more per day if they downloaded more per day, since they'd then pay a fixed amount per GigaBit. On the other hand, I don't understand what Verizon wants to be. I feel like the type of company it wants to be is only sustainable in the very short run, highly dependent on other companies such as Netflix, and incapable of good PR because what clients want, and what they subscribe for, is impossible to deliver (the amount of data clients want to transfer is always above whatever they can promise to offer). That market positioning is tolerable for instant Wall Street growth, but it is detrimental to customers, to website owners, to peering partners, and to the long-term future of the company, were a reasonable competitor to enter the market. I also feel there could be a middle ground, such as Verizon asking customers from every city to tip in for a massive city-wide network upgrade. That would be good for PR and customers would happily donate. It seems fitting, because from what I understand, the real money eater is a one-off upgrade; it doesn't increase maintenance costs much, if at all.
Terretta 12y ago
Why add a viewpoint that is not valid? That's like saying climate change deniers have a “valid” viewpoint when you can find 3 crackpots in a sea of 100,000 scientists. You buy an Internet connection from an Internet service provider to consume the Internet. Until the word Internet is dropped from “ISP”, that's the service they sell. They have no more rationale to charge Netflix to “access” Internet service purchasers than they have to charge your grandmother to deliver you her email. And about that profit motive, cable already raises prices at 4x consumer price inflation: “Since the FCC began compiling these reports 19 years ago, the cost of basic, expanded basic and the next-most-popular tier of service have risen at average annual clips of 4.3 percent, 6.1 percent and 5.1 percent, respectively. Inflation has grown at an average annual pace of just 2.4 percent over that time period.” http://www.siliconbeat.com/2014/05/19/pay-tv-prices-continue-to-outpace-inflation/ http://www.siliconbeat.com/2014/05/19/pay-tv-prices-continue...
supercanuck 12y ago
>That is to say, if Netflix is really the sole driver of Network upgrades, why does Verizon have to subsidize their costs of business? Because Netflix has a higher brand affinity and customers of Verizon will be outraged due to what they perceive is shitty customer service buy a quasi monopoly. The consequences is damage to Verizon's business because customers would switch if they could, but they can't. Verizon doesn't HAVE to subsidize Netflix's business but they should if they don't want a legion of pissed off Netflix customers who feel trapped by their ISP.
- hga 12y ago
  "if they don't want a legion of pissed off Netflix customers who feel trapped by their ISP" This is supremely dangerous to Verizon. Taking the US political area I know best, gun owning households are a majority in the US, but of course those who vote, vote first and foremost on this issue, let alone be politically active are the usual successively smaller fractions of that huge number. And starting in the mid-80s we've been able to move mountains (details on request). The last thing the big incumbent landline last mile providers want is a large percentage of the population getting pissed off and doing the above, voting when they might not otherwise bother, especially in state and local elections, voting on this issue, and becoming politically active on it. I think the incumbents' behavior is so outrageous that this is eventually inevitable, Netflix's PR attack, in part enabled by their being so big, has the potential to substantially move that day of reckoning forward, and is therefore probably the biggest thing to happen in the net neutrality fight since AT&T's Edward Whitacre opened his foolish mouth and really got the issue started 8 years ago.
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jonknee 12y ago
> Yes, ISP customers are paying for access but the business reality is that the ARPU per subscriber is decreasing every year at a rate lower than additional subscriber acquisition can sate. ARPU is going up while Verizon's bandwidth costs are going down (peer with Netflix/Google/YouTube/Facebook and a huge chunk of your traffic is taken care of). http://newscenter.verizon.com/corporate/news-articles/2013/07-18-verizon-reports-2013-2q-earnings/ http://newscenter.verizon.com/corporate/news-articles/2013/0... "FiOS revenues grew 14.7 percent, to $2.7 billion in second-quarter 2013, compared with $2.4 billion in second-quarter 2012." vs. "Verizon added 161,000 net new FiOS Internet connections and 140,000 net new FiOS Video connections in second-quarter 2013. Verizon had a total of 5.8 million FiOS Internet and 5.0 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 12.2 percent and 12.6 percent, respectively." (Revenue growing faster than new customer growth and a very high ARPU.)
deeviant 12y ago
If it not Verizon's responsibility to provide a internet connection, to the internet, then what exactly are their internet service customers paying for. Also, I find it interesting that netflix charges ~10-15 bucks a month, while the average internet only service plan in the 40-50$ range per month. This is a guess, but I would also say there are more Comcast/Verizon/Time Warner customers than netflix customers. The amount of money these large service providers rake in must be an order of magnitude higher than Netflix. To me, this money that the big ISP's are trying to get from Netflix looks like some sort of fee applied for forcing them to actually provide the service they promise to their customers.

Alex_MJ 12y ago

Am I the only one who thinks that this could hugely backfire from a PR perspective? The message is "The Verizon Network is Crowded Right Now." not "Verizon is Deliberately Slowing This Right Now." (or some less loaded version of that) It's bad PR for the ISPs, but combined with the fact that most people can hardly spell ISP, and that Comcast and their FCC homies keep describing the new toll booth as a fast lane, if I were a nontechnical consumer my first response would be, "What the hell are they waiting for? Put in the fast lane! I wanna watch my damn movies!"

Karunamon 12y ago
Which is why it's so important they used the ISP's name there. Instead of saying "congestion", they say "(ISP)'s congestion". Considering that customer satisfaction with the average telecom company is somewhere between that of the DMV and a crooked tax collector, it plays into the confirmation bias people have that they don't love their ISP, they tolerate their stupidity because its the only way to get online.
Zancarius 12y ago
> "What the hell are they waiting for? Put in the fast lane! I wanna watch my damn movies!" Telling a customer they're not getting what they paid for from their service provider is about as plain English as you can get. I daresay we need this sort of rhetoric, and I doubt their response will be levied toward Netflix unless they start getting letters from their ISPs saying "We're throttling you because you're watching Netflix and they won't pay up." This situation could get ugly, though.
- macavity23 12y ago
  I hope it does get ugly, because that's the only way this 'fast lane' horseshit is going to stop.
  - DanBC 12y ago
    Or perhaps it'll just make ISPs start charging by bandwidth instead of offering "unlimited" and hoping most people don't use it.

poopsintub 12y ago

The question is why didn't they try this with Comcast before shelling out millions of dollars.

jsz0 12y ago

> "This is about consumers not getting what they paid for from their broadband provider" If I pay for a 100Mbit/sec connection from my ISP why doesn't NetFlix send me 100Mbit/sec of data? They choose to limit my speeds (via streaming) and do not offer any options to download or pre-cache video content I plan to watch. Is this a violation of network neutrality? If I ask NetFlix for 4GB of data why are they allowed to limit the speeds?

emgeee 12y ago
AFAIK no where in your Netflix terms of use is Netflix obligated to give you content at a specific speed or amount. They are obligated to stream you movies, not stream you movies at 100mb/sec. This is in stark contrast to ISPs who advertise 100Mbit/sec down.