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Netflix and Comcast deal

Discussion in 'TiVo Coffee House - TiVo Discussion' started by eboydog, Feb 24, 2014.

  1. dlfl

    dlfl Cranky old novice

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    This could be viewed as just another example of deceptive advertising (that is when service described as "up to X Mbps" is actually only a fraction of X Mbps during the time period that really counts). Note that even competition in a free market doesn't prevent deceptive ads. Just consider the next ad you see for a delicious burger that is shown twice as thick as the real thing. And aren't there already regulations or laws that are supposed to prevent false advertising? If they don't work for burgers, would they work for ISP's?

    I don't know what the answer is for getting good performance at a reasonable price. It can't be the free market in most of the country because of infrastructure limitations (local monopolies). And the thought of making it a regulated utility scares me too. Or does Google have enough money to save us all?
     
  2. tarheelblue32

    tarheelblue32 Active Member

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    I'd rather have true free market competition. But if we can't have that, then I'd rather have a regulated monopoly than an unregulated monopoly every day of the week and twice on Sundays.
     
  3. bicker

    bicker bUU

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    Nope. This wasn't a matter of bandwidth, but rather connection costs. That's not "paid for" by customers. This dispute was about who would pay the costs of expanding the interconnection between Netflix's service provider and Comcast.

    Sure they do, if they want their services to have superior performance. It is no different than McDonald's building a restaurant on Main Street instead of in a cheaper location behind a bowling alley two blocks away.

    As things are today, how much money companies in the United States charge is mostly a matter of the value of what they deliver as measured by their customers' willingness to pay.

    Even if we consumers don't like it.

    If that were true, then more consumer-oriented commissioners would be on the FCC. What people say they want with regard to the American marketplace and what their collective voting behaviors promulgate are often two different things.


    Real is precisely what I am. I'm not blinded by what I want. What I'm talking about is what is, not some pie-in-the-sky Consumerist wet dream.
     
  4. dlfl

    dlfl Cranky old novice

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    i hear ya but it doesn't seem that slam-dunk to me. I'm especially worried about the Feds regulating this considering the general record they've achieved lately as the gang that can't shoot straight -- plus we would have to go further in debt to establish more bureaucracy (since no existing useless bureaucrat positions will ever be re-purposed --- that's just not how government works).

    Perhaps it can be argued that state level regulatory agencies work well. I don't know. However it's hard to see how state-level regulation makes sense for the internet.

    As for local-level regulation. Consider how well local franchise agreements are keeping the cable cos. in line. :rolleyes:
     
  5. tarheelblue32

    tarheelblue32 Active Member

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    A good start would be to stop allowing ISP lobbyists to write laws that prevent local municipalities from building their own fiber networks to compete with the incumbent monopolists.
     
  6. JosephB

    JosephB Member

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    This agreement is nothing new. This is exactly how the internet works. Netflix is simply paying Comcast directly instead of paying Cogent to connect them to Comcast. This is *exactly* how Akamai makes money. They pay all the ISPs for these types of connections and then content providers like Apple pay Akamai.

    Getting bent out of shape about this agreement just shows that you have no idea how the internet actually works.
     
  7. tarheelblue32

    tarheelblue32 Active Member

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    And you apparently have no idea what the implications of this deal really are. What I know is that it means customers are going to get screwed again to increase the profits of the already highly profitable, under-regulated, monopolistic ISPs. There will either be less choice, higher prices, or both in the future due to the seeds being planted by this deal. Forgive me if I don't like getting screwed over.



    "Traditionally, both sides have managed the traffic by gradually increasing the bandwidth and speed of their connections to one-another. ISPs often grumble about the cost but keep on upgrading to keep paying customers happy. Verizon and Comcast are suspected of dragging their feet on those upgrades in an effort to win compensation.

    Verizon and Comcast argue they should be paid by content producers responsible for generating tons of Internet traffic to help cover the cost of upgrades. Instead, Netflix offered its Open Connect boxes, which keep Netflix traffic within an ISPs own network, reducing the necessity of constantly upgrading connections with other transit providers. Verizon and Comcast don’t want Netflix’s solution — they want cold hard cash.

    Some network engineers cannot understand all the controversy about Comcast’s arrangement with Netflix. Some believe Netflix is simply shifting traffic away from third-party Cogent to Comcast directly, presumably at a cost savings. They suggest customers will be happy that streaming quality is restored and Netflix also wins a guaranteed level of performance they never had with Cogent. But that argument does not explain why Netflix was compelled to make a financial arrangement with Comcast.

    So why wouldn’t Comcast (or Verizon or Time Warner Cable) take Netflix up on its offer of free Open Connect boxes that would reasonably solve streaming problems without forcing anyone to spend a fortune on upgrades? Simply put, all three companies are direct competitors of Netflix. Helping Netflix offer a top quality streaming experience is not in the best interests of Comcast (or others) that are facing potential cord-cutting customer losses in their subscription video businesses.

    With Net Neutrality tossed out by the courts, there is little any regulator can do to resolve disputes until Net Neutrality can be properly enforced under a stronger regulatory framework. Some argue the congestion issues creating the problems with Netflix are not a true violation of Net Neutrality in any event because providers are not artificially prioritizing traffic.

    They are simply not keeping up with upgrades that just so happen to directly impact a competitor while leaving their own services unscathed. Providers also seem characteristically unconcerned about complaining customers, passing blame for the problem on to Netflix. Besides, they remind you, paying for an Internet connection alone does not entitle you to any guarantee of performance.

    With this week’s agreement between Comcast and Netflix, both AT&T and Verizon wasted no time admitting they are both seeking compensation from Netflix as well. Other providers are likely to follow.

    The Wall Street Journal reported the momentum appears to be shifting in favor of large Internet providers like Comcast and AT&T and away from content producers.

    Janney Capital analyst Tony Wible suggested Comcast’s toll booth could create a barrier for other content producers if the cable company asks for significant compensation."

    'Although there is no prioritization benefit [from the deal], we suspect that the exchange of money for resolution/performance could (if large) effectively limit competition,” said Wible. “In essence, Netflix could be trading [profit] margins for subscribers. Few others can match Netflix’s [spending budget to acquire content] without incurring massive losses. The competition may now have to cope with additional fees that sway their willingness to compete if they do not already have a large subscriber base.'

    In other words, a new Internet startup could face hard questions from investors about how it intends to cover ISP demands for compensation in return for a suitable connection to reach customers. A large venture like Netflix has enough resources to handle those costs and negotiate for a better deal while a smaller startup may not."

    http://stopthecap.com/2014/02/24/ne...oved-video-streaming-could-limit-competition/
     
  8. dlfl

    dlfl Cranky old novice

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    Unclear how much this helps. Suppose my small suburban city does build its own fiber network (at great expense to me I assume). Who will then connect to it to provide competition to the current monopoly incumbent? Or does my city have to start its own cable TV and internet operator? (Additional expense and something they have no experience doing). I know there are municipalities that have done this kind of thing but I'm skeptical that a truly honest cost accounting would indicate these systems are a better deal than the typical case.

    I've seen how sports stadiums or arenas are subsidized with taxpayer money. Perhaps a great deal for the politicians, box holders, and team owners, but not for the average citizen -- many of whom either have no interest in the sport involved or can't afford the tickets to attend.
     
  9. JosephB

    JosephB Member

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    This is just a gross misunderstanding of how peering and interconnection agreements work. The problem with the Cogent/Comcast/Verizon disputes is that for settlement-free peering (meaning no one gets paid) the traffic generally has to be symmetrical. If one side has excessive traffic in one direction, then the settlement free part of the agreement usually goes away.

    This is how the internet has worked since its inception. This is nothing new. There are no new precedents. This doesn't hurt new startups because they can always go back to a provider like Level3 or Cogent or Akamai, and when they are small their traffic will not tip the balance such that these issues arise. Once they get to Netflix's size and begin to jeopardize a Tier 1's status as a Tier 1, then they can start doing things like buying interconnections with customers' ISPs.

    Again, this is EXACTLY how Akamai and CloudFront and every other CDN on the planet works. Akamai pays Comcast, Verizon, AT&T, and others to directly connect to their networks. Then, Akamai customers pay Akamai for distributing their content (Apple being one of Akamai's biggest customers). The only difference is that here Netflix has cut out the middleman, and up until now Netflix was demanding these types of connections without paying any money. They were the only content company expecting end-user ISPs to peer for free, even though the ratios would be almost infinitely asymmetrical.
     
  10. JosephB

    JosephB Member

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    The market for business interconnection is vastly different than retail customer ISPs. I promise you would be able to find a vendor who would sell you IP transit in your hypothetical.
     
  11. bicker

    bicker bUU

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  12. andrewc2

    andrewc2 New Member

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    Ooh I've always wanted a 5gb "flexible" cap...
     

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