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Old 02-24-2014, 05:35 AM   #1
eboydog
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Netflix and Comcast deal

Seems like just another reason Comcast is becoming a monster that needs to be stopped.

http://online.wsj.com/news/articles/...01071892041790
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Old 02-24-2014, 05:47 AM   #2
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There may be other reasons to worry about Comcast (such as its impending acquisition of TWC), but this isn't a good touchstone for that: Netflix represents about a third of all Internet traffic in the country. They were essentially competing against Comcast making Comcast pay the cost of carrying their service without appropriate compensation, due to how broken the industry is due to its failure to have its pricing based on metered service.
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Old 02-24-2014, 08:36 AM   #3
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There may be other reasons to worry about Comcast (such as its impending acquisition of TWC), but this isn't a good touchstone for that: Netflix represents about a third of all Internet traffic in the country. They were essentially competing against Comcast making Comcast pay the cost of carrying their service without appropriate compensation, due to how broken the industry is due to its failure to have its pricing based on metered service.
That bandwith is already being paid for by Comcast's customers, Google, Netflix, etc don't need to pay for it. And there is no need for metered service because the cablecos make as much money on internet service as they do on tv service. The internet is now a more valuable infrastructure than landline phone service and needs to be remain open and kept that way by the FCC.
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Old 02-24-2014, 08:40 AM   #4
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That bandwith is already being paid for by Comcast's customers, Google, Netflix, etc don't need to pay for it. And there is no need for metered service because the cablecos make as much money on internet service as they do on tv service. The internet is now a more valuable infrastructure than landline phone service and needs to be remain open and kept that way by the FCC.
Yea, comcast charges for an advertised N megabit/sec connection, then complains when people try to use N megabits.
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Old 02-24-2014, 09:29 AM   #5
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There may be other reasons to worry about Comcast (such as its impending acquisition of TWC), but this isn't a good touchstone for that: Netflix represents about a third of all Internet traffic in the country. They were essentially competing against Comcast making Comcast pay the cost of carrying their service without appropriate compensation, due to how broken the industry is due to its failure to have its pricing based on metered service.
Are you for real?

This is roughly like charging me for cell phone service, and then charging my mom to call me because she calls me a lot.

What this is, is a way for Comcast to silently charge more for internet without directly charging it to consumers. They can raise prices while dodging the consequences of raising prices (i.e. consumer loss).

It's awful for the industry and, much like credit cards doing similar things with their fee system, needs to be stopped by regulatory agencies.
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Old 02-24-2014, 10:17 AM   #6
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That bandwith is already being paid for by Comcast's customers, Google, Netflix, etc don't need to pay for it. And there is no need for metered service because the cablecos make as much money on internet service as they do on tv service. The internet is now a more valuable infrastructure than landline phone service and needs to be remain open and kept that way by the FCC.

Totally agree. I'd like to see competition beefed up with the expansion of Google fiber and other internet enabling technology.
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Old 02-24-2014, 10:21 AM   #7
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Albert Fried: TiVo Comes Out On Top In Netflix/Comcast Deal
By Victor Nguyen 7 minutes ago Benzinga

Comcast (NASDAQ: CMCSA) recently reached a deal with Netflix (NASDAQ: NFLX) to provide faster internet speed for Netflix user streaming. As part of the deal, Comcast will receive direct content streaming from Netflix. The deal gives the ability for Comcast to distribute this content in a variety of different vehicles.

Rich Tullo of Albert Fried & Company projects this deal to be a catalyst for a third company: TiVo (NASDAQ: TIVO).

Tullo believes the utilizing TIVO Set-top Boxes (STB) would be an easier bridge for CMCSA, "While streaming NFLX on CMCSA owned-and-operated Boxes has TV and Movie Rights content conflicts which we think needs to be resolved, we think enabling NFLX on TIVO boxes is really a turnkey solution."

TiVo currently provides the only STB platform to provide NFLX content and it would be ideal for CMCSA to utilize its agreement with TIVO to make the transition.

Albert Fried reiterates its rating of Overweight with a price target of $23, up 90% from its current trading price.

TIVO closed previously at $12.72 and is currently trading up nearly 3% at $13.10.
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Old 02-24-2014, 10:51 AM   #8
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Netflix represents about a third of all Internet traffic in the country. They were essentially competing against Comcast making Comcast pay the cost of carrying their service without appropriate compensation...
Are you suggesting that the money I pay to Comcast to bring me data from the internet does not include Netflix? Comcast shouldn't care if my data comes from Netflix, or fluffykittensinbaskets.com. If I pay them for X amount of data at X speed, they should provide that.
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Old 02-24-2014, 11:04 AM   #9
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Are you suggesting that the money I pay to Comcast to bring me data from the internet does not include Netflix? Comcast shouldn't care if my data comes from Netflix, or fluffykittensinbaskets.com. If I pay them for X amount of data at X speed, they should provide that.
As far as I know Comcast does what your asking, for now, even the 250Gb caps are not on, at least in the Hartford CT area.
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Old 02-24-2014, 11:18 AM   #10
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As far as I know Comcast does what your asking, for now, even the 250Gb caps are not on, at least in the Hartford CT area.
I suspect that they don't in all areas for competing streaming services. I often have trouble streaming even the low quality Hulu Plus feed on my 25 mbps service. And there has been much documented about the lack of Netflix performance in many places.

In any case, the thing I was taking issue with is the notion that somehow my service that I pay for is a costly burden to the company that I pay for the service from and that it's not fair that Netflix gets to take advantage of the connection that I pay Comcast for to bring me data from the internet.
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Old 02-24-2014, 12:49 PM   #11
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Are you suggesting that the money I pay to Comcast to bring me data from the internet does not include Netflix? Comcast shouldn't care if my data comes from Netflix, or fluffykittensinbaskets.com. If I pay them for X amount of data at X speed, they should provide that.
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As far as I know Comcast does what your asking, for now, even the 250Gb caps are not on, at least in the Hartford CT area.
ISPs may give you what they say you pay for but many certainly do not provide what consumers expect or think they are paying for. I have Frontier DSL at 6Mbps in the morning (6am ish), it is almost always 6Mps in the evening it is always down to 1-1.5 Mbps and streaming is almost impossible. My friend with TWC 15 Mbps service has about the same results except in the evening hers only drops to 2-3 Mbps.

Of course both of our services say "up to" X Mbps so technically our ISPs are providing what they said they would. We both know there is no issue with our lines or home equipment and that it is an upstream capacity problem as our services work fine and at or near the rated Mbps speed when most people are sleeping/not using the Internet.

This deal between Comcast & Netflix may actually be good for Netflix users on Comcast's system but what does it do to those who want to use Hulu+, Amazon, Vudu, etc.?
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Old 02-24-2014, 03:15 PM   #12
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For all the Chicken Littles out there, this is a must-read. The reporting about this deal by the clueless media has been laughable.

http://finance.fortune.cnn.com/2014/...-comcast-deal/
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Old 02-24-2014, 03:25 PM   #13
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For all the Chicken Littles out there, this is a must-read. The reporting about this deal by the clueless media has been laughable.

http://finance.fortune.cnn.com/2014/...-comcast-deal/
Look, the bottom line is that I pay Comcast (or whatever other ISP) a certain amount of money to provide me a certain internet speed to whatever internet content I choose. If there are technical reasons why content I want is being slowed down, it should be up to the ISP to fix it. The fact that Netflix has to pay anything at all to Comcast to fix this issue is a big problem for me, whether it's technically a "net neutrality" issue or not. Comcast makes a ton of money, and they should have to spend some of those mega-profits of theirs on the needed network infrastructure upgrades.
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Old 02-24-2014, 05:35 PM   #14
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Look, the bottom line is that I pay Comcast (or whatever other ISP) a certain amount of money to provide me a certain internet speed to whatever internet content I choose. If there are technical reasons why content I want is being slowed down, it should be up to the ISP to fix it. The fact that Netflix has to pay anything at all to Comcast to fix this issue is a big problem for me, whether it's technically a "net neutrality" issue or not. Comcast makes a ton of money, and they should have to spend some of those mega-profits of theirs on the needed network infrastructure upgrades.
Except if Netflix uses MUCH more bandwidth than most other internet sites, causing Comcast or other network providers to spend money (to give Netflix customers a better experience) without any return to upgrade their network, this is a problem or will become a big problem as others sites start to use the internet to provide HDTV service. This is a problem with any all-you-can eat type service, and to just blame Comcast or any other network providers for not spending more money without any return of capital is wishful thinking, what if you were a stockholder in Comcast, your outlook may be different. I don't know what Comcast internal ROI is so I guess if it was 50% per year I would be more in agreement with you.
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Old 02-24-2014, 06:26 PM   #15
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Except if Netflix uses MUCH more bandwidth than most other internet sites, causing Comcast or other network providers to spend money (to give Netflix customers a better experience) without any return to upgrade their network, this is a problem or will become a big problem as others sites start to use the internet to provide HDTV service. This is a problem with any all-you-can eat type service, and to just blame Comcast or any other network providers for not spending more money without any return of capital is wishful thinking, what if you were a stockholder in Comcast, your outlook may be different. I don't know what Comcast internal ROI is so I guess if it was 50% per year I would be more in agreement with you.
I am going to have to somewhat disagree with you. I look at Internet access just like any other utility. The company providing the service should have to build their supply pipes around peek demand just like any other utility. Would you accept your water company saying we decided to put in a 1 inch line cause it was cheaper a 1 inch line is fine for any one house but of course if 20 houses start taking showers and flushing toilets at the same time the line will not be able to keep up with demand. Same idea for a natural gas line or how about if the electric company decided to only build enough capacity for 1/2 peak demand and just turned the power off for some people when the demand got to high?

The only reason ISPs don't provide enough band width is because we allow them to get away with it by not regulating it. If an ISP wants to sell a 6, 15, 30, or whatever Mbps service it should be obligated to provide that speed virtually 100% of the time. Regardless what the price is, if it is metered or not there will always be a peek demand period and the ISP should be required to deal with it, just like any other utility has too.
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Old 02-24-2014, 06:40 PM   #16
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For all the Chicken Littles out there, this is a must-read. The reporting about this deal by the clueless media has been laughable.

http://finance.fortune.cnn.com/2014/...-comcast-deal/
Exactly.

It all just shows that the internets doesn't discriminate between information and mis-information. A bit is a bit.
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Old 02-24-2014, 06:44 PM   #17
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Are you suggesting that the money I pay to Comcast to bring me data from the internet does not include Netflix? Comcast shouldn't care if my data comes from Netflix, or fluffykittensinbaskets.com. If I pay them for X amount of data at X speed, they should provide that.
Now Netflix is placing their content inside of the Comcast network. Before, without support from Comcast, users saw how bad streaming was coming from external CDNs that Netflix was also paying. While it may be a bad precedent, Netflix was already paying 3rd parties to deliver content to Comcast customers. Now they are just paying at the source. The idea that this will raise the cost of Netflix is also a misnomer. Netflix would probably love to pay the ISPs directly instead of the CDN companies. It would give them direct access to customers with guaranteed high quality streaming.
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Old 02-24-2014, 09:32 PM   #18
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This is roughly like charging me for cell phone service, and then charging my mom to call me because she calls me a lot.
If you both have cell phones, you DO both pay.

(Note, I'm not completely defending the deal... I can see arguments on both sides.)
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Old 02-24-2014, 09:48 PM   #19
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I am going to have to somewhat disagree with you. I look at Internet access just like any other utility. The company providing the service should have to build their supply pipes around peek demand just like any other utility. Would you accept your water company saying we decided to put in a 1 inch line cause it was cheaper a 1 inch line is fine for any one house but of course if 20 houses start taking showers and flushing toilets at the same time the line will not be able to keep up with demand. Same idea for a natural gas line or how about if the electric company decided to only build enough capacity for 1/2 peak demand and just turned the power off for some people when the demand got to high?

The only reason ISPs don't provide enough band width is because we allow them to get away with it by not regulating it. If an ISP wants to sell a 6, 15, 30, or whatever Mbps service it should be obligated to provide that speed virtually 100% of the time. Regardless what the price is, if it is metered or not there will always be a peek demand period and the ISP should be required to deal with it, just like any other utility has too.
Exactly. ISPs should be treated exactly like the power utility, water utility, or traditional telephone company. They all have to build their infrastructure for peak demand and charge everyone the same. The fact that ISPs aren't classified and regulated as common carriers is completely unacceptable, unless there is TRUE competition in the market like what is happening in Austin. If an ISP is a virtual monopoly in a particular market, then they should have to be regulated as a monopoly in that market.
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Old 02-24-2014, 10:07 PM   #20
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I am going to have to somewhat disagree with you. I look at Internet access just like any other utility. The company providing the service should have to build their supply pipes around peek demand just like any other utility. Would you accept your water company saying we decided to put in a 1 inch line cause it was cheaper a 1 inch line is fine for any one house but of course if 20 houses start taking showers and flushing toilets at the same time the line will not be able to keep up with demand. Same idea for a natural gas line or how about if the electric company decided to only build enough capacity for 1/2 peak demand and just turned the power off for some people when the demand got to high?

The only reason ISPs don't provide enough band width is because we allow them to get away with it by not regulating it. If an ISP wants to sell a 6, 15, 30, or whatever Mbps service it should be obligated to provide that speed virtually 100% of the time. Regardless what the price is, if it is metered or not there will always be a peek demand period and the ISP should be required to deal with it, just like any other utility has too.
You are correct BUT at least in my town I pay for the amount of water I use, so if water uses go up the water co gets more money to make sure we all have full water supply, the internet providers charge the same price for the same speed to everybody, so if I use 10 times what you use your cost is help paying for my use, if everybody use went up be a factor of 10 then the provider would have to charge more to keep everybody happy and upgrade the system. In the long run you can't get something for nothing, somebody has to pay, so it would be the users or the stockholders or people feeding the internet like Netflix. Most mobile internet is metered and you purchase what you think you need, (1Gb 5Gb etc per month) go over that and you pay more. Why would Comcast be any different except it is less costly to provide more data by wire then OTA, as mobile phone Co. have to do.
If the internet providers became a regulated utility than the price to users would be fixed with a guarantee ROI to each provider, as the cost went up the price you pay would go up, and competition would not exist, now at least I have ATT U-Verse available to hold Comcast feet to the fire every two years.
Someday the internet may become a regulated utility, but I not sure that would be an advantage to most of the users. Now I pay $139 for Internet blast, a phone line with no long distance charges (USA) and extended cable with HBO and one cable box, I remember in the old days paying well over $100 for just my phone and long distance charges.
Note: the $139 is before taxes and other bull charges on my cable bill.
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Old 02-25-2014, 12:26 AM   #21
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I am going to have to somewhat disagree with you. I look at Internet access just like any other utility. The company providing the service should have to build their supply pipes around peek demand just like any other utility. Would you accept your water company saying we decided to put in a 1 inch line cause it was cheaper a 1 inch line is fine for any one house but of course if 20 houses start taking showers and flushing toilets at the same time the line will not be able to keep up with demand. Same idea for a natural gas line or how about if the electric company decided to only build enough capacity for 1/2 peak demand and just turned the power off for some people when the demand got to high?

The only reason ISPs don't provide enough band width is because we allow them to get away with it by not regulating it. If an ISP wants to sell a 6, 15, 30, or whatever Mbps service it should be obligated to provide that speed virtually 100% of the time. Regardless what the price is, if it is metered or not there will always be a peek demand period and the ISP should be required to deal with it, just like any other utility has too.
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?
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Old 02-25-2014, 12:56 AM   #22
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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.
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.
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Old 02-25-2014, 05:20 AM   #23
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That bandwith is already being paid for by Comcast's customers
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.

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Google, Netflix, etc don't need to pay for it.
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.

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And there is no need for metered service because the cablecos make as much money on internet service as they do on tv service.
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.

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The internet is now a more valuable infrastructure than landline phone service and needs to be remain open and kept that way by the FCC.
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.


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Are you for real?
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.
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Old 02-25-2014, 08:14 AM   #24
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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.
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.
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Old 02-25-2014, 09:55 AM   #25
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As for local-level regulation. Consider how well local franchise agreements are keeping the cable cos. in line.
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.
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Old 02-25-2014, 10:44 AM   #26
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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.
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Old 02-25-2014, 11:18 AM   #27
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Getting bent out of shape about this agreement just shows that you have no idea how the internet actually works.
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/net...t-competition/

Last edited by tarheelblue32 : 02-25-2014 at 11:42 AM.
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Old 02-25-2014, 12:02 PM   #28
dlfl
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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.
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.
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Old 02-25-2014, 12:29 PM   #29
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Originally Posted by tarheelblue32 View Post
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/net...t-competition/
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.
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Old 02-25-2014, 12:31 PM   #30
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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.
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.
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