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Summary:

Comcast’s CEO was not exactly on friendly ground Wednesday, as tech insiders pushed him to explain his pending takeover of Time Warner Cable and his commitment to fast broadband.

Brian Roberts Comcast
photo: Comcast

Faced with difficult questions about his company’s pending takeover of Time Warner Cable — which would combine the two largest cable internet providers in the U.S. into a company consumers will likely hate twice as much — Comcast CEO Brian Roberts made one thing very clear: his company is determined to sit directly in the middle of the tech world.

Roberts, speaking at the Code Conference Wednesday, said Apple co-founder Steve Jobs once told him that Comcast “should be the best dumb pipe,” a common sentiment in the tech industry that internet service providers should get out of the way of the content and device industries and just provide reliable broadband service. But avoiding that low-margin fate has been a telco vow for decades, and Roberts made it very clear that Comcast wants to be “the best pipe.”

That means it wants to preserve a gatekeeper role. In a series of analogies, Roberts likened his company’s role to that of a postmaster, pointing out that Netflix pays hundreds of millions of dollars to mail DVDs to its customers but now expects to be able to deliver the same content over the internet for free.

“They would like it all to be free. I would like to not have to pay for cable boxes,” he said. Delivering bits over a pipe seems just a wee bit more cost-effective than paying the energy and labor costs of physical distribution, but Roberts didn’t get into that.

What should it cost to deliver content over the internet? It’s a contentious question for several reasons. One, of course, is the pending merger, which we believe would hurt broadband consumers by reducing competition and decreasing the incentive for Comcast to upgrade its networks over time. Then there is the debate over net neutrality and paid peering, which are separate issues but ones in which Comcast finds itself in opposition to a lot of tech and new media companies.

Perhaps it’s not surprising, then, that Roberts greatly preferred to talk about the traditional television landscape compared to broadband issues, although interviewers Walt Mossberg and Kara Swisher — aided by audience questions — did their best to force him to talk about broadband.

Code-conference-ticker

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  1. These companies keep getting bigger and bigger.
    Leslie

  2. PhiladelphiaFreedom Wednesday, May 28, 2014

    I pay Netflix for content and delivery of DVDs. Some of that they pay to the Post Office on my behalf.

    I pay Comcast for Internet.
    I also pay Netflix a lower amount for streaming content than for DVD delivery.

    Netflix doesn’t have to pay the Post Office for delivery of streaming content on my behalf. And they shouldn’t have to pay Comcast to stream to me because I’ve already paid Comcast directly for Internet.

    Comcast is making Netflix pay them to stream to me on my behalf. Using the money that I paid to Netflix.

    In other words, Comcast is charging me twice for the same Internet.

    Comcast has to pay for cable boxes. Comcast makes me pay for the cable box, so Comcast is purchasing the cable box and taking title on it and then leasing it to me.

    Comcast should charge ESPN a cable box access fee – charging ESPN for the right to use the cable box that I am already leasing from Comcast.

    Why not? ESPN would raise their content price to Comcast who would then pass it along to me the consumer. Why not double dip on the cable box?

    Guess who the dumb pipe is?

    1. be careful if Netflix doesn’t pay for it then you will be paying twice because your future rates will increase. Someone has to pay for the increased traffic. Don’t be stupid let Netflix pay.

    2. There is an elephant in room called Netflix which is hogging a large part of the entire internet system. You do pay more for postage on larger items, and certainly not the same as a letter. Mr. Roberts analogy is correct.

      1. Netflix isn’t ‘hogging’ anything. Netflix’ customers are choosing to use the Internet connectivity they have paid for to connect to Netflix. It is pull, not push. Comcast is making BOTH ends pay to stream the SAME bits.

        Commonly known as ‘double dipping’.

        1. You are incorrect. The sender always pays.

          Comcast offers you a much lower cost as a residential customer with the provision that you cannot run a server. This is specifically to contain the number of packets you transmit that they have to deliver. Depending on their peering agreements, they may have to pay for any packet you transmit to a destination off their own network. They never have to pay for a packet coming in to you.

  3. Funny. If Comcast is the postmaster, then its customers shouldn’t be paying for their set top boxes or delivery – just like they don’t pay for their mailbox and letters.

    Oh – and I heard post offices are close to dead around the world. Wouldn’t want to be compared to them these days anyway.

  4. “Delivering bits over a pipe seems just a wee bit more cost-effective than paying the energy and labor costs of physical distribution, but Roberts didn’t get into that.”

    The more apt riposte is that USPS, unlike Comcast, does not charge mail RECIPIENTS for the privilege of having mail delivered.

    1. Exactly. In the case of the Post Office (and UPS, etc.), only one of the parties pays for the delivery, not both.

  5. The thing is that they’re already being paid. They sold a connection to Netflix, etc. and Netflix pays them for it.

    This is no different than the cellular carriers selling unlimited plans and then deciding to stop offering them. Let’s hope consumers are more resistant to those shenanigans this time.

  6. So Roberts fails to see that the end user is paying the postman to deliver the content not the content provider…did anyone ask him about that?

  7. Did you actually expect any other response?

    Just look at this history. Cable companies got into the broadband business because it was a fairly profitable way to reuse existing infrastructure that supported their primary cash cow, but as always, the world evolved and Content Owners wanted more money at the same time as customers were starting to use broadband for content delivery rather than the cable companies distribution system. So, if they aren’t making money off of cable anymore, then they have no choice except to extract it from the secondary business.

    And as much as we want them to be dumb pipes, it will never happen because dumb pipes aren’t as profitable as what they are currently doing and I never met a company that was altruistic enough to screw themselves and their investors for a noble ideal.

    I hate these folks with a passion, and these latest rounds have only incensed me, but I never had any doubt they would anything other than what they are currently doing.

    1. DrDookieTrouser Madlyb Friday, May 30, 2014

      level(3) is a public company that has been losing money for 16 straight year essentially screwing over their shareholders in order to be “the low cost provider you can count on”

      <>

  8. Comcast or any other internet service provider has the right to charge fairly for their service like any other vendor. That being said, they need to choose their pricing model in a transparent way:

    1. Stay with the current bundled model: consumers and service providers pay for their end of the box and bandwidth.
    2. Unbundled pricing: parties pay for their end-point boxes some per-packet fee between the two parties. I pay for what I send, Netflix pays for what they send. I am open to paying for my QOS and Netflix can pay for theirs. The parties in the middle figure out their shipment charges to each other.

    The model cannot change everyday. We have followed (1) so far as billing and tracking is simple/easier/cheaper.

    On the merger side, I think that it will certainly be a disaster for the consumers. We pay the some of the highest prices and get some of the poorest service in the entire developed world. Somebody needs to show how the consumer wins in the pending deal.

  9. Nationalize all broadband just like the Postal Service and then we can talk. He’ll work for a public salary and pension right? Thought so – false analogies are false.

  10. Hey Bri….I am paying the postman. Your not keeping up your end of the bargain.

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