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Summary:

Nobody likes the taxman. The latest chapter in the fundamental disagreement between Netflix and Comcast over who should pay for the improvement of the internet unfolded Thursday.

Netflix CEO Reed Hastings
photo: Netflix

If paid peering becomes the way of the 21st century internet, don’t expect the high cost of low-speed U.S. broadband to get any better, Netflix CEO Reed Hastings declared Thursday.

Hastings, hit right at the beginning of his Code Conference appearance with questions about the comments made by his good buddy Brian Roberts of Comcast on Wednesday, reiterated Netflix’s unease with the spread of paid peering, in which content companies like Netflix pay networking companies like Comcast to ensure smooth delivery of their content to end users. Historically this has been done through a handshake agreement with no money changing hands. But Comcast is starting to throw its considerable weight around by demanding payment from content companies and the networking companies — Level 3 and Cogent, for example — that do the dirty work of routing bits over the internet, claiming that they are putting a disproportionate strain on its end-user network.

“It’s a general way of taxing the internet,” Hastings said. “They want the whole internet to pay them for when their subscribers use the internet.”

Netflix felt it had no choice to sign a paid peering deal with Comcast earlier this year, holding its nose as it did so in order to ensure that Netflix performance wouldn’t get even worse for Comcast subscribers. Not a lot of money is changing hands right now, but now that the threshold has been crossed, Hastings thinks that the fees will grow over time.

Hastings didn’t really add anything to the peering or net neutrality discussions that have been playing out over the last six months that Netflix and its supporters haven’t argued before. But it’s clear that these issues, which were once wonkish minutia discussed by a small set of networking geeks, are now drawing the attention of more and more average consumers as the U.S. contemplates the merger of Comcast and Time Warner Cable, which would consolidate the residential broadband market share across two companies that U.S. consumers already despise.

“The fundamental question is who’s going to pay for the network? And the answer is the ISP,” Hastings said.

Netflix makes up roughly 30 percent of U.S. internet traffic on a given evening, which has led Comcast to suggest that Netflix should bear 30 percent of its costs, he said. And when he suggested that if that’s the case, maybe Netflix should get 30 percent of Comcast’s broadband revenue, Comcast demurred.

Code-conference-ticker

  1. Face it. Its all about MONEY… And Com Cast want’t to get in your face. Screw you over. And take control on your Net Use.
    IF they do get Time Warner. ( I BET THEY DO). As I bet they have bought the Idiots at the FCC. And the Fools on the hill in DC.
    I know. You Know that this crap deal will go through. Just like the AT&T Dish deal will also.
    Com Cast will just do three things when they get Time Warner.
    1. Jump up and down. And say good. Lets give everyone the shaft!
    2. Lets put a Cap on there net use. And one we know 90% of the people will go over. So we can shaft them so more. And get more money!
    3. Lets slow down the net speed. And then tell everyone. We have a better speed. It’s $20.00 a month more.. So your $80.00 a month Net Bill will then be $100.00 +
    This all = Greed!~ Greed! and the B.S FCC letting it happen..
    If you really think the FCC and the Government care. WAKE UP CALL.

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    1. The FCC definitely does not care. Their local franchising rules have allowed Comcast to grab a monopoly in many local markets. It’s sort of insane to be calling for more FCC regulations to correct previously bad FCC regulations instead of asking for repeal.

      Most Americans too ignorant of all the rules in place now that shape the less-than-free market we are working with.

      Real competition would make Net Neutrality irrelevant.

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  2. DrDookieTrouser Thursday, May 29, 2014

    somebody better start PAYING level(3) for their services… this shit aint cheap, they are a public traded company that’s been losing money the last 16 years straight, at some point these companies better start coughing up some money otherwise we will SHUT THE LIGHTS OFF and it “Will take the internet a very long time to recover”…. lol, but I am not kidding
    c.q.

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  3. “The high cost of low-speed U.S. broadband” is a myth, and any real journalist knows this. Similarly, there is no tradition of SFP for out-of-balance CDNs.

    Netflix wants a free ride from ISPs to be a preferred middleman for Hollywood’s less desirable programming. That’s not going to happen.

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    1. Rock McAllister Thursday, May 29, 2014

      FUD.

      So when I pay the broadband portion of my cable bill, what exactly am I paying for? Oh that’s right, the bandwidth to get Netflix bits to my modem at the advertised speed.

      The ISPs are simply double-dipping because of there (almost there) monopoly. The Level3 data in the blog posts showed it clearly…Comcast is deliberately congesting to extort the content providers. Full stop.

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      1. Rock McAllister Thursday, May 29, 2014

        s/there/their

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    2. netflix already pays for their connection to the internet, shill.

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