5 reasons the FCC might be wrong about net neutrality

47 Comments

This week the FCC passed new rules on net neutrality, which were essentially designed to limit the ability of internet service providers (ISP) to either slow down or boost the speeds of websites. While many experts praised the ruling, not everyone was thrilled by the outcome.

https://twitter.com/mcuban/status/571426786652729344

On this week’s Structure Show podcast, Mark Cuban — the billionaire businessman who made his name in tech and now owns the Dallas Mavericks and is featured on the television show Shark Tank — came on to opine on net neutrality and why he thinks the new rules are bad for the internet and bad for competition. What follows are a couple takeaways on why Cuban believes net neutrality will do more harm than good.

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1. The internet is working fine the way it is

“Look, I’ve had my same position on net neutrality for more than ten years and that is I think what is happening on the net works. I mean, I was involved in the internet right when it started. We started Audionet, which turned into Broadcast.com back in 1995 and for the past 20 years things have worked. And now the net neutrality folks seem to be getting some momentum creating the perception that the big ISPs that got us to this point have now become bad citizens and they are going to ruin the internet unless they’re regulated. And from my perspective, I like the way technology goes and I like the competition and I like the way things are going. I think introducing regulations via the FCC is a huge mistake and I said so.”

2. Government bureaucracy is worse than ISP dominance

“Comcast has always had that power, right? It’s not like [company]AT&T[/company] and [company]Comcast[/company] had just recently become super big companies and they’ve changed their actions. I mean, one of the tenets of net neutrality is that no website, no legal website, should ever be discriminated against. Name me one that has been.”

3. Don’t worry about broadband providers. Worry about Google and Apple

“If you’re going to talk about concerns, what’s the fastest growing access methodology for the internet? It’s mobile, right? And who controls access to mobile? [company]Google[/company] and [company]Apple[/company]. So the far greater risk, and I still don’t think it requires legislation, but the far greater risk is OK…if Apple decides that Comcast’s app is not right, Comcast is not going to be able to reach most of their market to get access through an app to their own broadband, which is crazy when you think about it but it’s a possibility.”

4. Net neutrality laws could end up like patent laws

“For all the years that we’ve been in the tech industry since we’ve been about 8 or 9 years old, the majority of tech companies did not get involved in DC. They did not get involved in regulation. This is all a recent phenomenon. And now, everybody’s got a lobbyist, everybody’s involved, everybody’s got their opinion and I think it backfired on us, just like patent laws backfired on us. Look what happened with patents. That’s what happens when…legislation gets involved with technology. And so I just think that if you’re looking for pain points that the broadband ISPs aren’t it.”

5. Remember Janet Jackson’s infamous wardrobe malfunction? That’s the FCC for you

“What if there’s some decision that just shocks everybody … It’s happened time and time again where FCC regulations get tested, the decision goes against the FCC and they fight it for years. Just like the wardrobe malfunction from the Super Bowl in 2004, they spent money for 8 years. The FCC that you want to be the department of the internet is the company that spent taxpayer money trying to cover, debating, arguing the penalty of showing Janet Jackson’s nipple … Now those people who want to protect decency in the United States and the content that’s delivered over the internet is the purview of the FCC, where else would you go?”

47 Comments

Michael Elling

Why not disclose that Cuban is far from biased on the issue. AT&T and the Mavericks have significant commercial relationships. Also, Cuban appears on AT&T ads.

Steve King

Readers should also know that your “anti-consumer organization” AEI’s focus and objective is “expanding liberty, increasing individual opportunity and strengthening free enterprise.” You know, free enterprise, the thing that actually provides a job for you unless you are on the government dole. And by “non-ideological consumer” you actually mean “liberal consumer” since Liberalism and Progressivism are much more Ideological than Conservatism since only one of these actually has a proven track record over history.

Andrew

That is capitalism at work for you. If you want better services you better be ready to pay more money for them. It’s the same as with anything else that you buy anywhere at any given time. The market controls the demand, pricing and availability of those services. As long as there are companies getting into the digital realm (which will always happen) there will always be a demand for ISPs to serve up their content.

Sure, let’s just require that everyone get the same package, because it’s only fair. So we all should get the luxury edition of a car when we go to purchase one because its not fair that we should have to pay to enjoy those same benefits that other people are willing to pay for. Why should a car manufacturer ever tier the products that they offer?

What self-entitled, preposterous belief system has infected our country to believe that unlimited access to our services should be free from economic pressures unlike anything else in the world?

It is clear that this is a government grab for power. Like any other entity our beloved government has become concerned with one thing, self preservation, which means that it is no longer accountable to the people it allegedly represents. What kills me is that our citizens are uninformed enough to think that our government is still working for us and doing the good thing by regulating what was already working. Never mind that our government is not disillusioned by such a false sense of trust when it comes to the American people. Don’t be disillusioned by the feel-good story line of “protecting the internet” when all evidence simply states otherwise.

Nissan Thomas, Esq.

Mark Cuban is an idiot!! Netflix paid Comcast for faster access, so the issue of the internet was working fine the way it was, is not accurate. Smaller start ups would have to come up with more resources to play in this unregulated world, and those with deep pockets would survive, while the rest would vanish, just like Comcast, ATT, and Verizon would want. Less competition, so that they can charge consumers higher fees.

Chris

So who honestly believes their internet is going to get better and/or cheaper as a result of these new government regulations?

kemorr

While Google is very good at search, it’s also very easy to point your browser to any of several other search engines out there, same with any of their other services. And for Apple, the mobile device industry is incredibly competitive and the personal computing space also. Google and Apple make a lot of money in very competitive markets because people freely choose them over several other competing products in their respective markets. This is a perfect example of why competition is good. This is in many ways the antithesis to the broadband provider market in many places.

Dave

This article is pretty terrible. #3 basically lasts out what Verizon, Comcast and AT&T were hoping to do with ‘fast-lanes’.

I hope Google puts a giant hole in AT&T’s bottom line.

Matt

AT&T net income in 2014 = $6.2 billion
Google net income in 2014 = $14.4 billion

Now who do you think wields more power over the internet? I would be equally scared giving more and more control to Google as I would giving it to AT&T…

yonian

Readers should know that this study was done for the American Enterprise Institute, a Koch brothers financed anti-consumer organization. Comcast’s allies are going to flood every public forum with misleading comments like Richard Bennet’s and it’s likely that libertarians will agree automatically because “government is always worse than private industry”. Non-ideological consumers should know better. Fasten your seat belts, we’re in for a bumpy ride. These guys have unlimited money and they will never give up.

Joe Cruz

Cuban is DEAD wrong. The Internet has now become a necessity, not a luxury. The ISPs (whose margins are said to exceed 90%) have had decades to improve service, expand service and yet with all of their cash flow, our average speeds in America are worse than most other Western nations while we endure the highest charges for Internet service and without a doubt what is clearly abominable customer service. As a billionaire, I’m sure Mark is oblivious to this (and probably presumes that’s just fine, if you don’t like it, just switch carriers – I would encourage him to read any of the anecdotes surrounding Comcast customers who have TRIED to cancel their service) – cementing their existing ability to charge for “premium” services (which would be defined by them or to “slow down” certain content (perhaps that of their competitors?) is insane. The FCC made the only decision they could because it was and remains the only RIGHT decision. Let’s also not forget that we only have the Internet because of the massive investment of the federal government in the first place, and that capacity was transferred to industry at ridiciulously low transfer rates in the first place, so it’s not as though they are defending intellectual property they created or discovered. They found a cash cow which they, of course, do not wish to give up. But this is too important to leave to a handful of shareholder motivated companies who will only look to this quarter’s EPS rather than what’s best in the long term interest of their customers and our country.

Richard Bennett

It’s interesting how many suckers still believe US broadband speed is worse than it is in other developed countries when there is absolutely no legitimate empirical support for that nonsensical claim. I’ve written two studies on this subject, one comparing the US to the OECD nations and another comparing it to G7 nations and they find we’re doing quite well. Chris Yoo did another study comparing the US to Europe that also finds we’re doing fine, Roslyn Layton and Mike Horney find we’re investing like mad, and Bret Swanson points out that American use more bandwidth than anyone else.

GigaOm hasn’t reported on these studies, but they’re out there for anyone who really cares to learn the facts.

U.S. vs. European Broadband Deployment: What Do the Data Say? – Yoo
Internet traffic as a basic measure of broadband health – Swanson
Innovation, Investment, and Competition in Broadband and the Impact on America’s Digital Economy – Layton & Horney
The Whole Picture: Where America’s Broadband Networks Really Stand – Bennett et al.
G7 Broadband Dynamics – Bennett

On the other side, you have an advertising survey by an English teacher and some interns teacher working for the Open Technology Institute saying select foreign capitols claim to have faster broadband than cherry-picked US towns. Even if the ads were true, this doesn’t prove the point.

What are you gonna believe, actual data or carefully chosen ads?

Elisabeth Zguta

I agree with Mark Cuban. The worst scenario is always risk of regulation which never keeps up to the times – let the market swing and make its own adjustments

Derek Kerton

Let me addresss #1, “The Internet is working fine the way it is.”

Yes. Yes it has been working fine. We’ve enjoyed a pretty great, liberal, wild-west Internet so far. Too bad that the major ISPs have tried to change it at every turn. And eventually succeeded.

You see, the FCC has ensured a Neutral Network for decades. But the ISPs never agreed that they had the authority to do so. So, in 2010, Verizon sued the FCC, accusing them of exceeding their authority. Verizon won, so the protections our Neutral Network had enjoyed fell. Get it? We HAD Network Neutrality all along, but Verizon sued it away, and now we need it back.

The answer to “why do we need Title II” is simple: Verizon killed the other rules we had that were working, so we need a replacement if we want the Internet to keep working. Also, recently, we’ve had our first known examples of “an internet fast lane” with the Netflix and Comcast deal. Acting like these recent changes didn’t happen is either:
– deliberately misleading and ingenuous; or
– ignorant of the recent facts.

http://arstechnica.com/business/2015/02/verizon-is-mad-that-its-huge-net-neutrality-gamble-backfired/

Saying “It has worked fine up until now.” Is like saying “the USA has worked fine until now, why should we change how we govern” in 1861, even as the south opened fire on Fort Sumter. Lincoln understood he was at war. Cuban would rather we don’t.

PS, I was going to use the Lusitania example, but didn’t want to Godwin, so went Civil War instead.

Byron Bennett

I’m not sure which root causes are at play, but the things that need to be fixed are:

1. Why are our broadband speeds not near the top of the list when compared to other countries?
2. Why is our price for mb/s out of line with the rest of the developed world?
3. Why is this so drastically more pronounced when it comes to mobile data?

Richard Bennett

Show some data that supports your claims. I’ve looked for it and don’t believe it exists. Like so many other net neutrality bigots, you’re a victim of false belief.

yonian

You are quick to call someone who doesn’t support Comcast and its powerfull allies a bigot, but you don’t reveal your own label, “Visiting Fellow, AEI Center for Internet, Communications and Technology Policy”. I suggest that anyone reading this who doesn’t know the agenda of the American Enterprise Institute spend a few minutes doing their own research.

http://www.aei.org/author/richard-bennett/

Richard Bennett

OK, according to the link you provided, the average BB speed in the US is 33.3 Mbps, more than fast enough to do anything you want to do on the Internet. The G8
average is 28.9, OECD is 27.6. EU is 27.5, and APEC is 25.1.

I don’t see your problem. Is somebody going to claim Speedtest is funded by the Koch brothers?

Neil

Nearly every commenter in support of net neutrality here pulls out the canard that there is a dramatic lack of competition in broadband. If that is the case, why does the FCC refuse to do a market analysis to justify the rules? Perhaps it’s because the FCC’S own section 706 broadband reports show that competition in broadband has been growing over the past 10 years, while speeds have continued to climb and prices have maintained. In short, there are very few of the features of an anticompetitive market. Is it a perfectly competitive market? No, although wireless, with 4 nationwide carriers and dozens of regional and local carriers, is pretty damn competitive. But it is competitive enough to discipline bad market behavior. If it isnt, the FCC should show that first.

Ryan Mathis

Growing? Sorry but I can’t see how a market that is seeing increased consolidation and less consumer choice then before the 2005 reclassification counts as growing. Unless you’re using the previous 4Mbps definition of broadband and throwing DSL, mobile, and satellite into the mix as acceptable alternatives for wired broadband. Since we deregulated the way we did shedding Title II, and completely discarded local loop unbundling for residential (LLU is still used for B2B) we’ve seen continued consolidation and even less choice than before the FCC’s 2005 initiative.

One ISP per wire was never going to be a competitive market and the broadband over powerlines tech that Powell was banking on never came to fruition so on top of the problems we were going to have regardless the one thing that could have at least made a bad situation bearable ended up falling short.

The idea that intermodal competition and facilities based ISP’s where infrastructure and services are run by one company would lead to broadband investment boom was incredibility short sighted.

-why does the FCC refuse to do a market analysis to justify the rules?-

Correct me if I’m wrong but they already have.
Source: https://apps.fcc.gov/edocs_public/attachmatch/DOC-329160A1.pdf

tim

Just think, if the cable companies hadn’t spent all that money upgrading their network, DSL would still be a highly competitive option. ATT and Comcast could duke it out with price wars, special offers and funny commercials. Except the cable companies tried to run away with the whole market by offering mbps that no on could match. That’s when government needs to step in to make sure nothing like that ever happens again.

Rielly

Who here has ever been impacted by the discriminatory actions that Net Neut is trying to prohibit? No one. This is yet another example of an over reaching, nanny state administration implementing a solution to a problem that doesn’t exist.

chad

Who here? Do you have a netflix subscription? Because those tolls will eventually be passed on down to us if you do.

Ryan Mathis

It’s funny that Cuban mentions too big to fail, because with almost no one even attempting to address the severe lack of competition, companies like Comcast are quickly become too big too fail.

dreamtiger

Cuban’s #1 point is he likes the internet as it is. The purpose of the FCC’s ruling is to keep it that way, so you need to wonder what Cuban is really selling here. There is a ton of slippery, deceptive double-talk being promulgated by anti Net Neutrality players right now. One example is that they are for a free internet as opposed to one regulated by the gov’t, when we clearly need regulation to keep the net free, and so on.

Mike

The Janet Jackson event was under a Republican FCC!

FCC staffers knew it was doomed legally, but politicos insisted.

Shiggity

The problem with Mark Cuban is that his viewpoints were shockingly different when his net worth wasn’t north of 1 billion dollars. Nothing but a flip flopper.

Billion-aires HAVE to hate net neutrality. The basis of their wealth is largely predicated on the exact opposite.

kemorr

So his #1 point, apparently the basis for his whole argument, is an example from 20 years ago and incidentally one in which he started a company and ended up making a lot of money when he sold the company. Who wouldn’t like that story.

I think the irony is that ISP have clearly demonstrated that the would prefer to extract more money from their current aging infrastructure by charging more to those who use more data and create fast and slow lanes. I don’t think this is theoretical either, there are several examples where they have done this or tried/discussed doing this. The only reason they can do this because in many markets around the country there is little to no real competition for broadband access. AND if those fast lane/slow lane models continued to evolve, the company that he helped start 20 yrs ago and made a lot of money from MIGHT have been put at a disadvantage today compared to established startups and might NOT have even made it, let alone be sold for a large sum of money.

IF this was a free market and there was truly competition then I would agree that regulation is not needed. I think that is a big IF given the statistics on broadband access around the country especially compared to other developed nations.

So really it comes down to two things. Is internet access or broadband access something we think should be widely available to everyone or is it a luxury for those who have enough disposable income. And understanding when markets work and when they don’t, something that is often misunderstood.

Bottom line, his example of why things work very well could NOT be true in the future if he got his way.

Obviously he doesn’t feel this way, but he also doesn’t understand some of the principles that allowed his success 20 years ago. (Which is often true, that kind of success is often more about being in the right place at the right time with the right person)

Joe Wood

1. No it isn’t. Otherwise Netflix wouldn’t have to pay the ISPs
2. The government is answerable to the public, the ISPs to their shareholders.
3. That point is not mutually exclusive.
4. False analogy. Patents aren’t bad, patent trolls are. Title 2 does not require any subjective judgement.
5. Title policing has been working fine for other mediums. This is not a censorship issue.

Matt

Netflix does not pay for priority routing. It simply pays for an Internet connection, as does every business. If it wants more it pays more.

If the Internet is the 21st century medium for press and bloggers, than isn’t government control like the government deciding to regulate and own all of the printing presses in the country? Why doesn’t that scare you? It’s fine when your favorite political figure is in the White House, but what about when they aren’t?

Cost, the FCC estimates that Internet “tax” will be as much as $10.00 and that they are not doing anything to stop it. The only FCC promise is to not “enforce” parts of the new regulations, but it will be government it self that will impose them and the courts that will enforce them.
Does your Netflixs work? Yes, than don’t be so blind. Slaves are made in such ways.

Daryl

That graph is somewhat misleading as it just shows the net result, but nothing about the backend. If you want a picture of what happened, this article is a good read: http://blog.streamingmedia.com/2014/02/heres-comcast-netflix-deal-structured-numbers.html

In essense…. Netflix was paying Cogent (3rd party Transit provider) for the CDN’s internet access. Cogent in turn promised Netflix they had the capacity Netflix required into the networks at Comcast and other ISPs. They lied. The result is that there was a bottleneck in the connection points between Cogent’s backbone and Comcast’s Backbone network. (In simple terms. Netflix was paying for a 10 Gig link to the internet from Cogent. Cogent in turn only had a 8 gig link connecting themselves to Comcast’s network.).

Netflix’s deal had nothing to do with paying for Priority access. What they did was pay to directly connect their CDN to Comcast’s network. This means that the speed increases that were observed in the above graph can be directly attributed to 2 very simple and explainable reasons. 1. Netflix is still paying for a 10 gig link, but they are able to use all 10 gigs of it and not having to worry about the bottleneck at the interconnection point. 2. Netflix’s servers are now connected directly to the Comcast network, thereby moving the traffic closer to the consumers and removing several hops that it used to take thru the cogent network before getting to the comcast network.

So the uptick people can see in the speed changes can be attributed to the fact Netflix moved their servers much closer to the users, thereby removing several bottlenecks and additional latency generated by being further away. It’s not because Comcast is treating their traffic any differently than before.

Mcbeese

Up until recently, companies like Netflix and the ISPs exchanged traffic with peering agreements. Now Comcast is charging Netflix for access, and because so many of us have no choice other than Comcast, Netflix is forced to pay. If our Broadband market were more competitive, Netflix could simply refuse to pay and turn off the tap to Comcast, and Netflix customers would leave Comcast and switch to another network, or switch to another video service accessible via Comcast. Comcast has shown that it is willing to abuse it’s position in the network. Today it is Netflix …who knows what it might be tomorrow?

Daryl

Not quite. Netflix still uses CDN networks for access to the internet. The CDN network in turn pays a backbone provider for access to the Internet. The Backbone providers then have peering agreements with each other to exchange data between their 2 networks. The problem is that Netflix is generating so much traffic that often the peering between the CDN’s network provider and the big national ISP’s is being constrained. The Netlfix/Comcast deal is nothing more than Netflix paying Comcast’s CDN business so that Netflix content is now directly on Comcast’s network and thereby bypasses those interconnection bottlenecks. There is nothing illegal or shady by Comcast happening there, at it’s core it’s simply Netlfix having to consider factors outside of price in it’s choosing a CDN provider. [namely, How good is the CDN’s network provider quality, and can they absorb the bandwidth across the upstream peering locations].

The issue is Netflix has made complaining to the court of public opinion an art form in their attempts to get better deals.

Something to Consider…. Comcast has built a national Fiber backbone network. Verizon and AT&T bought some of the original National Backbone network providers (Worldcom / The Original AT&T / UUNet). Amazon has built it’s own CDN Network (Amazon S3). Google has built their own Datacenters and National Backbone network to connect their datacenters to all the backbone networks (Including nation ISPs). Netflix still just purchases CDN access from 3rd party CDN networks. In all these cases, except Netflix, The companies have invested capital heavily in order to improve the quality of their product, have more control over the customer’s experience, and to lower the ongoing costs of doing business by bringing in-house some of the largest reoccuring expenses (Internet Access/ Transport/ Storage/ etc). In turn, it puts them on a better footing when dealing with the other players. Comcast, verizon, and AT&T all have backbones that generate almost as much internet traffic as their residental IP’s consume. Amazon’s network of CDN locations which were originally built to house their own websites, now also generates additional revenue as they are able to resell the extra capacity…. which doesn’t cost nearly as much to add after the initial buildout needed for their own needs. Google, by building their own backbone is often able to get incredibly good deals on interconnection with other providers/ISPs because they do so much of the backhaul on the traffic they generate. Between “free” interconnection (peering) they receive, and the paid interconnection agreements they have with other backbones, their total transit costs are still cheaper than any “traditional” arrangement a company generating that much traffic would be outlaying with a traditional CDN network or with commercial access with a backbone ISP.

Netflix in turn hasn’t made any major capital investments in their internet access needs. They are spending their money to contract with 3rd parties. As such they do not have the control over that access that other large players do. (They can complain to their CDN network, but they don’t have any say in the dealings between their CDN and the CDN’s ISP).

Traditionally Free Peering/Interconnection agreements were based off the theory that both parties were exchanging nearly identical amounts of traffic between the two networks, That both companies had invested similarly in their networks with similar cost structures, and that the heavy lifting of the traffic backhaul would be assumed by the originating network with the pass-off to the 2nd network happening at the closest peering location. Based off these general assumptions, It’s obvious that Netflix has never been in a position to qualify for any sort of free peering agreement with any network.

sachanta

Daryl,
Agreed. Netflix is not paying prioritization but rather for connectivity between carriers that is based on both carriers sharing having roughly the same amount of bandwidth passing through each other’s network.

However, how is it that Comcast decided that Netflix customers get shorted here as opposed to all of Cogent’s customers? It is possible that they could have just told Cogent that too much traffic is coming from their network and ask them to either pay up or carry more traffic on their pipes? The relationship (peering agreement) Comcast has is with Cogent not with Netflix.

This is not as innocent or academic as the whole thing is made to sound. I am sure this is a similar set of issues the power grid, phone networks as well as the world wide postal system experiences…. and yet over the last 100 years, they have been able to evolve, grown up and be profitable under a regulator who has set some basic rules of engagement. I don’t see what the FCC did as anything but that.

Daryl

that’s the thing… Comcast didn’t decide that Netflix got the shaft. There was a bottleneck at the interconnection point that was impacting all traffic coming from the Cogent network. Netflix traffic just happens to be the most visible because of the amount of data they are sending, and the fact that data is very sensitive to latency.

Netflix made the business decided to bypass Cogent because Cogent was not addressing the problem to their satisfaction. It wasn’t the first time which Cogent has had issues with their interconnection with another network, and Comcast isn’t the first company which they have had those issues with.

tim

It is Cogent who decides how their different customers are prioritized and they decided to short Netflix:
http://blog.streamingmedia.com/2014/11/cogent-now-admits-slowed-netflixs-traffic-creating-fast-lane-slow-lane.html
This is simply because Netflix was paying less than Cogent’s other customers. So, really, it was Netflix who decided to give their own customers the shaft, hoping they would blame the poor service on Comcast, and that would force Comcast to upgrade their connection for free. Thankfully, for the health of the Internet and everyone who shares it with Netflix, Comcast did not blink.

Daryl

Quick correction….. It appears that Netflix has decided in the past couple years to build out their own CDN network instead of relying exclusively on 3rd party CDN’s. The issue has been that the Backbones they are paying for Transit / access have not been expanding their interconnection with the other large networks to prevent bottlenecks stemming from Netflix’s traffic. IOW’s…. The Companies that Netflix has been paying for Internet access have failed to live up the Service Level agreement which Netflix has expected them too.

In turn I was wrong about the details of the Deal with Comcast. It was not a deal with Comcast’s CDN business, but instead a transit deal with Comcast. In other words, As the networks which Netflix was paying for their access were unable/unwilling to upgrade their interconnections with other backbone networks, Netflix decided to go directly and pay to connect to that network.

Ultimately it’s still the same general concept though. Netflix was paying a 3rd party. That 3rd party was failing to live up the SLA Netflix required by not upgrading their links to Comcast’s network. Netflix decided to fire the 3rd party and go directly to where they needed their stuff delivered, and where they have direct control over the quality of that connection.

Derek Kerton

True. Netflix and Comcast customers were the victims. And Netflix DOES pay extra now in order to reach their subscribers.

Add it up: Netflix already paid their own connectivity bills, YOU paid your connectivity bill, and now Netflix pays Comcast the surcharge peering bill. That’s three payments to ISPs for carrying your Netflix.

But now, what if a NEW ENTRANT tries to compete with streaming video. Netflix, as an established player, can afford and does pay Comcast. How does a new entrant compete with Netflix? It would be hard. Now, we have new victims, and Netflix is on the bad guy’s side. This is the model Comcast wants – pay to play, exclude innovators.

Fred Campbell

Derek,

You should do some research about how the Internet peering/transit market works. The real problem for a new entrant at this point is Netflix itself, which has used its market power in the Internet backbone market to leverage preferential deals for its CDN. There is absolutely zero evidence whatsoever that Comcast tried to charge Netflix more for interconnection than Comcast charges any other CDN: http://cbit.org/blog/2014/09/netflix-secretly-holds-subscribers-hostage-to-gain-favorable-fcc-internet-regulations/.

Daryl

Not quite.

You pay for connectivity with Company A.

Netflix paid it’s connectivity bill with Company B.

Company B was not meeting the Service level requirements that Netflix required to reach customers at Company A (and others… don’t forget Comcast wasn’t the only ISP which bottlenecks at the Cogent peering points).

Netflix switched their connectivity bill to Company A due to Company B not providing the speeds they required.

Netflix is not paying a 3rd unknown fee for access to Company A’s customers. They simply switched their Internet Access from Company B to Company A in order to improve their speeds.

And if Netflix is paying more, It’s not because they were forced into it. They aren’t stupid. Comcast publishes the rates it charges for CDN connectivity. The rates aren’t some big secret. Odds are with Netflix’s pull, and the amount of traffic they are generating, and the multi-year term and service level agreements they would need/want, That Netflix probably got a slightly better rate than the base published rate. If they are paying more it’s because they went from the Dollar General of Backbone connections to the Target of Backbone connections.

voice of reason

The proposed level of regulation of the internet is similar to the present level of regulation of airlines, TV and radio broadcasters, phone companies, and railways. The government does not own any of those enterprises, or dictate how they run their businesses. It simply requires them to use public resources for the public benefit, and to treat all customers fairly.

Does it scare you that the government owns almost all commercial airports in the US? Airlines seem to manage anyway.

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