Netflix Blinks, Will Pay Comcast For Network Access

We've mentioned several times the tension between giant streaming sources (especially Netflix), and ISPs (especially Comcast, especially given that it may merge with Time-Warner). Now, Marketwatch reports that Netflix has agreed to pay Comcast (amount undisclosed) for continued smooth access to Comcast's network customers, "a landmark agreement that could set a precedent for Netflix's dealings with other broadband providers, people familiar with the situation said." From the article: "In exchange for payment, Netflix will get direct access to Comcast's broadband network, the people said. The multiyear deal comes just 10 days after Comcast agreed to buy Time Warner Cable TWC -0.79% Inc., which if approved would establish Comcast as by far the dominant provider of broadband in the U.S., serving 30 million households" I wonder how soon until ISPs' tiered pricing packages will become indistinguishable from those for cable TV, with grouped together services that vary not just in throughput or quality guarantees, but in what sites you can reach at each service level, or which sports teams are subject to a local blackout order.

Comments

If Comcast were Exxon

[DulcetTone]

They'd be receiving money from Sears when I drove my car to the mall.

Why do people accept this?

Re:If Comcast were Exxon

[Anonymous Coward]

Simple Answer: Government Granted Monopolies.

People accept it because they have no other choice, in many cases. When laws exist prohibiting even cooperative ISP's forming to provide competition, you're kind of up shit creek, unless you want to go with much slower 56k/dsl/satellite service...

As for why they put up with the laws, well, there's this two party system we have...and corporations pay both parties...rarely is there much choice on matters such as this at the ballot box.

Re:If Comcast were Exxon

[Zynder]

Some people actually believe everything you wrote.

Re:If Comcast were Exxon

[Grishnakh]

No, proper regulation avoids regulatory capture by enacting laws which forbid it. Other countries don't have a problem enacting and enforcing proper regulation while avoiding regulatory capture. It's just the US (along, probably, with various other corrupt third-world regimes) that has this problem.

Re:If Comcast were Exxon

[leonardluen]

and what makes you think the corporations wouldn't employ their own militia in the absence of that govt protection?

heck even now many large corporations already employ their own security personnel.

Re:If Comcast were Exxon

[Lumpy]

It's called a kickback, the legal term is "franchise fees".

Re:If Comcast were Exxon

[Immerman]

It's user pays in the same sense as a grocery store is customer pays. In both cases the business pays for it's "imports", and then passes the costs on to their customers.

Cogent isn't dumping data onto Comcasts network, Comcast's customers are *requesting* that data - that data is part of why they're paying Comcast in the first place.

Again, if the issue is Cogent then Netflix should be left out of it. Once the precedent is established do you really think Comcast would *stop* charging Netflix if Cogent were to get their act together? Let the ISPs duke it out however they like, but leave the endpoints out of it. If Netflix doesn't like the result they can change ISPs - I hear Comcast's backbone can handle the traffic.

Re:If Comcast were Exxon

[Camael]

There's so much spin and misinformation in above post.

It's not as simple as "data transfer" where peering agreements are involved. The fees you pay aren't there to allow Cogent to dump tons of data on one link of your ISP, forcing them to carry it on their backbone across the country to the end user there, rather than upgrading their own backbone to handle the traffic properly.

No, the fees you pay are for your ISP to provide a service, i.e. the transmission and delivery of digital content you choose over their network. And if you request Netflix to stream movies to you, your ISP by golly is contractually obliged to deliver that data to you . When Netflix/Cogent sends that data which you requested to your ISP, calling that transmission "dumping" is clearly 1. untrue and 2. BS.

That's exactly what they're doing. As Cogent dumps more traffic on them, they're just not upgrading the peering points, so Cogent customers see congestion and slowdowns going to/from other ISPs.

Not only Cogent customers. The customers of that ISP will also notice the slowdown . Take Verizon for instance. When/if Verizon refuses to upgrade peering points, all of Verizon's paying customers who use Netflix will be affected. So, what do you call failing to deliver a paid for service to your own customers?

Stop taking the ISP's side and look at the average consumer's point of view for once.

Oh shit

[Enry]

Well there goes the Internet

Re:Oh shit

[ObsessiveMathsFreak]

All too true.

The net we knew is truly dying. It goes beyond the death of Net Neutrality and the resulting birth of Net Extortion exemplified by this deal. More and more we see people moving away from rich client browsers and other programs into simpler, disconnected, atomic apps, connecting to restricted, walled garden, internet services. Such services can more easily transition into a pay per-view web, whereas free-visit-traffic websites with no method of charging/locking-in users will find the going difficult. Many are already consciously damaging the usability of their own websites in an attempt to transition them toward a restricted "app"-like format-- the new Slashdot Beta being a prime example.

The internet could be moving towards an earlier proposed vision of it, from the 1980s, when it was proposed that people be nickel and dimed for each additional service they required. Every new service would require -- not a website-- but a new client program, which could naturally be regulated and charged on an individual basis. Somehow,, this outdated model the past is slowly becoming the future of our Internet.

This didn't have to happen. No technological development lead us to this point. This outcome was decided most firmly in the realm of the Law, by the Court system, and with not one pip of say-so from the programming or engineering community which actually runs and maintains the web.

If the internet genie is put back in the box, it will be the result of entirely socially/legally constructed forces.

Internet access should be a socialized service

[mozumder]

There's no reason for private companies to profit off the basic requirements of a functioning society.

Communications is so critical that the US Constitution writes in the Postal service as part of it.

Internet communications should be treated as a basic service.

Once this happens, we can restructure more government services to be properly internet enabled.

Really, private companies do not serve the interests of the public. They never have. They never will.

Private companies are great at the luxuries of life, not the basics.

Re:Internet access should be a socialized service

[mrchaotica]

Vertical integration (i.e., both manufacturing the product and delivering it) is not necessarily a problem. Vertical integration where any part is a monopoly or oliopoly, however, is against the public interest and should not be allowed.

Re:Internet access should be a socialized service

[Boronx]

"We" is the people of the United State of America. What makes us special is that we've granted to ourselves the power to govern the country. There is no question that we ought to govern the country, the only question is how. You'd give unrestricted rights to businesses to do what they want. Id restrict businesses from acting in ways detrimental to their customers or to the economy as a whole. This means forcing competitors to compete and not collude, and forcing businesses to avoid conflicts of interest.

Prison companies shouldn't be able to lobby for tougher criminal laws.

Giant agribusinesses shouldn't get together to set grain prices.

Big finance shouldn't be able to recommend buying a security while they short the security.

A company that controls Aluminum transport shouldn't be able to place financial bets that the price of Aluminum will go up.

These are all happening right now, and if we let this continue and grow we'll turn into a corrupt third world hell hole.

Re:Internet access should be a socialized service

[visualight]

" I go out of my way to use private entities in lieu of the US Postal service."

Ass. The problem with government services is, wait for it, PEOPLE LIKE YOU, who warp reality to fit your propaganda derived ideology, and then sabotage things so that some fat cat can seek rent. A lot of really well run operations suck -because- they were privatized. The military commissary is one I remember well.

You are ignorant of the reality of why these private entities are able to thrive. It's *BECAUSE* they don't have to deliver every letter to every house and apartment in the country. They get to just do the high margin stuff.

And they absolutely know this, which is why they are meeting and discussing what they need to do to support the U.S. Postal service. 'Big bags of money' is a real option for them, because without the post office, *they* can't survive.

Common Carriers

[Anonymous Coward]

This is why the FCC should have classified ISPs as Common Carriers a long time ago and given themselves regulatory power over this aspect of these businesses. The FCC chose NOT to give themselves power to regulate ISPs and now we (the customers) are paying the consequences.

Extortion through lack of net neutrality

[carlhaagen]

This is how it starts.

Re:How soon until...

[anagama]

Regulatory burden? WTF? The only regs Comcast and its ilk adhere to are those that they purchase.

Here's what real regulation would look like -- no ISP may be a content provider of any type, nor can a parent company own both an ISP and a content provider/producer/etc. You can own one or the other, but not both.

The ONLY reason Comcast has a hardon for Netflix is because it is a content provider and Netflix threatens their model.

Re:Long-term loss

[x0ra]

How does streaming 4k HD video fit in the open nature of the internet ? Netflix is merely entertainment, you don't need it to live, even less to survive. Why should Netflix free-ride over ISP investments ?

Re:Is this quite the same?

[Anonymous Coward]

It's Cogent who screwed up.

Re:Long-term loss

[Rougement]

"Why should Netflix free-ride over ISP investments ?" They're not, I'm paying my ISP for internet access. Which sites and services I choose to access is none of their business. Netflix has set a dangerous precedent here.

Re:Not long

[GreyWolf3000]

But you're supposing that you're paying for consumption. That's a very reasonable ideal.

Netflix is paying for content, which is one step towards turning them into any other "content provider," which is exactly where telcos want them to be. They want to be in between us and Netflix so that Netflix will scratch their beak.

The end game is not you or I paying for tiers of "bandwidth," it's getting us to pay for tiers of "content" -- we should resist this rather forcefully.

Re:Could someone answer this?

[Wonko the Sane]

I may not be a lawyer, but I'm pretty sure the Seventh Amendment trumps the Supreme Court

Nope.

The US Constitution is a very old piece of paper sitting in a museum.

The Supreme Court is a group of people.

A piece of paper is an inanimate object - it can't do anything.

Re:Let me get this straight

[Anonymous Coward]

Bandwidth is not free. As such, either you want Netflix to free-ride over Comcast investment, or you agree for the asymmetry to be compensated to Comcast.

Comcast isn't free-riding over anyone. Netflix paid for their outbound bandwidth, and Comcast's customers are paying for the inbound. Everyone's getting paid, but Comcast wants to double-dip. In 2005 Ed Whitacre (then CEO of SBC) said of popular service providers:

"Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?"

There was a serious uproar about that, with people rightfully claiming that Ed had no leg to stand on since SBC's customers were already paying for their inbound bandwidth. Exactly what is different now that makes this argument more legitimate?

Re:Not long

[thaylin]

No regulation and this will just get worse. It has been shown time and time again. This is a market that requires hudge investment, and have huge monopolies already in place. Without major government intervention, at least paying for the infrastructure, there is no way many will come into the market. Even Google needed help in the areas it has come into.

Re:Not long

[vux984]

Bandwidth is neither unlimited or free.

I fully understand this. That is why i am paying my ISP a premium for 100Mb access.

It's rather fun to see people who wand to have those with high income pay more tax, but not having big bandwidth consumer pay more for the pipe access.

What are you on about? I do pay more for 100mbit bandwidth than my brother pays for 10mbit. I am not complaining about this, nobody is.

I, for one, would be happy to subscribe to a cheaper basic service I don't mind to have youtube (or youporn) in 144p if at the end that saves me money.

Be my guest, pay the ISP less for less speed. Lots of people do that.

What does that have to do with the ISP deciding to charge netflix to provide me the high speed access to the content that I am paying them to provide me high speed access to?

This is the equivalent of me going into a restaurant with a bottle of wine. (The wine is netflix, the restaurant is my ISP.)

Now, the rules here are that I can do this, I can bring in my own bottle of wine, but have to pay a corking fee for them to serve it to me in the restaurant. I am fine with this. So I've paid for the wine (netflix), and I've paid for the corking (ISP). So that's all there is too it.

Suddenly the restaurant phones the liquor store and demands money from THEM to serve me the wine. The wine that I've already paid for myself, and which I've already paid the restaurant to serve me.

WTF

I am the ISPs customer. I am already paying the ISP a lot of money to transmit data over their network to me, from any source on the internet at high speed. Why on EARTH should netflix have to pay them as well for what I am already paying them for?

Re:Does this work two ways?

[Anonymous Coward]

What a shame Netflix didn't fight back by enlisting their subscribers

It's not too late for that. Simply detect when the subscriber is coming from Comcast and start charging an extra $1/mo to cover Comcast's extortion fee and include an explanation of why they're being charged an extra dollar. Netflix passes on the cost to customers and Comcast gets a ton of angry support calls.

But the cynic in me says that Netflix is happy to set this precedent. By agreeing on a price that they can tolerate, it means that any upstart competitor will have to pay it too adding yet another barrier to entry in the streaming content business.

Re:Not long

[lordofthechia]

I think the better analogy is the post office.

You pay shipping to receive packages (to the post office). You also pay for the content of those packages (to whoever you bought the item(s) from).

Now more and more people start ordering stuff from Amazon. The local post office realizes that their mail trucks are filling up and they're unable to pick up all the packages they need. Some of the packages get left behind, some get crammed into the truck (and end up damaged), some make it through.

  They also notice that a third of all packages have Amazon logos.

Does the post office:

A) Use the extra money it has been receiving from postage fees to upgrade it's fleet, buy more trucks, hire more drivers, etc.

B) Pick up on Amazon's generous offer to have some items already stocked, packaged, and automatically labeled next to the Post office so that commonly ordered items can be transferred locally instead of going through the USPS's now heavily taxed fleet?

C) Extort money from Amazon in exchange for their customers receiving their packages in a timely and undamaged fashion (which their customers are already paying for).

Now you can say the main difference is that the post office is charging per package vs selling a service to its customers where they can receive a certain amount of mail (say in pounds) per day. Either way though a service is being promised, paid for, but not fully delivered.

And now to add self interest:

What if you got an ad flyer from your local post office with "Now you can order movies and books from the USPS!" while at the same time movies and books that you are paying shipping to receive from Amazon are getting delayed, crushed, or lost.