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Netflix Blinks, Will Pay Comcast For Network Access 520

Posted by timothy
from the who-pays-whom-for-what dept.
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.
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Netflix Blinks, Will Pay Comcast For Network Access

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  • by DulcetTone (601692) on Sunday February 23, 2014 @05:13PM (#46318133) Homepage

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

    Why do people accept this?

    • by Hognoxious (631665) on Sunday February 23, 2014 @05:28PM (#46318227) Homepage Journal

      I don't see an alternative other than regulation. And regulation reduces profits, so it's communism.

      George Washington gave his life to fight against communism in 1776. If you don't believe in profits, you're literally pissing on GW's grave, you bastard!

      Just pay up, and if you don't like it then move to North Korea.

      • by x0ra (1249540) on Sunday February 23, 2014 @05:39PM (#46318293)
        Regulation leads to regulatory capture, which leads not to communism, but to oligarchy. There has been no real implementation of "communism" anytime, anywhere.
        • by Attila Dimedici (1036002) on Sunday February 23, 2014 @06:47PM (#46318845)
          That is not true. There have been several implementations of communism. They have all been relatively small scale. As far as I am aware, the only ones which were at all successful were religious communities (See Hutterites). The thing to notice about all of the implementations of communism is that they were purely voluntary (that is, those who did not wish to take part in communism were free to leave the group).
        • by Grishnakh (216268) on Sunday February 23, 2014 @07:13PM (#46319011)

          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.

          • 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.

            That is an interesting view of regulatory capture, which basically states companies use regulations to limit competition and maintain higher pricing. If you look at Europe for example, companies were and no doubt still are quite good at it. Airlines for years enjoyed monopoly pricing and even now are trying to stop low cost carriers from invading lucrative routes via regulations. Laws enforcing minimum selling prices results in consumers paying higher prices since more efficinnt companies cannot charge les

        • Regulation leads to regulatory capture, which leads not to communism, but to oligarchy. There has been no real implementation of "communism" anytime, anywhere.

          Both of those are true. BUT... there is improper regulation and proper regulation.

          In countries where backbone is (by government regulation) required to be shared (and NOT for free), it has actually led to greater competition and lower prices than in the United States.

          Regulation may be a necessary evil. But incompetent or misguided regulation (as we have now in the U.S.) is just plain evil.

      • by Zynder (2773551) on Sunday February 23, 2014 @06:18PM (#46318591)
        Some people actually believe everything you wrote.
    • Re: (Score:3, Interesting)

      by FuzzNugget (2840687)

      Because internet, that's why. A person is smart, people are fucking retards (or something like that)

      Somehow, wiring and routing equipment complicate simple principles like preventing monopolies from engaging in extortion.

      • there are 8 bits to a byte and a spare byte in an IP packet is nothing, these days.

        we should assign bit numbers to the ISPs. we could call them 'evil bits'. I think its a brand new idea! you could make policy routing decisions based on that.

    • by Anonymous Coward on Sunday February 23, 2014 @05:49PM (#46318379)

      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.

      • by Lumpy (12016) on Sunday February 23, 2014 @09:04PM (#46319709) Homepage

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

      • Even if the first mile market was fully open, infrastructure is almost always a natural monopoly: the fewer infrastructure providers of a given type there are, the higher the existing providers' network attach rates are and the lower total network maintenance costs per home passed become. That's why even the most "competitive" markets all around the world only have 1-3 wired communication infrastructure providers.

        The very high building costs make it impractical for extra players to enter the market, fight t

    • by beelsebob (529313) on Sunday February 23, 2014 @05:58PM (#46318449)

      Because the finance of the internet is based on a sender pays model. Peering agreements only work when you actually have (roughly) equal traffic with another ISP. In this case, the ISP serving netflix has significantly higher data sent from it than Comcast's network, so they need to start paying comcast to transport that data.

      This by the way, is at the same time, why bandwidth caps and metering on a home connection is bullshit –because what you're paying is paying only for the data you send, the data you receive is already payed for by the sender.

      • ISPs are not peers though, they are endpoints. The "equal data" argument only works between two backbone/transit providers. ISPs are requesting that data be sent to them. they don't get to request the data be sent to them and request that they also be paid to receive it.

        Also what makes you think you only pay for upload? That makes no sense. Though I agree in that bandwidth caps are bad -- though mostly because they are generally misleading advertising.

        • by gregor-e (136142) on Sunday February 23, 2014 @11:45PM (#46320501) Homepage
          I pay Comcast for 17 mbps of downstream internet. There is nothing in my contract that constrains where I request this data from. The fact that so many of Comcast's customers all choose to fill their paid-for internet pipes with bits from Netflix means that Comcast has agreed to provide adequate infrastructure to satisfy the bandwidth requirements its customers have paid for. If Comcast is unable to provide the bandwidth they have sold to their customers, they are guilty of selling something they don't actually possess. I believe there is a word for this.
    • Re: (Score:2, Interesting)

      by evilviper (135110)

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

      In this case, Sears intentionally blocked off their parking lots, forcing customers to drive over and park on long stretches of Exxon's roads... And Sears' solution to this is to ALLOW Exxon to host a free Sears kiosk in all their gas stations...

      The analogy is straining... but that's about right.

      Why do people accept this?

      Because Netflix's ISP (Cogent) is a douche bag of the highest order, who ALWAYS claims to be the

      • by Immerman (2627577) on Sunday February 23, 2014 @07:49PM (#46319283)

        Now that is a horrible, horrible metaphor.

        Almost from day one the internet was based on a user-pays model. ISPs A and B both have a lot of customers who want stuff from users on the other ISP. Data flows back and forth, and periodically the ISP who requested the most data paid the ISP who supplied that data, based on how many more bytes flowed A->B than B->A. It provided incentive for ISPs to seek out content-providers as customers, or to be better content providers themselves (remember, it was mostly universities to start). As the number of ISPs increased they often decided to decided to save bookkeeping headaches and enter into "nobody pays" peering agreements with other ISPs with whom they had roughly symmetric data flows, but consumer pays remained the norm in any asymmetric exchange.

        Fast forward, and some ISPs are now trying to change the rules - rather than paying for the data their users consume and passing that cost on to the users, as has been done since day one, they now want to double-dip and charge the content providers as well, for the exact same data transfer they are already charging their users for I have already paid my ISP for a certain level of internet access, why should I be put up with them intentionally degrading my access to some services?

        l As for the "kiosks" I'm assuming you're referring to the caching systems Netflix has offered. And again your metaphor is horrible. Under normal rules Comcast would be paying Netflix's ISP for every byte of data transferred, but Netflix offered them an optimized caching system so that instead of having to upgrade their systems to handle the load their customers demanded, as well as paying for the data itself, instead they could simply pay to transfer a single instance make all the free copies they wanted, saving them a bundle.

        >Without in-depth details about the exact details of the Netflix disputes between Cogent and Comcast, Verizon, and others, I'm going to assume Cogent are acting like pricks, as usual, and give the other ISPs every benefit of the doubt.

        Fair enough. But if it's a battle between ISPs, why are they dragging Netflix into it? Threaten to blacklist or throttle Cogent, and let Netflix either put a fire to their ass to shape up so other ISPs will continue doing business with them, or find another ISP who aren't pricks to begin with.

  • Oh shit (Score:5, Insightful)

    by Enry (630) <.ten.agyaw. .ta. .yrne.> on Sunday February 23, 2014 @05:13PM (#46318139) Journal

    Well there goes the Internet

    • by paiute (550198)
      Here Lies the Free and Open Internet
      1969-2014
      RIP, Old friend - It was fun.
    • Re:Oh shit (Score:5, Insightful)

      by ObsessiveMathsFreak (773371) <obsessivemathsfr ... t ['om.' in gap]> on Sunday February 23, 2014 @06:12PM (#46318531) Homepage Journal

      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.

  • Not long (Score:5, Interesting)

    by mbone (558574) on Sunday February 23, 2014 @05:14PM (#46318143)

    I wonder how soon until ISP's 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.

    Not long. The cable guys are, in this way, just like the Bellheads. They see their real moneymaker as these blasted tiered services (never mind their historical roots in equipment limitations). Soon you will probably have to buy the Disney package to be able to get the Google package to be able to get slashdot.

    What I think of the judges that thought this was a good idea is not fit for slashdot, much less polite company.

  • by mozumder (178398) on Sunday February 23, 2014 @05:14PM (#46318147)

    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: (Score:3, Informative)

      by Boronx (228853)

      I don't understand why we don't just restrict companies to do the thing they're supposed to do. You're a cable company? Ok, you're allowed to sell cable connections into people's homes. You want to say what traffic flows on your cable? Sorry, not in your charter.

      Are you a movie company that wants to put in cable that carries only your movies? Sorry, not in your charter.

      Of course this means that a company couldn't really own another company.

      • by mrchaotica (681592) * on Sunday February 23, 2014 @05:55PM (#46318425)

        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.

    • by dnaumov (453672)

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

      So there should be no private energy companies? No private guards / security companies? No private education and no private health care? What a crock of shit.

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

      Actually, there's a really good reason- because government mandated monopolies have ALWAYS been incredibly shittty. Shitty service, shitty customer service, shitty everything.

      As SNL once said "We're the phone company. We don't care, we don't have to".

      You want to totally kill what tiny competition is allowed in the ISP space by mandating everyone have to go with the cable provider they have? Well that onl

  • by Nyall (646782) on Sunday February 23, 2014 @05:15PM (#46318149) Homepage

    I'm sure netflix has employees whose home internet is provided by Comcast. What would prevent them, or any other customer, from starting up a class action lawsuit (mandatory arbitration maybe) that Comcast isn't providing advertised bandwidth?

    • by khasim (1285) <brandioch.conner@gmail.com> on Sunday February 23, 2014 @05:28PM (#46318225)

      Two reasons.

      1. Comcast advertises "up to" X bandwidth. But does not guarantee any specific speed.

      2. Comcast can show that you can get "up to" X bandwidth on the local segment. Just not across peering points.

      This is another reason that the Time Warner/Comcast merge cannot be allowed to happen.

      • by TheGratefulNet (143330) on Sunday February 23, 2014 @06:15PM (#46318549)

        fwiw, I have comcast and its been really fast. 50meg/sec download in real honest terms. hard to believe but its true.

        even with a vpn and 'watching' (yeah...) movies from europe to the US, I still get 6MB/sec (yes, megabytes) over my VPN, over comcast. this is when I term my connection in a nice safe euro country.

        what I hate about comcast is that they don't offer honest pricing. it starts low then climbs and you have to disconnect their service for 6mos before being allowed to renegotiate another 'special'.

        still, after being stuck with dsl for over 10 yrs (at t1 speeds or less; usually much less) the 50meg 'blast' pkg is actually quite real and reliable in my area (bay area). I don't have issues with their connection; just their business practices.

    • by locutus2k (103517)

      Comcast (and indeed other ISPs) doesn't guarantee speed. They are very clear to point that out in the teeny tiny fine print. They only real guarantee you get is a bill. Since there are no SLAs on home service, just be glad you get a connection at all. The "free" market says they have to make a reasonable effort to keep connections up and running, else they would lose customers. With Comcast 'growing' like they are, they have less incentive to keep the systems running.

  • Common Carriers (Score:5, Insightful)

    by Anonymous Coward on Sunday February 23, 2014 @05:19PM (#46318177)

    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.

  • by carlhaagen (1021273) on Sunday February 23, 2014 @05:20PM (#46318193)
    This is how it starts.
  • by Anonymous Coward on Sunday February 23, 2014 @05:20PM (#46318195)

    Maybe it is time for Google, Facebook, etc.. start charging Comcast for access to their networks?

    What a shame Netflix took a step back on this and what a shame Netflix didn't get any support by the giants of the internet.

  • I want my network neutrality back. This is the sort of thing that is going to squeeze out the smaller players, or anyone who the backbone operators and ISPs don't want to succeed. It will result in less innovation as startups who can't afford to pony up to the established powers who control the infrastructure won't be able to do business. Prepare for decades of stagnation and no progress as the big players concentrate on consolidating control and only improve things where they absolutely have to, incrementa
  • by PhrostyMcByte (589271) <phrosty@gmail.com> on Sunday February 23, 2014 @05:37PM (#46318273) Homepage
    This isn't quite the same net neutrality issue here. Netflix isn't paying to stop service degradation or increase priority of their traffic -- they're basically just switching service providers and paying Comcast to host their servers. It may even end up cheaper for Netflix.
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      It's Cogent who screwed up.

  • I think this would give the government decent reason to block the Time Warner merger - Lest Comcast become the 21st century version of Standard Oil.

    (Or not... if Comcast has enough political leverage with the current administration and with them owning NBC...)

    • by TheSync (5291)

      Lest Comcast become the 21st century version of Standard Oil.

      I hope so, because in 1865, kerosene cost fifty-eight cents a gallon; by 1880 it was just 9 cents a gallon.

      But somehow I doubt that Comcast TWC NBCU will be able to reduce cable prices as much as Standard Oil reduced kerosene prices. After all, Standard Oil did not depend on local government monopoly franchises to achieve their monopoly, but instead only depended on the market.

      [Read Vindicating Capitalism: The Real History of the Standard Oil Com [theobjectivestandard.com]

      • That's how they destroyed their competition and established a monopoly - predatory pricing. Generally SO engaged in differential pricing - high where there was no competition and low where there was competition. This practice is currently illegal. See Jones, Eliot. The Trust Problem in the United States (1922).

        SO also used their market power to engage in other corrupt business practices including forcing rail companies to grant rates not available to other companies.

  • Now Netflix has incontrovertible proof Comcast has been throttling their service.

    • Re:Brilliant Move (Score:4, Interesting)

      by matthewv789 (1803086) on Sunday February 23, 2014 @11:09PM (#46320275)

      No, not at all, and I'm fairly sure Comcast has not been.

      Previously, Netflix had to go through a middleman to get to Comcast (Cogent, as well as Level 3 and others). They already had to pay those middlemen, and the connections they were getting to Comcast were increasingly congested, probably due to transit providers not wanting to pay for peering even if they were sending a lot more traffic in one direction than the other, and thus the other end not wanting to invest in additional infrastructure to handle that increased one-way traffic. This is typical, has been the standard practice for the life of the Internet, and has nothing to do with "Comcast vs Netflix" or "net neutrality" etc. Peering agreements are supposed to assume roughly equal traffic in both directions from both parties, otherwise the one causing the imbalance in traffic is expected to pay.

      Now, Netflix are paying Comcast directly to cut out the middleman and get better, less-congested, direct connections. This means they don't have to pay the other transit providers for the traffic they'll now be sending directly to Comcast, AND it seems their payments to Comcast will be less than what they were paying Cogent et al for the same bandwidth.

      So for Netflix, this is win-win: they can cut their bandwidth bill AND get better performance and less congestion streaming movies to Comcast customers. What's the problem?

      Net neutrality is a real concern, but this particular case is not an example of it.

  • Comcast charges content providers to be on channel line up
    Charges the customer to watch them
    Overwrites the provided programming with their commercials.

    If ever the was an exemplar of a gravy sucking pig comcast is it, and they are the prime exemplar of how crony capitalism is failure.

  • This is just the robber barons of old. The original robber barons where Knights who built castles on the bank of the Rhine river. Any boat traveling the river had to pay or face the cannons of the castle. There was a new castle around every bend of the river, so you can imagine how expensive it was to ship anything up and down the Rhine.

    These same folks can be found today in the "Government" checkpoints that you'll find every few miles in certain parts of Africa, or the Thai cop who stops you and asks f

    • by TheSync (5291)

      Any boat traveling the river had to pay or face the cannons of the castle.

      Only the Holy Roman Emperor could authorise the collection of tolls along the Rhine - which is just like local governments granting monopoly cable franchises.

      [Technically only those requiring tolls outside the authority of the Holy Roman Emperor were known as robber barons (German: Raubritter).]

  • I will develop one of my previous comment.

    The current one-size-fit-all billing scheme of the internet is utterly broken from my point of view. I do not have choice of the content's quality I watch. I used to watch youtube on a 5Mbps link, now, I do over a 25Mbps link, but I don't really care about watching HD videos, nor do I give a frack about 720p, 1080p video. Ever if I select youtube "I have a slow connection. Never play higher-quality video", I am always getting a better quality video than I need. The

    • The current system is utterly UNFAIR to the customer. I want to be able to have a basic access if I WANT TO. When I have no money, I WANT a cheap basic access, if I have more money and can afford better content, then I am free of doing so.

      What are you talking about? The cost or speed of your internet connection has nothing to do with what's going on here. You pay for a connection to The Internet. You don't pay for a connection which gets you to Google quickly, but then only gets you to Netflix slowly or not

      • by x0ra (1249540)
        My point exactly, I pay for more than I need and this is terribly unfair. See my above hauling truck example. What you call "Internet access" is truly bandwidth and latency. I do not need to be able to stream Netflix 1080p all day long, as such, why should I pay for a pipe capable of doing so ?
  • by V-similitude (2186590) on Sunday February 23, 2014 @06:37PM (#46318755)
    This is a play by Netflix to demonstrate to the FCC just how dangerous the Comcast/TWC merger would be. Here's hoping they listen.
  • by evilviper (135110) on Sunday February 23, 2014 @06:44PM (#46318821) Journal

    Netflix is having all these problems because they use Cogent, the cut-rate morons of the transit world...

    This has happened hundreds of times, long before they carried Netflix streaming video:

    http://www.pcworld.com/article... [pcworld.com]

    https://secure.dslreports.com/... [dslreports.com]

    https://secure.dslreports.com/... [dslreports.com]

    https://secure.dslreports.com/... [dslreports.com]

    http://www.complaints.com/2008... [complaints.com]

    http://publicpolicy.verizon.co... [verizon.com]

    http://www.prnewswire.com/news... [prnewswire.com]

    http://www.fiercetelecom.com/s... [fiercetelecom.com]

    https://www.datacenterknowledg... [datacenterknowledge.com]

    etc., etc.

  • by Daetrin (576516) on Sunday February 23, 2014 @06:50PM (#46318869)
    "with grouped together services that vary not just in throughput or quality guarantees, but in what sites you can reach at each service level"

    Someone came up with a nice prediction of things to come along those lines: http://i.imgur.com/5RrWm.png [imgur.com]
  • by rundgong (1575963) on Sunday February 23, 2014 @07:10PM (#46318995)
    The no cost peering agreements between the major ISPs is based on the premise that traffic flows both ways in approximately equal amounts.
    Netflix is something like 30% of internet traffic and it's mostly one way. They are so big they produce more traffic than many entire ISPs.

    They may be so big that no ISP can peer with Netflix's ISP without disturbing this balance.
    Is it possible that the solution is that Netflix basically are forced to have multiple ISPs and connect directly to many networks?

    I can see that this could lead to problems as has been mentioned elsewhere in this and many other threads, but maybe there have to be exceptions to the general rule.
  • by Karmashock (2415832) on Sunday February 23, 2014 @07:40PM (#46319215)

    Companies like comcast only exist because no one is allowed to compete with them. Remove the monopoly protection and let them get torn apart by competitors.

  • Tempest in a teapot (Score:5, Informative)

    by matthewv789 (1803086) on Sunday February 23, 2014 @10:53PM (#46320211)

    Net neutrality is a real issue, but this is not an example of it, it's just Internet infrastructure working as it always has and as it's intended to.

    Previously, Netflix did not have a direct peering arrangement with Comcast, so they paid Cogent and others for transit to Comcast.

    Now, they have arranged to directly connect their network to Comcast (which was NOT the case before), and, since they are not supplying the roughly equal traffic in both directions typical of "no-pay" peering agreements, they have agreed to pay Comcast for this arrangement.

    What they are paying Comcast for direct peering appears to be LESS than what they were paying Cogent et al previously for transit to Comcast... And they have a more direct, and presumably better performing, set of connections now.

    This is a win-win for everyone, and has nothing to do with net neutrality. It's a simple arrangement to implement more direct and lower-cost traffic relaying.

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