Netflix Fights Attempt To Make Streaming Firms Pay For ISP Network Upgrades 38
An anonymous reader quotes a report from Ars Technica: Netflix co-CEO Greg Peters spoke out against a European proposal to make streaming providers and other online firms pay for ISPs' network upgrades. "Some of our ISP partners have proposed taxing entertainment companies to subsidize their network infrastructure," Peters said in a speech Tuesday at Mobile World Congress in Barcelona (transcript). The "tax would have an adverse effect, reducing investment in content -- hurting the creative community, hurting the attractiveness of higher-priced broadband packages, and ultimately hurting consumers," he argued. [...] "ISPs claim that these taxes would only apply to Netflix. But this will inevitably change over time as broadcasters shift from linear to streaming," Peters said at MWC. Sandvine data suggests that nearly half of global Internet traffic is sent by Facebook, Amazon, Google, Apple, Netflix, and Microsoft. Online video accounts for 65 percent of all traffic, and Netflix recently passed YouTube as the top video-traffic generator.
Peters cited Nielsen data showing that "Netflix accounts for under 10 percent of total TV time" in the US and UK while "traditional local broadcasters account for over half of all TV time." Live sports account for much of that. "As broadcasters continue the shift away from linear to streaming, they will start to generate significant amounts of Internet traffic too -- even more than streamers today based on the current scope and scale of their audiences," Peters said. "Broadband customers, who drive this increased usage, already pay for the development of the network through their subscription fees. Requiring entertainment companies -- both streamers and broadcasters -- to pay more on top would mean ISPs effectively charging twice for the same infrastructure." Telcos that receive new payments wouldn't be expected to lower the prices charged to home Internet users, Peters said. "As the consumer group BEUC has pointed out, there is no suggestion these levies would be passed onto consumers in the form of 'lower prices or better infrastructure,'" he said.
Peters said Netflix's "operating margins are significantly lower than either British Telecom or Deutsche Telekom. So we could just as easily argue that network operators should compensate entertainment companies for the cost of our content -- exactly as happened under the old pay-TV model." While telcos claim companies like Netflix don't pay their "fair share," Peters pointed out that Netflix has spent a lot building its own network that reduces the amount of data sent over traditional telecom networks. "We've spent over $1 billion on Open Connect, our own content delivery network, which we offer for free to ISPs," he said. "This includes 18,000 servers with Netflix content distributed across 6,000 locations and 175 countries. So when our members press play, instead of the film or TV show being streamed from halfway around the world, it's streamed from around the corner -- increasing efficiency for operators while also ensuring a high-quality, no-lag experience for consumers." Peters also touted Netflix's encoding technology that cut bit rates in half between 2015 and 2020. While Internet traffic has increased about 30 percent a year, "ISPs have managed this increased consumer usage efficiently while their costs have remained stable," Peters said. "Regulators have highlighted this, too, calling out that infrastructure costs are not sensitive to traffic and that growing consumption will be offset by efficiency gains."
Peters cited Nielsen data showing that "Netflix accounts for under 10 percent of total TV time" in the US and UK while "traditional local broadcasters account for over half of all TV time." Live sports account for much of that. "As broadcasters continue the shift away from linear to streaming, they will start to generate significant amounts of Internet traffic too -- even more than streamers today based on the current scope and scale of their audiences," Peters said. "Broadband customers, who drive this increased usage, already pay for the development of the network through their subscription fees. Requiring entertainment companies -- both streamers and broadcasters -- to pay more on top would mean ISPs effectively charging twice for the same infrastructure." Telcos that receive new payments wouldn't be expected to lower the prices charged to home Internet users, Peters said. "As the consumer group BEUC has pointed out, there is no suggestion these levies would be passed onto consumers in the form of 'lower prices or better infrastructure,'" he said.
Peters said Netflix's "operating margins are significantly lower than either British Telecom or Deutsche Telekom. So we could just as easily argue that network operators should compensate entertainment companies for the cost of our content -- exactly as happened under the old pay-TV model." While telcos claim companies like Netflix don't pay their "fair share," Peters pointed out that Netflix has spent a lot building its own network that reduces the amount of data sent over traditional telecom networks. "We've spent over $1 billion on Open Connect, our own content delivery network, which we offer for free to ISPs," he said. "This includes 18,000 servers with Netflix content distributed across 6,000 locations and 175 countries. So when our members press play, instead of the film or TV show being streamed from halfway around the world, it's streamed from around the corner -- increasing efficiency for operators while also ensuring a high-quality, no-lag experience for consumers." Peters also touted Netflix's encoding technology that cut bit rates in half between 2015 and 2020. While Internet traffic has increased about 30 percent a year, "ISPs have managed this increased consumer usage efficiently while their costs have remained stable," Peters said. "Regulators have highlighted this, too, calling out that infrastructure costs are not sensitive to traffic and that growing consumption will be offset by efficiency gains."
Re:eat dicks, net flix (Score:5, Insightful)
I think you have that backward, where an intermediate ISP was trying to charge Netflix for equipment upgrades. If you want access to Netflix you need two things:
1. Internet access of your own.
2. A Netflix account/subscription.
See number 1 there, where you pay an ISP for access. The ISPs are already getting paid for the bandwidth.
Re:eat dicks, net flix (Score:4, Informative)
Exactly. If they need additional money to upgrade their infrastructure, those costs should go directly to the consumer who is the one utilizing the resource.
Re: eat dicks, net flix (Score:3)
Personally, if I was an ISP, I'd have a low cost subscription with a pretty low data cap. Meaning that if you watch netflix, you do not make it to the end of the month.
Charge the heavy users.
Re: (Score:2)
And frankly, Netflix works fine over 4G. In fact, it's pretty good even at 500Kb/s
5G has never been a consumer tech, it's a high density tech allowing more endpoints. Of course, the phone companies screwed themselves because higher speeds, lower prices and no caps ensured they could never get ROI from consumers.
Good (Score:5, Insightful)
If netflix is sending me bits, it's because I asked for them; they're my responsibility. If the ISP wants more money for carrying those bits they can talk to me.
Do both (Score:2)
Do both. If the government decides to intervene and charge content providers for network costs, then in exchange for subsidizing the network - the government should set a rate cap, commit requirement, a buildout and uniform access requirement for consumer internet access and service fees.
The pricing should impose universal access to high-bandwidth reliable internet, And set a rate less than the current rates in all markets (Since the network is now going to be subsidized).
Re: Do both (Score:2)
Insanely greedy. (Score:5, Insightful)
All ISPs go on and on about how much bandwidth they will give you, for anything you want, access to the internet.
But then if Netflix doesn't pay, I only get the internet ... except netflix? Shouldn't I get a discount?
The entire idea seems stupid and insane. You charge your customers for bandwidth and your expense is providing that bandwidth.
Re: (Score:1)
You are under the impression that companies don't pay for bandwidth? That's only true for organizations that scale to the level that they directly peer with ISP's. Even then it's completely normal to charge companies for peering situations where the traffic is highly asymmetrical. Netflix and the other billionaire run orgs have been using their market power to force EU ISP's to give them free bandwidth. Meanwhile Netflix pays US providers for that same service. Especially parties like Microsoft and Amazon t
Re:Insanely greedy. (Score:5, Insightful)
Let's see... looks like netflix makes heavy use of Amazon S3 for storage and EC2 for data processing. You really think Amazon isn't charging them for the network traffic too?
If you mean Netflix isn't paying e.g. Comcast, they shouldn't. Those are my bits. I asked for them, they're on Comcast's network because of me. If Comcast has a problem with them, then Comcast can talk to me about my rate plan.
Re: (Score:2)
The IPSs can make all of this streaming bandwidth consumption disappear by allowing the streaming services to install caching servers in the neighborhood nodes. But most ISP won't allow that, the plan instead is for the ISPs to install their own caching server and then charge massive fees to use them. This all centers around the ISPs wanting to replace the revenue loss from traditional cable. If the ISPs would just face the music and admit they are nothing but dumb pipes we wouldn't be having issues. I re
Re: (Score:2)
Your comment is confusing. Netflix streaming happens for 99% directly from peering arrangements. They don't pay Amazon for that 99%. In the EU they also don't lay ISP's but in the US they do. Netflix pays comcast. Comcast isn't going to talk with you because Comcast doesn't give a fuck about you. Neither does Netflix. In fact you are not a party here at all as it's a business dealing between those two parties.
Re: (Score:2)
> Even then it's completely normal to charge companies for peering situations where the traffic is highly asymmetrical
Can you give me an example?
Re: (Score:2)
Netflix paying comcast (and other ISP's) in the US is the classical example.
Re: (Score:2)
Thanks.
Sounds like Comcast wasn't delivery the speed and quality they promised the customer while letting the customer believe it was Netflix's fault.
"Netflix is paying Comcast for direct connection to network" - https://arstechnica.com/inform... [arstechnica.com]
"Deal with the devil: why Netflix broke its own rules on net neutrality" - https://www.theverge.com/2014/... [theverge.com]
Re: (Score:2)
They charge you for Internet access,
and they charge Netflix for internet access,
and they want to charge Netflix again because it makes money from its Internet access,
and now they want to charge Netflix again to upgrade their network.
Once they find a plausible reason to charge you again for the Internet access you already pay for, they will. They have no concept of reasonableness, all they want is to charge everyone they can as much as they can. Any money you still have left over after paying for Internet
Re: (Score:1)
this comment written by an ISP
How about giving me FTTP (Score:2)
Pick one. (Score:2)
Bill the client or bill the server. If ISPs want to charge service providers like Netflix, great! Stop charging consumers. If ISPs want to charge consumers, great! Stop trying to charge service providers.
Re:Pick one. (Score:5, Insightful)
This story repeatedly implies they don't, but running something like Netflix means paying for a lot bandwidth to ISPs. ISPs who may then turn around and charge end customers as well. Either way the end customer also pays.
This is la story of ISPs bribing government officials to charge companies like Netflix a second time, just because they can. The reason Netflix is bringing stuff up like its own CDN is because they know government officials are too ignorant to know how the internet works and too stupid to learn.
Re: (Score:3)
They don't, typically. Netflix handles a lot of their traffic through peering, and their transit providers are rarely the same companies as the customer's ISP (when the transit provider even has a consumer ISP division to begin with).
Re: (Score:2, Interesting)
The reason Netflix is bringing stuff up like its own CDN is because they know government officials are too ignorant to know how the internet works and too stupid to learn.
"government officials are ignorant:" The current Commissioner to the Internal Market involved into this draft is Thierry Breton, an actual Electrical Engineer (from Supelec Paris, the most prestigious school of such things in France), he was CEO of three large multinational IT / Telecom / Electronics companies successively, and apparently appeared in a list of best performing CEOs established by Harvard Business School. He then became Minister of Finances of France, and later EU Commissioner. Commissioners
Re: (Score:2)
The Commission requested ideas on how to lower the cost of deployment of the gigabit infrastructure. ISPs suggested to tax the contents providers, understandable of them.
Understandable? Sure, as long as you understand it as trying to steal money for something they've already been paid for.
Re: (Score:2)
A societal need was identified to deploy a new infrastructure. It will cost a lot and nobody wants to build it, so we have to tell them to. The money has to come from some place, in the end always the consumer. We use IRS, the government revenue where everyone pays independently of their use of internet; we can use tax where internet users pay independently of their actual need for the infrastructure; or we can use tax from the use of services that actually require the deployment and use of the infrastructu
Re: (Score:2)
I got 1 question for you to consider. Take your time and think it over carefully.Ok, here goes.
What will happen to Europe and the EU when they run out of other people's money to spend?
Re: (Score:2)
Like any government on this planet, they reassess their spending priorities as function of the money they can use.
Here it would mean they would not have access to this kind of money (corporate profits from internet-related big companies), then we would not have the possibility to create this gigabit internet. But that would be ok, because without the big streamers we would also not have the need for the infrastructures.
Re: (Score:2)
A societal need was identified to deploy a new infrastructure. It will cost a lot and nobody wants to build it, so we have to tell them to. The money has to come from some place, in the end always the consumer.
The obvious answer to a widespread public need is to collect the money through taxation, and build municipal infrastructure. If the infrastructure is owned by the government, the profit motive is removed from its management. This can result in inefficiencies, but in most cases satisfaction with municipal utilities is much higher than with private ones. This is also specifically true of municipal networks. Netflix will not be even the only video streaming-related beneficiary of an improved municipal networki
Re: (Score:2)
The obvious answer to a widespread public need is to collect the money through taxation, and build municipal infrastructure.
Building public-owned telecom is not possible anymore since liberalization (privatization) of telecommunication markets in 1998. It would take a landslide left-wing election across EU to change this state of facts. What they can do is regulate the telecom market such as set objectives and make sure funding exists; this is the purpose of their proposal.
a) collect it from all the big bandwidth users, not just netflix,
Yes this is the case. The premise is that currently big bandwidth users are the streamers (over 50% of bandwidth already, increasing due to people wanting HD/
Re: (Score:2)
> ISPs DO charge service providers like Netflix ... Netflix means paying for a lot bandwidth to ISPs
Can you give me any links about that and the ISP's argument/rational?
more of the same (Score:2)
Billing my coworkers (Score:2)
So my job pays me a wage to do some stuff. But its not enough and I want to make more. In my job I have to interact with other people, I'm going to start billing all of them for my time. I had a one hour meeting with Suzie, Charles, and Subramanian today - hope they are each ready for a $125 bill. I mean keeping up with work can be a real pain and I really can't grow my income at the office any other way.
Streaming is incentive to have broadband (Score:2)
Make car companies pay for roads? (Score:2)
What's next, make car companies pay for roads, or make airplane and jet makers pay for airports? Um...that just doesn't make sense. Its the customers who use those things. Its discriminatory to force creators + makers to pay in advance of their customers' usage. ISP infrastructure is used for alot more than Netflix streaming.
ISPs dishonest about bandwidth issue (Score:1)