And so the precedent is set. This is the direction I see things going:
For $70 a month from Comcast you can get Amazon, Google, and Facebook. For only $10 more a month you can add Netflix and Spotify. Want Pandora? Sorry, you'll have to switch to AT&T for that.
The broadband providers are used to this type of packaged service given their history as cable television providers. It's how they make their money beyond providing simple connectivity. Their future expansion and profits are linked to their ability to create exclusivity and extract revenue based on targeted demand.
I don't see any other way around this. Absent regulations prohibiting packet discrimination, I'm not sure I would do any different if I were in Comcast's shoes.
This is exactly the opposite of what you are talking about - there is no preference being provided for Netflix traffic. There is no charge going to the customer for access to Netflix.
This is simply the case of a provider, discovering that Cogent provides poor transit services, realizes that you actually have to pay in order to get good Internet peering. This has always been the case on the Internet.
As long as Comcast treats all traffic the same regardless of source, destination, packet type, etc.. I'm fine with their behavior here.
The deal was a paid-peering deal, which would likely drive down Netflix costs. We don't have any information on whether net neutrality was harmed. Hopefully netflix will provide information on this.
Peering is a practice where two sides agree to maintain their side of the infrastructure and not charge for metered bandwidth.
If this is a problem, then build physical infrastructure so your business isn't dependent on someone else's pipes. If states and municipalities put up roadblocks to it, then let's focus on tearing down those roadblocks.
I think it's ridiculous and self-serving for internet companies to complain about this. Getting bits to customers is a critical part of any online business. You can either do it yourself, or pay someone to do it. Does Amazon complain that UPS charges them to deliver packages to customers?
That is not going to happen. The onus is not on the consumer, it's on the service provider. The service provider may transfer the costs onto the consumer but Comcast won't directly charge the consumers a premium. That would be a bad move and Comcast would lose out its customers to competitors.
Wow, Netflix has decided to negotiate with the terrorists? I'm pretty disappointed.
Edit: Having read more of the non-paywalled version, I have to say I think they're shooting themselves in the foot, even if Comcast was offering a better price than Cogent. It sets a terrible precedent, and gives Comcast the leverage to bump the price extortionately at the end of the deal.
This is the creation of an economic moat (a term coined by Warren Buffet.)
The gatekeeper creates a toll and the tradesman agrees to pay the toll. This is an entry cost to new market players and therefore reduces competition. This toll may be increased as the biggest player (Netflix) grows in size and this benefits them, as eventually new startups have $1+ million startup costs and nobody is willing to invest in that cost-payoff scenario.
This is a win-win negotiation for both Comcast and Netflix but a loss for consumers. Unfortunately it's just how the game is played.
This might not be an anti-net neutrality deal. Here are the details we know at this point:
1. Netflix is currently using Cogent
2. Comcast offered them a direct connection to their network via paid-peering.
3. Netflix agreed and will move over.
4. Nothing about net neutrality was mentioned in the article.
This deal is being referred to as paid-peering. Peering is a practice performed at ISPs where two ISPs hook up infrastructure and agree to maintain their sides without charging for bandwidth. Peering is a common practice among the industry, and content-providers are always looking for ways to peer with more ISPs because it drives down their overall cost of operations.
The article says nothing about net neutrality. We don't have enough information to say whether net neutrality was harmed in this deal. We can only speculate at this time. Hopefully we will hear more from Netflix on this.
You don't seem to understand: This is not a technical issue; is a conceptual one, people are not going to read the details of the deal, rather to grab the idea and slowly believe that paying for better connection with a site/ISP is normal.
This is actually good for Netflix and terrible for any competition. While Netflix probably has to hand over a bit of money, they are in a much better position to do so than any of their competitors as they're the biggest. In effect this creates a massive entry barrier into the video streaming market. You will now likely need to set up a massive infrastructure and pay massive bribes to various internet providers to be able to compete. So this is probably a smart move by Netflix by creating entry barriers that they should be able to easily pass on to consumers if they can achieve market dominance.
This sounds like standard paid peering; there's nothing non-competitive here.
If you're a small provider, you tend to buy transit from one or a few providers, and pay per bit in whichever direction has the most traffic.
If you're bigger, maybe you can setup peering. If you have relatively balanced flows, and meet other qualifications, you can usually get free (settlement free) peering. If your flows aren't balanced, then the tradition is that whoever is sending more pays. If the networks you're establishing paid peering with are cheaper than your transit provider (usually the case), then peering is still a win for you, and a win for the other network.
If Netflix wants to get settlement free peering with Comcast, they need to balance their traffic to Comcast (maybe partner with a backup service, or web crawler)
The same thought came to my mind, a moat around Netflix's current business. However, I don't think that's quite how it will play out.
Comcast won't charge new streaming providers from the get go. That will stunt its own business opportunities. Instead it will prefer to let them grow to the point where they can claim network congestion issues. At that point it has a "justifiable claim" as well as more negotiating leverage.
Not so much established and highly capitalized competition (like Amazon), but disastrous for startups and new entrants. It adds a major barrier to entry in the form of a b2b paywall before you can reach consumers.
Not entirely sure why this is such a big deal. Peering agreements happen all the time. Lots of large services peer directly with consumer ISPs because it's cheaper and more efficient than using intermediary transit.
This has nothing to do with net neutrality. Comcast is not throttling or discriminating traffic in any way (at least not publicly). This is a peering dispute settlement.
Does this affect competitors to Netflix? Depends on how much volume they have. If their volumes are low, they can still reliably use transit providers more economically. As their revenue increases, they'll need their own backbone network, but their ability to pay for it goes up too.
Is Comcast big, bad and evil? Probably. But not in this case. Comcast dealing directly with Netflix is good for both parties. They are entitled to charge Netflix to peer directly because most traffic is going to flow into Comcast's network from Netflix. They also probably had a case negotiating away from settlement-free agreements with Cogent for the same reason. Again, none of this is out of the ordinary, ASes negotiate peering deals with each other all the time based on the volume and direction of the traffic they exchange with each other, and this is all fairly unregulated.
Net neutrality is irrelevant in all of this, it only matters if Comcast actively discriminates between traffic at their end. This deal is not connected to the ruling.
Comcast is a residential ISP. What possible traffic could there be to flow out of their network, other than requests for other data? By that logic, everyone has to pay to peer with Comcast because "Ha ha, we have all the customers. Darn, it sure is a shame that our customers don't have any data to send to you. Darn it, we really wish we could do free peering, but we just can't, aw, darn it. [cue South Park cable company responses]"
No, what happened was Comcast discovered another place they could fuck over the customer - by charging for peering even though it benefits their customers to not do so, and decided to spin it into some way that makes people feel like Comcast was somehow being injured by Netflix under the old settlement-free peering model.
Beyond looking at the implications for Net Neutrality (since we don't really know the implications of this deal going forward in relation to this); for people who are wondering why this has happened, this looks like this is part of Netflix's Open Connect Project[1] which is a single-purpose CDN network - and is essentially a paid-peering deal.
As part of the Open Connect Project, Netflix has deployed servers which are hundreds of terabytes in size in strategic locations all over the work and they contain ~60-90% of the data required for that particular country.
These devices either live in the ISP (which is what Netflix wanted to happen with Comcast) or live in an internet exchange where multiple ISPs can connect to the Open Connect devices.
There are 3 core benefits in doing this:
- Better Streaming due to fewer hops to the client
- Peering is free (usually) and is essentially where two ISPs connect their infastructure and agree to maintain their own sites without bandwidth charges. It's common throughout the industry and content-providers are always looking to peer with ISPs to drive down their overall costs of operations.
Are the insane? Why would they agree to this weeks after the net neutrality case, and not wait at least until they see what Congress and FCC want to do about it?
The only other explanation is that they may actually like this, because they know it would slow down a lot of their smaller competitors coming after them. It's even stranger when you think that customers must've blamed Comcast for their poor Netflix experience lately, not Netflix.
> The only other explanation is that they may actually like this, because they know it would slow down a lot of their smaller competitors coming after them.
It's like a hostage situation; you say "yeah I don't negotiate with terrorists" but when you see your wife/kid/so threatened and the money is just there in the bank it's hard to hold on to that posture...
Netflix and other streaming services should not engage in these types of contracts. They should instead detect slowdowns and notify customers of the slowdown and to call their provider to fix it, resulting in increased support costs, customer attrition, etc for the provider. Peering should remain a 50/50 split between the major peers. Just because Comcast and Verizon are sitting there refusing to turn the ports on until you cough up $ (basically a hostage negotiation) doesn't mean you should.
I thought Comcast had to follow the net neutrality rules until 2018 regardless of that court decision a few weeks ago... Is this NFLX caving because nobody is enforcing the rules Comcast agreed to? (Edited for englishy)
In addition to the absurd, outsized cost, I don't want to pay Comcast et al. -- directly or indirectly -- these extorted prices, because they turn around and spend from these enormous profit margins to further constrain and "prioritize" my use.
The only solution, is to cut off this excess profit that has become the lifeblood of this systematic abuse.
And where these oligopolies have essentially captured the market to the point of excluding any and all competition: End them, legally. Break them up. Specifically legalize and perhaps even foster municipal broadband.
There may be no ultimate, static solution. But there are definitely next steps, and they are overdue.
Cogent has had peering disputes not only with consumer ISPs like Comcast, but with nearly every other tier one provider out there. Cogent is known to provide very cheap bandwidth but on the flip side they are also known to not be a mutually beneficial partner for settlement free peering. If you have cogent as a provider you should know this. Netflix knows that and thus has offered to provide settlement to Comcast to get better peering rather than be in the overcrowded Cogent link.
"Neutral" is a vague term that in this circumstance conveys no actual meaning.
Settlement free peering is the exception, not the rule. Almost everyone pays for access to the Internet, whether it's buying transit or peering with settlement.
Unsaid among all this - Netflix could have simply paid a higher quality transit provider (Level 3) to provide them transit, and there wouldn't have been any problems (Level 3 maintains some headroom on their peering circuits).
The reality is that it was likely cheaper for Netflix to just pay for peering with Comcast directly.
I think what I'm seeing is that Netflix doesn't really care about neutrality beyond its ability to enable their business. Which is basically what we as consumers should have assumed from the start.
This is a terrible precedent to set, and if it's true, I'm very disappointed in Netflix. Comcast is vulnerable right now since it's seeking to merge with TWC. Now's the time to pull out the big guns and show Congress, the FTC, and the citizens of the US why net neutrality is important. But instead of taking advantage, they cave and even pay off Comcast in what's essentially extortion. A disturbing vision of the future broken Internet to come.
Wait wait wait...so, a company that has something like 60-70% of the market in total monopoly now has successfully ransomed another company who depends on their services?
Where are you getting those numbers? It would seem [1] that Comcast has about 24% broadband market share. Subtracting the 3 million or so planned divested lines, even a post-merger Comcast would only have about 34% of the market -- which may be too high for comfort, but is nowhere near 60-70%
Heres what I would be trying if I was netflix. Probably sure I'd have trouble pushing it against the rest of the company but I'd try this:
1) Collect evidence of network tampering/filtering
2) Get agreement in place to pay for better service
3) Collect the rest of the evidence that network filtering was in place when it gets lifted.
4) Simultaneously hit comcast up for breaching the neutrality agreements, while notifying all comcast customers that comcast is forcing netflix to charge its customers more for access.. that it might have to be along to them to pay... but we are working on ways yo prevent it.
Try and squeeze comcast from both ends at once and public embarrass them, while trying to keep the higher ground, looking like the peoples hero, under dog etc...
I doubt many companies would take that risk, but that what I'd try.
They have already done 1 and 2. The problem is #4 isn't possible because there aren't neutrality agreements to breach. Comcast provides shit service to Netflix and that's perfectly legal.
[+] [-] scelerat|12 years ago|reply
For $70 a month from Comcast you can get Amazon, Google, and Facebook. For only $10 more a month you can add Netflix and Spotify. Want Pandora? Sorry, you'll have to switch to AT&T for that.
The broadband providers are used to this type of packaged service given their history as cable television providers. It's how they make their money beyond providing simple connectivity. Their future expansion and profits are linked to their ability to create exclusivity and extract revenue based on targeted demand.
I don't see any other way around this. Absent regulations prohibiting packet discrimination, I'm not sure I would do any different if I were in Comcast's shoes.
[+] [-] ghshephard|12 years ago|reply
This is simply the case of a provider, discovering that Cogent provides poor transit services, realizes that you actually have to pay in order to get good Internet peering. This has always been the case on the Internet.
As long as Comcast treats all traffic the same regardless of source, destination, packet type, etc.. I'm fine with their behavior here.
[+] [-] ffk|12 years ago|reply
Peering is a practice where two sides agree to maintain their side of the infrastructure and not charge for metered bandwidth.
https://en.wikipedia.org/wiki/Peering
[+] [-] rayiner|12 years ago|reply
I think it's ridiculous and self-serving for internet companies to complain about this. Getting bits to customers is a critical part of any online business. You can either do it yourself, or pay someone to do it. Does Amazon complain that UPS charges them to deliver packages to customers?
[+] [-] philwelch|12 years ago|reply
[+] [-] aleem|12 years ago|reply
[+] [-] Wingman4l7|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] bbosh|12 years ago|reply
Vote with your feet.
[+] [-] jaggederest|12 years ago|reply
Edit: Having read more of the non-paywalled version, I have to say I think they're shooting themselves in the foot, even if Comcast was offering a better price than Cogent. It sets a terrible precedent, and gives Comcast the leverage to bump the price extortionately at the end of the deal.
[+] [-] lhnz|12 years ago|reply
This is the creation of an economic moat (a term coined by Warren Buffet.)
The gatekeeper creates a toll and the tradesman agrees to pay the toll. This is an entry cost to new market players and therefore reduces competition. This toll may be increased as the biggest player (Netflix) grows in size and this benefits them, as eventually new startups have $1+ million startup costs and nobody is willing to invest in that cost-payoff scenario.
This is a win-win negotiation for both Comcast and Netflix but a loss for consumers. Unfortunately it's just how the game is played.
[+] [-] teddyh|12 years ago|reply
The term you should be looking for is “paying the danegeld”:
That if once you have paid him the Danegeld, you never get rid of the Dane.
— Dane Geld, Rudyard Kipling
[+] [-] middleclick|12 years ago|reply
[+] [-] loceng|12 years ago|reply
[+] [-] ffk|12 years ago|reply
1. Netflix is currently using Cogent
2. Comcast offered them a direct connection to their network via paid-peering.
3. Netflix agreed and will move over.
4. Nothing about net neutrality was mentioned in the article.
This deal is being referred to as paid-peering. Peering is a practice performed at ISPs where two ISPs hook up infrastructure and agree to maintain their sides without charging for bandwidth. Peering is a common practice among the industry, and content-providers are always looking for ways to peer with more ISPs because it drives down their overall cost of operations.
The article says nothing about net neutrality. We don't have enough information to say whether net neutrality was harmed in this deal. We can only speculate at this time. Hopefully we will hear more from Netflix on this.
[edit to fix list formatting]
[+] [-] ivanca|12 years ago|reply
[+] [-] eli|12 years ago|reply
[+] [-] RyanZAG|12 years ago|reply
[+] [-] toast0|12 years ago|reply
If you're a small provider, you tend to buy transit from one or a few providers, and pay per bit in whichever direction has the most traffic.
If you're bigger, maybe you can setup peering. If you have relatively balanced flows, and meet other qualifications, you can usually get free (settlement free) peering. If your flows aren't balanced, then the tradition is that whoever is sending more pays. If the networks you're establishing paid peering with are cheaper than your transit provider (usually the case), then peering is still a win for you, and a win for the other network.
If Netflix wants to get settlement free peering with Comcast, they need to balance their traffic to Comcast (maybe partner with a backup service, or web crawler)
[+] [-] aleem|12 years ago|reply
Comcast won't charge new streaming providers from the get go. That will stunt its own business opportunities. Instead it will prefer to let them grow to the point where they can claim network congestion issues. At that point it has a "justifiable claim" as well as more negotiating leverage.
[+] [-] wmf|12 years ago|reply
[+] [-] danielsiders|12 years ago|reply
[+] [-] InclinedPlane|12 years ago|reply
[+] [-] dllthomas|12 years ago|reply
[+] [-] santosha|12 years ago|reply
This has nothing to do with net neutrality. Comcast is not throttling or discriminating traffic in any way (at least not publicly). This is a peering dispute settlement.
Does this affect competitors to Netflix? Depends on how much volume they have. If their volumes are low, they can still reliably use transit providers more economically. As their revenue increases, they'll need their own backbone network, but their ability to pay for it goes up too.
Is Comcast big, bad and evil? Probably. But not in this case. Comcast dealing directly with Netflix is good for both parties. They are entitled to charge Netflix to peer directly because most traffic is going to flow into Comcast's network from Netflix. They also probably had a case negotiating away from settlement-free agreements with Cogent for the same reason. Again, none of this is out of the ordinary, ASes negotiate peering deals with each other all the time based on the volume and direction of the traffic they exchange with each other, and this is all fairly unregulated.
Net neutrality is irrelevant in all of this, it only matters if Comcast actively discriminates between traffic at their end. This deal is not connected to the ruling.
[+] [-] gergles|12 years ago|reply
No, what happened was Comcast discovered another place they could fuck over the customer - by charging for peering even though it benefits their customers to not do so, and decided to spin it into some way that makes people feel like Comcast was somehow being injured by Netflix under the old settlement-free peering model.
[+] [-] itsprofitbaron|12 years ago|reply
As part of the Open Connect Project, Netflix has deployed servers which are hundreds of terabytes in size in strategic locations all over the work and they contain ~60-90% of the data required for that particular country.
These devices either live in the ISP (which is what Netflix wanted to happen with Comcast) or live in an internet exchange where multiple ISPs can connect to the Open Connect devices.
There are 3 core benefits in doing this:
- Better Streaming due to fewer hops to the client
- Netflix avoids rate limiting (if they're inside the ISP Network)
- Peering is free (usually) and is essentially where two ISPs connect their infastructure and agree to maintain their own sites without bandwidth charges. It's common throughout the industry and content-providers are always looking to peer with ISPs to drive down their overall costs of operations.
[1] http://openconnect.netflix.com
[+] [-] higherpurpose|12 years ago|reply
The only other explanation is that they may actually like this, because they know it would slow down a lot of their smaller competitors coming after them. It's even stranger when you think that customers must've blamed Comcast for their poor Netflix experience lately, not Netflix.
[+] [-] twoodfin|12 years ago|reply
[+] [-] badman_ting|12 years ago|reply
There ya go.
[+] [-] callahad|12 years ago|reply
[+] [-] almosnow|12 years ago|reply
It's like a hostage situation; you say "yeah I don't negotiate with terrorists" but when you see your wife/kid/so threatened and the money is just there in the bank it's hard to hold on to that posture...
[+] [-] JohnTHaller|12 years ago|reply
[+] [-] cwisecarver|12 years ago|reply
[+] [-] pasbesoin|12 years ago|reply
The only solution, is to cut off this excess profit that has become the lifeblood of this systematic abuse.
And where these oligopolies have essentially captured the market to the point of excluding any and all competition: End them, legally. Break them up. Specifically legalize and perhaps even foster municipal broadband.
There may be no ultimate, static solution. But there are definitely next steps, and they are overdue.
[+] [-] specialp|12 years ago|reply
[+] [-] linuxhansl|12 years ago|reply
I am already paying Comcast for access to the internet! Why does Netflix have to pay on top it?
That said, I have Netflix and Comcast and I have never experienced any issues.
Edit: Actually I realize, this is an agreement to allow Netflix to colocate some of their servers at Comcast hubs. So it is not actually that bad.
[+] [-] insaneirish|12 years ago|reply
"Neutral" is a vague term that in this circumstance conveys no actual meaning.
Settlement free peering is the exception, not the rule. Almost everyone pays for access to the Internet, whether it's buying transit or peering with settlement.
Nothing new to see here, move along.
[+] [-] smutticus|12 years ago|reply
[+] [-] ghshephard|12 years ago|reply
The reality is that it was likely cheaper for Netflix to just pay for peering with Comcast directly.
[+] [-] gnoway|12 years ago|reply
[+] [-] skywhopper|12 years ago|reply
[+] [-] vxxzy|12 years ago|reply
So much for net neutrality. Now ISPs have another way to make more $$. Keep those profits higher - push smaller streaming services out.
[+] [-] angersock|12 years ago|reply
Motherfuckers.
[+] [-] briandh|12 years ago|reply
[1] http://gigaom2.files.wordpress.com/2013/05/usbroadbandsubscr...
[+] [-] zeckalpha|12 years ago|reply
This may mark the end of net neutrality.
[+] [-] aleem|12 years ago|reply
[+] [-] pushrax|12 years ago|reply
[+] [-] rjd|12 years ago|reply
1) Collect evidence of network tampering/filtering
2) Get agreement in place to pay for better service
3) Collect the rest of the evidence that network filtering was in place when it gets lifted.
4) Simultaneously hit comcast up for breaching the neutrality agreements, while notifying all comcast customers that comcast is forcing netflix to charge its customers more for access.. that it might have to be along to them to pay... but we are working on ways yo prevent it.
Try and squeeze comcast from both ends at once and public embarrass them, while trying to keep the higher ground, looking like the peoples hero, under dog etc...
I doubt many companies would take that risk, but that what I'd try.
[+] [-] jonknee|12 years ago|reply