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Comment by chimeracoder | Hacker News Reader

> 2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"

I agree with your first point, but your second point doesn't follow. If anything, Comcast will price gouge Netflix out of business, and we'll be back to being stuck watching their awful "On Demand" instead.

They can do this, because Comcast owns the content (NBC), the delivery mechanism for said content (cable TV), and the only delivery mechanism (broadband Internet) for their competitor (Netflix/Amazon Prime).

On the other hand, the (failed) merger attempt between AT&T and T-Mobile was the best thing to happen to consumers in a long time, due to the breakup fee that AT&T had o pay T-Mobile($1+ billion worth of spectrum).

I'm trying to imagine a similar silver lining that could happen here, though I can't think of any.

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And how would this 'FU ComcastWarner' work in America? Anywhere you live you only have the choice of paying your cable provider, your telephone carrier or your wireless carrier for internet. - DSL infrastructure hasn't evolved in a decade or more. You're lucky to get mid-single digit megabits/sec. I had 0.7 mpbs offered to me in Mountain View by at&t. - Cable is the only speedy one, but they can price gouge you, limit the amount of traffic (see Comcast) and decide who to prioritize - Wireless is getting faster, but is severely limited in transfer packages. You'd be paying an arm and leg just to get a few Gigabytes in total per month.

So tell me - how does this 'FU ComcastWarner' gonna work? Move to the one or two towns that have alternative internet (e.g. Fibre)?

We could all pressure our local governments to provide municipal internet. Many cities have already created services that are much faster too.

Unless/until the state or local governments pass laws that make that illegal and grant even stronger de facto monopolies to the cable companies.

We control our government. If they fail to act in our best interest it is our fault.

You're being very naive, Comcast has more control and access to government then 'we'.

Currently.

Futurely too.

One man, one vote.

One fat wallet, one million votes.

Too late. The DSL & Cable monopolies are lobbying like hell to make municipal broadband illegal, and have succeeded many places.

Internet providers need to quit playing these shenanigans all the time.

What they do is they build public roads. You wouldn't allow a company to build a public road, and then go:

"Safeway trucks get a free pass, cause we have a deal with them; everyone else, $5 per vehicle. Except for you, Best Buy, you pay $25 - except Saturday and Sunday, when you may not pass at all."

... Best Buy pays more than anyone else? Hm, this is starting to sound good.

Well, I do see signs on side streets all the time that say "no trucks over 3 tons". And I've seen parking signs that had incomprehensible terms.

I agree with your position, but I think your analogy is tortured.

I also see police on the roads, that prevent random lunatics from driving while tripping balls and ramming into my ass at 150 km/h during my morning commute. I think that's also a function of government.

Secondly, if you think the "no trucks over 3 tons" signs impinge on your "liberty", then go ahead and drive a 25 ton truck down that road, see what happens. I'm having this discussion about "liberty" versus common sense with my 3rd grade son all the time.

I certainly never said "no trucks over 3 tons" impinges anyone's liberty. I was implying that "no trucks over 3 tons" is equivalent to saying "no one is allowed to consume more than X amount of bandwidth" on my public pipe, which is exactly how the network providers are going to couch their arguments when trying to strangle Netflix.

There is probably a good technical reason as to why there is a 3 ton limit, i.e. the road (or bridge this road crosses) can't support >3 tons and will probably collapse under the weight of a heavier vehicle. There are also good safety reasons such as not wanting 25ton 18 wheelers using the road past your local primary school as a rat run. That's where your analogy fails.

Well a long time ago I would have been all for public roads, but alas do you really trust the Federal government to dictate what does go down the pipe and who is allowed?

Do you trust the Federal government to dictate what goes down the road and who is allowed to drive?

I recommend blind trust in nobody, as a rule. But with the government, at least there's the option of voting against the current office holders. Whereas when a Comcast-TimeWarner super-juggernaut takes over the whole market, what are my options? My lawyers versus theirs? Yeah, that would end up "well".

With the government, at election time, you have the option to vote between one corrupt asshole or the other. With corporations, you can just choose to not buy from them (therefore starving them of money).

So, in the case we're discussing here (and directly applicable to my own situation BTW, but that's anecdotal), people will have the "choice" between, let's see... Comcast-TimeWarner and... Comcast-TimeWarner. Great choice, I'll take seven!

Or I could choose to not buy, therefore starving myself of the resources they provide. That's even better!

So you really, really have to have Internet/cable, and they must give it to you cheaply and at high quality? If you're not even considering the option of walking away from them, you're giving them enormous leverage over you.

EDIT: This is the behavior of "rational economic actors", IMHO. If the benefit you get from the expensive Internet they offer is bigger than the cost, it's rational to take it. If it isn't, then it's rational to pass on it. If enough people do this, then the corporation realizes they get more customers by lowering prices (if they also act as "rational actors").

Many people really, in a practical sense, do have to have the Internet, and at reasonably high quality. Work and school being two common cases.

The 'rational actor' model is to economics what spherical cows [1] are to dairy farms. It is a simplifying assumption that is useful for certain general cases, but if you ever find yourself depending upon it in an argument, you're working at too shallow a level.

In this case, though, even if the rational-actor model were valid, you'd be wrong. In the case of monopolies and oligopolies, the rational-actor approach is to, basically, let yourself be screwed by the monopolist.

For example, in my case I'm in an area where I pay more money for worse broadband (ADSL) because I hate monopolists like Comcast. From an economics perspective, I'm an irrational actor, because I'm not optimizing for my own interests.

[1] http://en.wikipedia.org/wiki/Spherical_cow

> Many people really, in a practical sense, do have to have the Internet, and at reasonably high quality. Work and school being two common cases.

Work and school are economic investments with concrete returns; financially, you get more out of Internet access than you pay. If you didn't need Internet for either of these, and just used it for Netflix or World of Warcraft (or any kind of recreation), would you reconsider paying for it?

Sorry, I'm not interested in jumping through your theoretical hoops. As a non-Comcast user who does need the internet, that doesn't seem like an interesting game to me.

Then do the constituents of your city, county, state, and country a service and either stand for election, volunteer time for a candidate that's not an asshole, or donate money to the campaign of a candidate that's not an asshole so they get on the ballot. Otherwise you get what you deserve.

What if a company built a private road and did the same thing? Would you still have a problem with it?

I've no problem with what people and companies do in their own backyards.

Keep in mind that in some cases the municipals are sued by the companies that can't be bothered to implement quality broadband for trying to implement quality broadband.

Makes me wonder if it'll have to get to the point that a municipality says fuck you to both the broadband provider suing them and the county/state courts that allow such nonsense to implement their broadband anyway.

municipal internet

Sure. But how many 'municipal' providers are there in places where a lot of the HN activity lies (i.e. SF/Silicon Valley) in say Mountain View, Palo Alto, Santa Clara, Redwood City, Menlo Park, San Mateo, Cupertino, Los Altos etc? It's a small patchwork all over the country.

When municipalities offer cable they roll out with a competitive package but often fall behind in technology over time because they are slow to upgrade and have no leverage with content providers. I imagine it would be the same for internet.

Why would they need leverage with content providers? I don't want content from my municipal, I want access to the content of my choosing. Let me deal with content providers on my own terms.

The latency on cellular internet makes it unusable for many applications like gaming.

I've played many games of Starcraft on a Verizon LTE connection. Many (most?) online games have 250ms of latency "built in" to even the playing field for users with ping times below 250ms. LTE latency is usually closer to 50ms

Twitch shooters, at least, definitely do _not_ have built in latency, and 250ms is unplayable.

250ms is probably ok for RTSs and turn based games, but would not work for anything fast paced.

I am confused how RTSes are not fast paced. I can't imagine any FPS has players do the same levels of Actions per minute [1] as some good RTS players.

[1] http://starcraft.wikia.com/wiki/Actions_per_minute

It's pretty easy to do lag compensation on RTSs. You have the server run a copy of the game locally and just sync with the clients. Typically, RTSs have a lot of actions, but timing isn't as crucial. So, if things get out of sync, you just buffer until you everything catches back up again. You can even do things like vary the speed of the game (FPS) without the players noticing much. With games that rely on precise timing as a core mechanics (e.g. a shooter, fighting, or rhythm), the player is going to notice that an action took 10ms and then the next time they did it, it took 20, because they'll actually miss their target.

250 ms for SC2 is a huge handicap and is definitely not added to the game. I can't imagine marine splitting(or really playing BW at all) with that kind of penalty.

That being said, Targa is famous for playing for a while via a 4g connection in Australia. So playing the game well is certainly possible.

Netflix partnering with, or potentially acquired by, Amazon to take on other platforms makes sense. There needs to be consolidation and I think Bezos could do a better job bringing in bigger licensing deals.

So your solution to defeating a monopoly is to form a monopoly?

That is called duopoly, and is less bad than a monopoly.

A duopoly might help in America but for the rest of us (at least where I'm from) competition is working fine. I can choose between around 5 different providers for internet and/or TV with prices starting at as little as $35 per month for unlimited internet at around 20mbps download speed. I can also choose online between Netflix, Amazon/LoveFilm, free demand services such as BBC iPlayer, ITV Player, 4OD, and paid on demand services that come with certain TV packages (SKY on demand). In the UK competition in this space has never looked better in my opinion. It always amazes me that America, the champion of the free market, has such a fucked up telecoms (and by extension TV) industry.

If you're in the UK, Zen Internet now offer £25/month truly unlimited fibre broadband. ~80mbps down, ~20mbps up, no traffic shaping / AUP or anything. I am so happy with my internet right now.

Thanks for the tip - looks like fibre isn't available in my area yet though.

The $35 includes most calls (all local and ten most-called/chosen national and mobile numbers are free on my package from the last three providers) and line rental. Add another $15 for TV licence.

The competition here is from Local Loop Unbundling [1], where the non-ISP part of BT, BT Openreach, works on the exchanges and cabinets. Rollout stats [2], compare Scotland and London for the rural/city development. There's up to 9 choices in London, I would expect iPlayer would work on all of them.

http://en.wikipedia.org/wiki/Internet_in_the_United_Kingdom#... https://www.samknows.com/broadband/statistics/regional

Yeah, it's ridiculous, even to this American.

The best way I can explain it is that it's putting the accent more on "free" than on "market", and it's a 14-year-old's definition of free: "You can't make me do anything! YOU'RE NOT MY DAD!"

However, I worry that the more accurate explanation is that it is a neofeudal structure cloaked in free-market terms.

Google is already positioning similarly with YouTube, Google Fiber, and plays for wireless service here and in floating balloons around the planet.

Tripilolopopy

From Tripoli to Gallipoli.

Netflix can hardly be called a monopoly. I cancelled in 2013 because it had such a tiny catalog.

Besides, if it doesn't equal bittorrent, what is an amoral person going to choose? I think I'll choose s/stealing/borrowing/.

Amazon already have a film-on-demand service called LOVEFiLM.com.

That's U.K.; for America at least, we have Prime instant video.

Are either any good? Better than NF or Hulu+? Cost?

> They can do this, because Comcast owns the content (NBC)

You forgot Universal, which together still amounts to only a fraction of Netflix's content. There's a reason that Netflix doesn't carry many titles in their streaming service: it's already too costly to acquire the rights to stream them all. If Comcast were to raise the price on that content, Comcast could simply stop streaming those movies/shows. Given the size of their library at this point, I doubt any of this would be missed. The "content" you mention is no longer as critical to Netflix's business strategy as it used to be, especially as they move to more original content.

Netflix's original content only amounts to a fraction of the content available on Netflix. They do and will continue to be dependent on licensing this content.

They might want Netflix to survive in some form so as to avoid awaking the sleeping antitrust dogs. Same way as Microsoft found the Mac a useful argument against the "desktop monopoly" argument in the 90s.

If they cared about that, I don't think they would be throttling Netflix.

They would simply enforce draconian bandwidth caps to disincentivize streaming altogether.

It's not like many of their users could opt for a different service, anyway.

I seem to remember that pointing at the Mac as a defense against desktop monopoly charges didn't work out too well for them in the end.

What happened to MS in the alternate universe where MS openly vowed to crush Netscape and were as good as their word, after Apple went bankrupt in the early 90s?

They lost their antitrust case, which most of the harshest judgements were reduced or overturned later in appeal. In the end it was determined that they were a monopoly, the results of which include the things you mentioned, and some of their long held business practices had to be changed. After that Netscape eventually came back, and better, as Firefox and Apple doesn't seem to be doing so badly these days.

I'm not understanding your point about an alternate universe in your statement. I must be missing something.

To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry. iApps running on iOS running on an iPhone using an Apple A7 offers the ability to optimize the user experience and integrate the layers that vendors doing things piecemeal can't match.

If Netflix et al want to survive, they have to evolve from being mere middlemen, funneling someone else's content through someone else's pipes.

Google has threatened to go nuclear over net neutrality and open up their dark fiber network should things get ugly. Google has more fiber than most any one single company in the us and could be a legitimate threat should comwarner try to call their bluff. I have a feeling google would win that fight

I would love to see Google enter that fight instead of trying to regulate their competition away. Not because I'm that anti regulation, but because I don't appreciate the irony of Silicon Valley always bitching about regulation, but then demanding that the government create an artificial reality where owning the pipes doesn't give you a natural competitive advantage.

Would you appreciate it if one supermarket bought all the food and then price gouged you 100 dollars for meat?

I don't see how a monopoly helps anyone but the corporation, and even then just in dollars today. Strangling the entire market doesn't help anyone in the long run.

Actually, they wouldn't arbitrarily price their products that way. Companies engage in a little thing called price discrimination. The only difference in a monopoly is that you are the sole price leader. That doesn't mean you can arbitrarily set the price high. Most cable companies have monopolies thru license in municipalities.

>That doesn't mean you can arbitrarily set the price high.

You can if you corner the market and the good is required like food is.

You'll get your stores raided if you control and gouge something like food and water though, possibly ending with a head in a grocery cart. Police might even help.

Cable has a bit more leeway with the crowd I'd imagine, though there'd still definitely be consequences. Just not as dramatic consequences. I'd hope people protest gouged cable prices peacefully.

Just try. But first, you'll want a refresher on the French Revolution, letting the starving "eat cake" and the amazing effectiveness of guillotines.

Somehow that doesn't work this way. In israel monopolies and price gouging of food is pretty common(not 100X, but maybe 2x), and i haven't seen no violent acts.

I'm not denying the antitrust concern of the union. I'm pointing out the hipocrisy of certain generally anti-regulation Silicon Valley companies trying to use antitrust law to preserve the viability of their role as middlemen. At the end of the day, Netflix's business model is inherently fragile. Amazon is somewhat better positioned, because they at least provide the upstream infrastructure. I think they know they need to play the last mile game, just as they're exploring doing on the physical goods side with drones and special deals with USPS.

I wonder if torrent/p2p would be a viable business model for Netflix. Think about it : they have a massive install base inside comcast where they can run programs and on most such programs they can run code, and store data.

Solution seems obvious.

P2P isn't a good architecture for something like that. You pull data from a leaf node, through the core network, back to another leaf node, traversing the relatively slow last mile coax part of the network twice. Meanwhile, a relatively small number of movies and shows will dominate the demand, which Comcast can easily cache near the edges of its network. There is a reason Netflix is vying to get equipment in those spots.

note that Netflix runs on Amazon

I know. That's why Amazon is better positioned. They at least own the upstream infrastructure. Netflix is utterly dependent on three other industries, but is itself pretty easily replaceable. The had a first mover advantage in getting favorable content licensing deals before anyone thought it would matter, but that's fading fast as those deals are renegotiated. And its value add is totally fungible. People care about the content and will happily use another provider if they have the content. Netflix' foray into original content is an existential move.

Except it's not really that dependent on Amazon - there are nearly perfect substitutes for every AWS service.

Comcast is different because it already operates as a monopoly in many areas, and it's trying to change the rules so that it can leverage that monopoly, to the detriment of everyone but themselves, and there's not really anything that anyone but the regulators can do about it.

Comcast has a huge advantage owning the pipes into my house, but they squander it. Rather than provide services, they become highway robbers on their own toll road. Comcast could have been netflix, akamai and so much more years ago. So tell me how they don't have advantage?

> Comcast could have been netflix Netflix offers incredible value. Don't you think it's irrational for Comcast to offer up this value at the expense of their own profits when they are not being threatened? They are going to milk it for as long as they can.

Milking it is not a rational choice, expected but not rational. Comcast should have make the Roku, but due to a fixation on the analog cable infrastructure they did not. The amount of analog bandwidth they devote on their networks to digital traffic is a ridiculously small percentage of their capacity.

Comcast should have created the caching infrastructure that Akamai did. Comcast should have implemented cloud backup services. They have the capability to have 50+ Mbps from the customer to their datacenters. This is freak'n huge.

Why didn't comcast create a colo system so that providers could get as close as possible to the customer?

No, Comcast will go down with the Titanic with all of their riches. They have squandered more than they have protected.

If utility natural monopolies weren't regulated they wouldn't exist because local governments wouldn't allow them to dig up roads to put in their infrastructure.

This would be fun to watch unfold.

Citation?

There is no use for Google to participate in long-haul wholesale. There is a lot of supply there. The real issue is last mile, where consumers have no choice.

>There is a lot of supply there.

But the rules just changed. It remains to be seen what those guys will do. But I agree that the last-mile competition, or lack of it is far more important.

That's what Google Fiber is, which is (slowly) rolling out to multiple cities.

Really? The last time I checked, the cost for fiber optic back-haul was ridiculous! I need to get some new quotes within the next few months, though- we shall see.

Except people often have no choice about which ISP they can use, whereas people have at least some choices in the mobile phone space.

Comcast is relying on last mile monopoly. Samsung/Apple have alternatives.

> To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry.

That is devil's idiot. I can choose between 4 different cell carriers and dozens of smartphone makers. Many people only have one option if they want >10Mbps internet.

Fortunately I get to choose between Optimum and FiOS. Optimum gives me 60/25 for the basic rate to keep me from switching to FiOS.

I was addressing chimeracoder's point about vertical integration. There might be tons of Android manufactures peddling phones, but Apple and Samsung are eating up all the profits because they are verticicaly integrated. That's the major play Comcast is making.

I wouldn't be surprised to see this coming soon to wireless. Imagine movie caching servers integrated into the backhaul network instead of going over the public internet. The improvement in QoS would make being a Netflix type entity untenable.

He wasn't making a point about vertical integration, but rather about monopoly power. Perdue and Tyson are vertically integrated. They own feed mills, hatcheries, grow farms, packing plants, and distribution. No one cares because you can always just pick the package of chicken that costs $3.29 instead of $3.59.

I also don't see how Samsung is vertically integrated. They don't make the OS, the App store, or have content/DRM. They have in-house manufacturing, but Apple doesn't. The two companies are vertically integrated in totally different ways, thus vertical integration is a weak argument for their success.

See his second paragraph about owning NBC.

That was also about monopoly power. If NBC were an independent entity, they would license their back catalogue to the highest bidder. Given that NBC is owned by a cable company, the strategy changes. The current dynamic for NBC is, if we license to Netflix, then some people will cut the cord, lowering Comcast/TWC cable revenue. The bigger Comcast is, the less likely NBC is willing to license content to Netflix. If NBC were independent, they would maximize their own revenue, but because they are owned by Comcast, NBC's decisions are to optimize profits for the combined company which is likely not in the interest of consumers.

This is the case regulators should make for putting conditions on the merger. Comcast should be forced to divest from NBC/Universal and agree not to acquire additional content. That would create a significant benefit for consumers.

That describes a vertical monopoly, which is not prohibited. If Apple hadn't acquired PA Semi, they would be selling their products on the open market to the highest bidder, etc. Same situation.

Netflix already serve their content from servers colo'd at ISPs. Big FreeBSD boxes.

http://www.networkworld.com/community/blog/netflix-goes-edge...

Sure. Having a government backed monopoly is usually the better business model.

>To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry.

what?? Does Apple or samsung have any control on how much carriers charge?

By your logic, ATT wireless, verizon wireless, and other cell carriers have to make their own cell phone and not just be a middlemen that funnel someone else's content on someone else's smartphone.

Why precisely does Netflix need to "evolve"? I like Netflix just fine as it is, thank you very much. The totality of current online businesses are using "someone else's pipes", so framing that as a criticism strikes me as distinctly hollow.

I would say it needs to "adapt" to harsher market conditions created by these mergers, net neutrality gone, etc.

Online businesses by and large use other people's pipes and that inherently makes them all vulnerable. Its like apps on iOS. Apple will always capture most of the value created by the ecosystem as a while, because they control the platform. App developers have little leverage. Its not profitable to be a sharecropper, but that's what online businesses largely are. Regulating and commoditizing the communications infrastructure into "dumb pipes" (I.e. net neutrality) is the only around that. Its regulation that picks winners and losers by telling an entire industry that they have to produce a commodity product so that online businesses can be protected from a flaw intrinsic to their business model.

Apple is an integration house. The screen and the A7 are actually fabricated by Samsung. They would have a tough time going it alone.

This, I believe, is why Netflix is producing original content. Outside the US they license it to traditional networks as well (I've seen adverts for House of Cards recently through Sky here in Germany).

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