Comcast’s deal with Netflix makes network neutrality obsolete | Hacker News Reader

Comcast’s deal with Netflix makes network neutrality obsolete

washingtonpost.com

215 pointsadidash109 comments

Paraphrasing

> the FCC has no good solutions.

Yes they do, declare broadband to be a common carrier. Force comcast to sell wholesale access to their retail pipes to other companies who then compete for the end users. We've seen this show before and have good solutions to the problem. It's time to treat the Internet as a mature public utility and regulate it as such, i.e. regulate it to maximize social good

That people are still fighting this I just can't believe. How can the internet not be viewed as an essential utility in the modern world is just crazy to me.

Because they profit from it.

Stupidity and greed. Many people arguing about this at the Wall Street Journal, for example, are convinced that there are no such things as broadband caps or QOS levels and that everyone who uses Netflix streaming is freeloading without paying for the bandwidth they use. In their mind companies like Netflix and people who argue for net neutrality are identified with welfare cheats and socialism. I wish I were making this up.

For the purpose of comparison, we have the same issue in France, although we do not have Netflix there. ISPs are slowing down Google services / Cogent / … and asking them to pay[1]. One went so far as to remove Youtube ads on-the-fly without telling (let alone asking) the consumers beforehand. And slowly, not limiting bandwidth becomes an argument for the customer to pay more, as well[2].

They are looking for a target to increase their revenue. Given the targets they pick, I'd say they're mostly driven by envy.

[1]: http://www.lemonde.fr/technologies/article/2012/09/20/free-a...

[2]: http://imgur.com/aHxjUOz

I think link 2 shows an ad for unlimited youtube over 4G wireless and presumably is referring to unlimited data usage, which is a different thing to wired broadband. I think all countries have similar restrictions - I don't know anywhere where you get unlimited mobile data on the cheap deals.

Both referenced links deal with mobile broadband specifically.

Let me tell you about vested interest, rent-seeking, and regulatory capture. Three things that should be taught in elementary school, but never will be, because public education has all three in spades as well.

YES

There is no way in hell the aggregate interests of the telecom industry will allow broadband to be declared a common carrier.

Unless the Internet companies (Netflix, Google, Amazon, Apple...) suddenly realize they, also, have their entire business models at stake and start lobbying just as hard as the telecom companies.

Netflix is there. The rest don't seem to realize how screwed they are, yet.

Netflix is there, but what does the Comcast deal imply? Maybe Netflix's calculation is that they're big enough to sustain paying Comcast's toll, and that agreeing to pay it helps add a barrier to competitors behind them. If that's the case, then the consumers lose because they're paying higher, hidden, overhead vs what they would pay in a more competitive market. With insufficiently transparent choices for the end consumer, one big driver for efficiency disappears.

People keep saying this, but you have to dig deeper. Even the content producers don't want this.

Common carrier means multiple things, but one of them is that it sets a floor on the price for peering agreements. This means that currently free peering will have to become paid peering, and no one wants that.

It would actually give more money to the ISPs for something they are already doing.

You have to carve out the local access portions of the current ISPs into their own companies. Make those local access providers common carriers.

I think that is roughly what the gp is saying.

This is what happened in Ireland with traditional phone services and the infrastructure they depend on.

Eircom split into Eircom Wholesale and Eircom.. The last mile copper and core network is managed by Eircom Wholesale, while end users subscribe to Eircom.

The wholesale company offers its services to any phone or broadband company, with published (starting..) price lists. This seems to work well.

In Europe, we also have the notion of Internet Exchanges like INEX, LINX and AMS-IX. These are non-profits, typically owned by their members, who provide switching fabric at the major datacenters for ISPs and other internet companies to exchange traffic - without any per-peer fees. You simply pay a membership fee typically based on the number and type of ports you want.

This allows even the smallest companies to directly peer with the major ISPs. INEX requires members establish BGP peering with something like "at least 80% of other members".. Again, this seems to work well.

Sure, but that's Europe where non-profit != communism.

I'd like to investigate the price floor claim more, you have a link?

> Common carrier means multiple things, but one of them is that it sets a floor on the price for peering agreements.

TL;DR for the following: [citation needed]

Designating broadband service as common carrier service, enabling the FCC to issue regulations of the type defined for common carriers to broadband providers would no doubt permit the FCC to set a non-zero price floor for peering, but I'd like to see what law would require the FCC to set a non-zero price floor if it designated broadband service as common carrier service.

Hell no.

We will go back to a day where whatever speed you get is all your ever going to see. I know people hate Comcast/etc but where I lived all I had was what the phone company, THE COMMON CARRIER, wanted to offer us until the cable companies came in.

We got a wonderful choice of dial up, ISDN, and T1. Eventually they gave us DSL but the roll out was so slow and the initial installs so buggy it was mind boggling. Then one day I get a flier in the mail, try cable! Five times the speed and what do you know, the phone company suddenly cut their prices and offered deals to get people back.

Common carrier means no competition at all. As in, your area may get an upgrade AFTER all the important people get theirs first, namely those with political connections or in tony neighborhoods. The rest of us, well its like waiting for the roads to be plowed.

This is the opposite of the common carrier model. In the common carrier model, there are many companies that you can choose from as a consumer from the get go, because the network is unbundled from a single company.

You're missing the point: the last mile network is shared across all of those companies. Ergo, the company that actually owns the last mile network has no competition on that last mile network and no incentive to upgrade that network.

Ideally that last mile network would be point-to-point FTTP though, eliminating this entire issue.

Firstly, the last mile company still has QoS agreements with the companies that buy from it, and they can plausibly choose to simply go elsewhere if the last mile company does not give them good enough QoS terms; whether that means building their own network, or simply pulling out of that area. Basically, a small group of companies can more plausibly apply joint pressure to a single company than many millions of people can, purely because of coordination costs.

Secondly, part of the common carrier model is that if the government is not convinced that the common carrier is acting in the public's best interest - for example, if they are delaying needed upgrades - then the government can simply confiscate the common carrier's assets, and sell them to a company that will actually meet its QoS and upgrade obligations, or spin the whole thing off as a SoE.

Sure they do: consumers will pick the best last-mile providers, because in this model, consumers actually have the power to choose.

I live in San Francisco and only have one choice (AT&T Uverse). I am in a new building with fiber connections, but I'm stuck paying $150+ a month for 15MB internet and middle of the road TV. My Netflix is heavily throttled. My service hits 1000+ ms pings at least a few times an hour for minutes at a time. I often get download speeds far less than the rate I pay. I can't believe I'm saying this, but I even miss Comcast.

I honestly don't see how it could get worse with internet regulated as a utility. Imagine if my gas and electricity decided to not show up for a day.

My hope is that the timing of this deal was calculated by Netflix to focus regulatory scrutiny on the Comcast/Time Warner merger. Netflix can now tell regulators that even though Comcast and TW don't compete for the same customers on the consumer side, the sheer size of the combined beast would make settlement-free peering a thing of the past.

Except they do compete for the same customers, no? The merger is with Time Warner Cable and not Time Warner.

However, even if they did merge with Time Warner, they would still be competing for the same customers, since Comcast is NBC is Universal.

There are probably not many markets in which Time Warner Cable and Comcast both exist. That's probably what he meant as its been a talking point.

> There are probably not many markets in which Time Warner Cable and Comcast both exist.

There are exactly zero such markets.

Not approximately. Exactly.

http://dealbook.nytimes.com/2014/02/12/comcast-set-to-acquir...

http://www.nytimes.com/2014/02/24/opinion/the-comcast-time-w...

This is bullshit. Time Warner (Brighthouse) and Comcast both compete in the area I live in. Orlando, FL.....

Just because they service the same city doesn't mean they overlap coverage area. Many RBOC and Cable lines cut across city boundaries. Most of the boundaries were in place when cities were allowed to grant exclusive franchise rights to cable providers in order to entice them to provide service.

And although deregulation did away from allowing cities to provide exclusive rights, very few cable companies are willing to pay to fight the entrenched interests.

They overlap... I just switched to Time Warner from Comcast.

In my neighborhood I can choose between them. I believe Brighthouse owns the lines, but I can get Comcast service over them.

The parent was referencing the merger. There's no competition with oneself.

Just FYI, Brighthouse is no longer affiliated with Time Warner Cable, they're a separate entity owned by Advance Newhouse.

Residential broadband is a business model that depends heavily on successful bandwidth utilization speculation. However since Netflix is extremely popular (close to half of all internet traffic in the US), the pattern gets extremely predictable and so there is little advantage to be had in the core business of bandwidth arbitrage, since it's being arbitraged "upstream" of residential ISPs and baked into the larger pipe prices.

If any service becomes sufficiently popular, the price of providing bandwidth for it to a large subscriber base approaches the characteristics of a dedicated bandwidth circuit for more and more nodes on the network.

Of course, Comcast is using it's last mile power as leverage, but the core issue the economics of bandwidth speculation.

Also something I never see mentioned is that this sort of seems to be how popularity works; that is "Popularity" tends to be zipf distributed

A very interesting observation! However, bandwidth speculation would only be the core issue in a competitive market where price was determined primarily by infrastructure costs. What we have is the opposite of that.

The core issue is leverage. Bandwidth speculation is a distant second, even though it's much more interesting to us tech folks.

The best accounting I've seen indicates Netflix is at roughly 1/3 of North American traffic:

http://allthingsd.com/20130514/netflix-still-eats-a-third-of...

Similar to where they were at the year prior:

http://allthingsd.com/20121107/netflix-has-plenty-of-competi...

It's vary time of day dependent. At 10AM EST Netflix is a much lower percentage than at 10PM EST.

> EST

Also EDT. :)

I usually just write ET to mean both. (And CT, MT, PT, etc.)

Yeah I'm being picky. It's a pet peeve. Sorry.

Edit: After a downvote -- actually, I'm not sorry anymore for pointing this out. Roughly half the year there is no such thing as EST. Think that's picky? Bite me. (Note that I didn't grammar police their use of "vary" instead of "very".)

I just want to mention the opening quip:

"For the past two decades, the Internet has operated as an unregulated, competitive free market."

Is just hilarious. Hilariously wrong.

Who's regulating the internet in the US?

The US government?

In what way? The US government has done nothing to restrict the growth of the Internet compared to other nations that force national firewalls and web-filtering proxies on their citizens.

Sure they haven't...

You're confusing regulation with censorship. I hope to hell that congress doesn't do the same.

You mean apart from domain seizures?

http://www.wired.com/threatlevel/2012/03/feds-seize-foreign-...

I'm not so much striking down the "regulated" part, as I'm striking down the competitive one. In most places around the US coax and twisted pair lines (that were funded by the public purse in the first place) were sold to private companies at hilariously low rates to then milk the market in perpetuity while you are required to get permits to tear up roads and run your own network cable. And of course in most places that could happen, the cable company lobbies to prevent it.

So it isn't competitive at all. Though it is honestly hard to be competitive with infrastructure - how would you go about having multiple redundant private highways going to the same place just to maintain competition so that one road doesn't milk toll rates and let the quality degrade because they have a monopoly? Honestly, the latter is happening even now with public roads because without any competition or monetary motivation states just let their infrastructure crumble.

The hilarious part to me was that it will continue to be, comcast are a US provider. So whatever garbage the US ends up calling "the internet" the rest of the world will still have the internet.

Except that we won't either, as the media companies (funnily enough, many of which are tightly tied to US ISPs) and Governments impose filter upon filter on us.

Tor, i2p, and GNUnet, will be the only places free from censorship, and even they will be labelled as being for criminals only; why would we want to bypass the filters, we must be either pirates or paedophiles. We're witnessing the swift end of the very short-lived era of free information for all over the next five years.

Poignant and well phrased.

No we aren't, this is just melodrama...

https all the filters stop working.

VPN all the filters stop working.

Use Tor all the filters stop working.

So we aren't allowed to put big billboards up in public with hardcore porn on them... that is not the end of free speech though, that's just the end of billboards with hardcore porn on them.

Even if you put all that aside:

http://en.wikipedia.org/wiki/Internet_censorship#Around_the_...

There is a heap of green on that map.

In the next 5 years, I'll still be able to send you whatever information I like, and I'll still be able to ensure you are the only person who can receive it, and that no body else will be able to receive it for ~100 or so years (depending on how encryption develops)...

https sends the certificate in clear text. you most certainly can filter on the subject. and obviously you can filter by ip. parent post is correct.

Okay, you had a weak response to 2 out 4 of my points...

I was mostly thinking about the Internet backbone here, and I think this statement is correct. Until recently, there have been many backbone providers that compete with one another with minimal regulation.

It only seems wrong from the perspective of a residential buyer.

Anyone buying transit did indeed experience a very competitive market. Why else has the cost of backbone bandwidth been steadily falling for a almost 20 years? Not out of the goodness of a monopolists heart.

Those goofy diagrams are wonderfully effective at explaining the situation.

Worth noting is that Cogent is small potato and basically has no leverage. It barely does $300 mil in revenue. Compared that to most Tier 1 providers which do $10 bil+.

That's the part that makes me suspect the talk about this harming new entrants, startups, etc. is overblown. Afaict, the situation for small players is the same as it's always been: you pay for transit from an ISP with good connectivity, and you get good connectivity. If you have some colo racks somewhere with high-quality connectivity, your customers on just about any network have good access to your content. If not, you find a better colo facility.

The controversy here seems to be over what happens when you're a massive player and looking to get your bandwidth for less than typical retail transit prices. Then it enters the whole game of peering politics, which has changed considerably over the past 10 years. But if you're a relatively small startup with some colo racks, I don't see how that game is any more relevant today than 10 years ago: you still just buy transit. I mean, I personally have no trouble delivering my modest amount of content to Comcast users, and I've never paid Comcast.

I do think there is a general barrier to entry on the internet, because large players (YouTube, etc.) get free transit from peering agreements while new entrants don't, so any YouTube competitor is at a huge transit-cost disadvantage to Google. But that's a fundamental problem with the way the internet backbone has been built out of a mesh of private peering agreements, ever since it abandoned having a single neutral backbone run as a utility (originally by the NSF). I think going private was a mistake and benefits both big players and politically savvy ones, at the expense of new entrants paying commodity, but that's a (very) big issue to fix at this point. It's not an issue of "net neutrality", though: the traditional peering system is inherently non-neutral, not utility-esque.

You fail to see the big picture, most people do.

This is not unlike government regulation that "exempts" small business....

All this does is put an effective ceiling on a business. You will never be allowed to grow beyond X with out having to pay your protection money.

This hurts startups because VC and other investors want the business to grow beyond X and knowing their is an upper limit to the growth will make it very hard if not impossible to get investment.

No it is not that. The internet is largely a collection of privately owned network that has interconnects where networks meet. At that meeting point you can either pay for transit on another network, or agree to settlement free peering if it is mutually agreeable.

Google "Cogent peering dispute" you will see they have had problems with nearly every tier 1 out there. They sell bandwidth very cheap and then try to work out settlement free agreements. The problem is their network often times ends up pushing much more traffic onto the peer than they deliver themselves.

Netflix is a customer of Cogent's and as many customers of them know they often have disputes. Netflix is large enough now where they can pay at interconnects for transit and not have to deal with Cogent's oversubscribed network.

This is not the death of net neutrality. This is how the internet has always worked. To peer settlement free the networks need to be on near equal terms. If you are a small business you simply pay someone who has this peering worked out.

In this instance Comcast is not discriminating against traffic from Netflix in particular, it is discriminating against a peer network that is not paying settlement and providing a non mutually beneficial connection. That is business and is how the internet has always worked since it left the NSF.

What exactly does "mutually beneficial" mean, though? It doesn't necessarily mean traffic is flowing in both directions. Theoretically, when Netflix delivers traffic to residential customers, Netflix benefits through subscription fees, and the residential ISP benefits in that it is able to offer a fast internet experience to its paying customers. If it were easy to switch ISPs, then customers might switch to those with better Netflix streaming, giving Netflix bargaining power. Unfortunately, not only is it not easy to switch, but many areas have effective ISP monopolies... and on the other side, switching from Netflix to competing video services is easy, so customers are much more likely to punish Netflix than their ISP for bad interconnection. But that arguably has elements of market distortion to it.

Exactly. Cogent isn't shoving a burden onto Comcast because that "burden" is part of Comcast's value proposition to its customers. Calling it a "burden" is like saying that Zappos is placing a burden on UPS and should pay above the standard rate to have their product delivered.

Of course, UPS doesn't have a monopoly, so they can't get away with that crap. But they reveal the truth: this is all about leverage.

> Unfortunately, not only is it not easy to switch

More to the point, in the US there's often only two players, a DSL and a cable provider, so little meaningful choice.

Mutually agreeable would be something like this: Comcast-we provide access to 30 million residential customers for you to deliver content to. Level 3: We provide connectivity to Europe over our Apollo cable, connectivity to ..... on and on

Forget about Netflix here for a moment this is a network agreement. If you are Cogent Comcast can say: You are providing bulk bandwidth cheaply and delivering a huge amount of traffic to our network. You are not providing our customers or us with significantly greater connectivity, and far less of our traffic is going over your pipes. Pay us or we are not going to take more of your traffic.

As an end user, I say to Comcast: I'm paying you for access to a bunch of stuff on Cogent's network. Make sure you have adequate peering with them.

But you have little leverage over Comcast, even collectively, if they're the only cable provider in your neighborhood.

Which is why government intervention is now an imperative.

I wonder if part of the value equation to Google for Google Fiber is to help balance their traffic.

I am perfectly Aware of how "opeering" works, am I also perfectly aware how that is a bull shit excuse made up by people like Verizon to justify double billing

There is absolutely zero chance Cogent will ever recieve more data from Verizon then Verizon receives from cogent.

So the Teir 1 Providers that also just so happen to be last Mile Providers have created this nice little scam whereby they can double bill and call it "peering"

Netflix accounts for 30-50% of traffic these days yet only now have they needed to cut out a low quality middle-man to provide their service. I doubt startups have anything to worry about. If you manage to become 50% of Internet traffic you can toss the biggest ISP in the US some money to stay in business surely.

"Toss them some money" will turn into "lie down and let them bleed you dry" sooner or later once Comcast decides to launch a competing service.

Yes, and I think Netflix already knows that's inevitable, hence their heavy investment in developing original content.

Not when the media monopoly is taking almost all of your revenue in "license" fees

Netflix does not really make that much in profit. I see a rate hike coming soon

I have no idea how Tier 1 providers work but is it possible that in the future (5 - 10 years) more will be sprung up?

Or is it so costly that it will eventually be a single tier 1 in the future?

There can be only one. The "competitive marketplace" is a fancy name for modern gladiatorial combat, played out with pens and contract forms instead of swords and shields.

How many Tier 1 providers that aren't ILEC's, Cable or Wireless providers are doing $10B in rev? Akamai did $1.6B in rev last year. Edit: Level 3 does around $6B - that's the highest I've found of the independent players.

Netflix should pass on the "Comcast tax" to Netflix customers using Comcast. That might encourage Comcast users to switch ISPs (assuming competing broadband services are available to those users).

It might backfire and encourage Comcast customers to just use their Netflix-ish xfinity online streaming service (gag me).

I'd like to see someone try. Just read the Comcast "streampix" (wonder where you got that name, Mr. McDowell?) fine print:

They don't guarantee the same listings, quality or availability, and you have to have a certain Cable TV subscription level already (i.e., you're already being gouged).

I posit that Comcast's streaming customers and Netflix customers have very little overlap.

Good idea. If I were them (and if it was legal to do so) I would even call it the "Comcast tax".

What if this lowers Netflix's costs for Comcast users, since it's now peering closer to the consumer? Should non-Comcast users have to pay a "we haven't signed a peering agreement with your ISP yet" tax to Netflix?

> assuming competing broadband services are available to those users

You are hilarious.

This may actually backfire on Comcast/Cox/TimeWarner/etc's own online streaming services they will be competing with Netflix on. Netflix hopefully realizes other providers will come asking for tier access that is faster. So then taken further, when Cox wants to deliver content beyond just Cox customers they can't, they'll have to pay. So this will also probably lead to some mergers into even less providers.

They have just locked provider based online streaming services into a worse off position in terms of cost to run. Hulu will also be caught in this since Comcast owns it. Netflix or independents that can get big enough and pay all the extortion fees will win. It is a whole new game, lots of toll roads.

And then we all grow up and realize that little Johnny can't run his competition on his competition without paying protection money.

All joking aside, there isn't much you can do. comcast owns the tubes. The world where they have to bend to the masses is a scary world.

Is this better? I dunno, only if Netflix goes out of business. This only really shortens comcasts rope long term. They just created a new market with this strong arm.

Grab your popcorn folks, this is going to get interesting.

I get the impression satellite Internet might be getting more popular.

speed of light says it won't, unless you like 400ms ping times.

I don't mind 400ms ping times when streaming Netflix, as long as the bandwidth is there.

Oh you'll mind when trying to browse for movies or do any commands. It'll be like waiting in line at the DMV. Sure they have the bandwidth to work with everyone, but you still have to wait.

So serve it 2 ways, browsing over normal network, streaming from another domain over the sattelites.

Vastly increased cost, vastly increased complexity, all to work around a problem that only exists because we won't slap down predatory monopolies.

It's no different than using different CDNs for different types of web assets and it's very likely something they are doing already.

Do they? Every satellite internet provider I've ever seen has hilariously low bandwidth caps.

There's ample precedent (Bell) for what will happen to Comcast, though the real issue is so long as US voters put more emphasis on hearing the evangelism of free markets then seeing the implementation, nothing will change.

What's needed at a low level is laws that provide general access to street-level conduits and cabinets so competing ISPs (i.e. Google Fibre) can actually start up competing services to the big providers. Unfortunately efficiency would demand some level of government subsidy and the chances of that in the current environment trend towards zero (i.e. it would be way more efficient to have the government pay for the fibre to the home splice, and then let the big companies fight it out over who gets to attach a router to that and how that router is serviced).

That's not a bad model: the last mile is usually the most expensive piece of any network to install, after all.

The Australian NBN was going to be something along the same lines: Government installs the common backhaul, last mile and "points of interconnect" then the corporations can install their points of presence & if required they can provide their own backhaul too.

Sadly Rupert Murdoch's party has decided that further proliferation of the very model the NBN was trying to avoid is a better way of spending the money.

Ironically that whole thing is essentially all about NetFlix as well: Australia with decent broadband would be a tempting market to enter, and would obliterate Foxtel overnight.

Currently Foxtel also signs all sorts of exclusivity agreements to make sure no one can offer streaming services for regular TV in Australia either - hence the mystery of us still receiving American TV shows up to a year after they finish running in the US. There's a reason we're #1 for torrent piracy.

This is some seriously bad precedence. Perhaps it will be good ammunition for Netflix to take to regulators, but it's far more likely it's better ammunition for Comcast to use against Google, Facebook, etc.

I think the best thing that can be done is Netflix giving a complete and full account of the extortion that happened here, perhaps in front of congress.

Timothy B Lee is the Rush Limbaugh of Hacker News. Saying things that could technically happen, in the sense that they wouldn't violate the laws of physics, in order to get people good and angry.

If this is just about a peering agreement, then it didn't start with the Netflix - Comcast deal. Riot Games signed a peering agreement with some European providers earlier this year:

http://www.reddit.com/r/leagueoflegends/comments/1onydr/

For people telling this is just peering agreement, this is not. It would be peering agreement if Amazon would be paying, because Amazon is providing the bandwidth to Netflix.

What I suppose is that under this agreement, Netflix is not paying Amazon anymore outbound bandwidth to Comcast and as such pays it directly to Comcast.

Not all of Netflix's infrastructure is on EC2. They have in house built stuff to deliver content at the speeds they need.

EC2 is mostly only used for web hosting and other small infrastructure. Not the streaming parts, especially now that they are running their own CDN.

Have a local common carrier, but make it a coop where customers and employers have 1/n voting right. That way you don't have a company with the benefit of a monopoly and the growth/innovation of the company depends on how much the majority of people want to pay.

If you're not a network operator, you probably should not be guessing how the internet works. I do enjoy some of the speculation (mostly because its ridiculous) but in general it really doesn't help to guess.

Right, because net neutrality is ONLY about Comcast throttling Netflix. ಠ_ಠ

Just wait until this begins to affect our online gaming sessions.

Article writer - Timothy B. Lee

More than a little coincidental.

Completely different person than Tim Berners-Lee, despite the similarities.

Yes, this one writes for Ars Technica.

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