The truth of the matter is this has absolutely zero to do with costs, and everything to do with extracting rent via market position.
I know it's not a popular opinion on HN, but I don't think it's unreasonable for Comcast to ask Netflix to shoulder some of the cost. It also has the added benefit of incentivizing Comcast to provide faster service. If they can charge Netflix more for pushing more data, then it directly leads to more profit if their users consume more data.
Actually it gives them an incentive to provide slower Internet service. This encourages content providers to pay to use the Comcast private network instead of the Internet.
We can comfortably say that 99.9% of the services on the internet are not going to pay Comcast. The big players might, but there's an extremely long tail.
Thus, for most of the internet, Comcast encounters a conflict of interest. Its actual paying customers want higher speeds. But it has every incentive to reduce speeds for services that aren't paying for more.
I pay my ISP for access to the entire internet. If they screw with my access to a service simply because they didn't pay, that makes no sense.
If I'm paying $75/month for high-speed internet access, that means the entire internet, not just the parts they get kickbacks from.
I pay my ISP for my access, Netflix pays their ISP for their access, and we get to talk to each other. That's how this stuff works. Comcast charging Netflix is double-dipping, and is directly opposed to their supposed purpose of serving me, their customer.
(Hypothetically. I'm no longer a Comcast customer, thank goodness.)
Edit: I usually hate real-world analogies, but I think it could be instructive here. Let's take the USPS as an example of something in the real world that looks a lot like an ISP.
I can pay USPS $5.60 for a flat rate Priority Mail envelope, and they will deliver the contents anywhere in the country within 2-3 days. Doesn't matter who's getting it, and doesn't matter what's in the envelope as long as it fits.
Now, let's imagine that some company ends up receiving a lot of mail. Providing mail service is expensive, right? It takes a lot of trucks and postal workers to deliver all this mail to this one company. Surely they should be charged for what they're using, right?
Of course, this company says no. These people who are sending us mail already paid USPS. It's their job to deliver mail to its destination once they get paid to do so. Why should they get paid twice to deliver the same piece of mail?
In retaliation, to "convince" this company to pay, USPS starts slowing their mail. Those trucks and mail carriers are expensive, we need some of them elsewhere. You'll just have to wait.
And as a result, because USPS is demanding that this company pay to receive mail that I already paid to send them, my "Priority Mail" starts taking 4-5 days to arrive instead of 2-3.
I hope it's obvious that USPS is completely unreasonable in this hypothetical scenario. I see no difference between this and Comcast charging Netflix for service I'm already paying Comcast for.
Netflix doesn't pay an ISP. That's the whole point of the arrangement, it goes straight from Netflix to Comcast. There is no middleman. So their peering arrangement is the equivalent of "paying their ISP".
To say that Netflix should not have to pay for internet traffic is ludicrous. I want a piece of that. Comcast should hook up their network to my servers so that my personal website is fast for Comcast users. For free of course.
In other words, you're describing a situation in which Comcast blackmailed Netflix for access to Comcast's customers as one in which Netflix claims they "should not have to pay for internet traffic". This is detached from reality.
Now they're attempting to shift costs onto everyone else. And they're using the public's distrust of ISPs to get the public to pay for Netflix's business expenses.
In other words, we're already in the double-dipping situation I'm decrying. The "we each pay our ISPs" scenario that I described and that you quoted is now, sadly, a hypothetical.
Now they are using the biased tech media to create a campaign whereby they will lower their costs even further and shift them onto others (including you and me).
In a reasonable free market, none of this discussion would matter. The agreements would all shake themselves out in the marketplace. But give a company a monopoly and suddenly they're not subject to the same forces. Between Netflix, Cogent, and Comcast, only one of them is a monopoly.
You pay for guaranteed bandwidth within Comcast network. Not the whole internet.
Which gets back to the whole issue at hand. If Netflix wants to improve their service they need to pay for better transit. So they cut out the middleman and go directly to the source of the majority of their viewers.
This is no different than Twitch, Google, or Microsoft direct peering with Comcast. They see the value in allowing people to access their services as fast as possible, so they spend the money to do so.
This is internet 101. Netflix just wants everything for free.
I accept that they can't guarantee bandwidth once traffic gets out of their network, but as long as both sides and everything in between has adequate bandwidth, shouldn't I be able to use it?
From my point of view, if they're allowed to let their service degrade so that they can turn around and charge Netflix more money to make it go faster again, how is that an incentive to provide a faster service? To me, this is an incentive to provide slower service so that they can charge companies like Google and Netflix more money.
Edit: Funny this sentence can be turned around on you by clarifying who requested those streams.
Prior to paying Comcast for transit, if Comcast Customers asked Netflix to push 4k streams to them, that decision carried no repercussions for Comcast Customers.
This is not true. Netflix has to pay for transit of the bits leaving their servers just like everyone else. They just pay their transit provider for this, not Comcast (well, except when it is Comcast, but that's beside the point).
The right ways for Comcast to keep their costs under control re: video streaming would be to either meter pricing or drop rate limits. The problem is that metering is unpalatable to their customers, and rate limit drops would expose the lie that the entire cable modem marketing engine is based on (that last mile downstream throughput maximum is the only number that matters).
Netflix doesn't have a transit provider any more. They are piping directly into Comcast and wanted to do so for free. I want my website to be delivered to all Comcast customers for free, do you support that?
Shouldn't Comcast be required to purchase enough capacity to provide high-quality service to their residential customers? SFI between a content provider and an eyeball network should be a mutually beneficial cost reduction, but Comcast has enough market power (captive broadband subs) that they can get away with intentionally not buying enough capacity to serve their customers.
A peering agreement is free when both sides are accepting traffic for the others, but that's not what is happening in this case. Netflix -> Comcast is one way.
Still waiting for an answer to my previous question, should Comcast delivery my personal website to their customers for free?
It seems like Comcast entered a shitty peering arrangement with Cogent and decided not to upgrade the interconnect links in retaliation. Netflix gets caught in the crossfire and ends up having to pay Comcast directly to avoid a few million angry customers. Is there any transit provider that Netflix could have gone with that has enough interconnects with the Comcast network? If not, Netflix is forced to pay whatever price Comcast names for their customers to receive adequate video streams.
But Netflix was using them for almost 100% of their traffic delivery. That's insane. There are other transit providers they could have paid more to and gotten better service, but that would have meant higher costs.
The whole irony of this situation is that I've heard rumors that Netflix is paying less per gigabit to Comcast than they paid Cogent while getting better service than they would get from a top-tier provider. If that's true, other companies will be lining up to get a similar deal because they'd just be cutting out the middlemen.
> I want my website to be delivered to all Comcast customers for free, do you support that?
Sure, if your website has a peering arrangement with Comcast. Comcast isn't required to offer one to you, though.
As a cable subscriber, I expect that when paying for N Mbps of bandwidth, I'm entitled to N Mbps of bandwidth of the content of my choosing. If Comcast's pricing model needs to change to a cost-per-gigabyte model in order to cope with the increased quantity of data customers consume, so be it. But sneaking the costs onto Netflix's tab effectively shifts Comcast's costs to all Netflix customers, allowing Comcast to artificially lower their prices relative to smaller ISPs without the market share necessary to effectively extract rent from Netflix.
100% of the time ? not going to happen
So let's say I'm an ISP and I bring a fiber to your home, and gives you a gigabit ethernet port. You cannot expect all current and future customers to be able to use 1 Gbit/s at the same time. You would need a big non blocking switch with as many ports as subscribers, the technology for this does not exist once you reach a large customer base.
Now do you want me to shape your link to 0.1Mbit/s, because that's the only thing I can guarantee if all customers uses their link at the same time ? Or you'd rather have the 1Gbit/s possible bandwidth ?
Which one is better:
1) guaranteed 0.1Mbit/s for 10$, 5Mbit/s for 100$, 1Gbit/s for 4000$ 2) possible 1Gbit/s for 20$ ?
If you take the globalized approach, you cannot have business like Netflix, they destabilize the equation.
In order to make that happen, of course, we'd have to live in a fanciful world where shifting last-mile delivery cost to content providers wasn't an option so the painful process of exposing this cost to customers couldn't be hidden in a rat's nest of perverse incentives that benefit the most entrenched corporations. (Ironically, and despite its protestations, Netflix's ability to pay this rent is a barrier to entry for its own future competitors.)
With adaptive streaming technology, there is not such thing as "today streaming demand"
If whenever you raise the pipe size, it is automatically filled by an higher resolution/quality/bitrate stream, it is a never ending game.
What I mean is that, whatever the state/quality of ISP networks is or could have been, we are doomed to face that "Netflix problem". If networks were better, then Netflix would already offer 4k or dual/triple HD streams and so there would be saturation anyway.
> (Ironically, and despite its protestations, Netflix's ability to pay this rent is a barrier to entry for its own future competitors.)
Actually, moving all Netflix traffic to private pipes will free the shared ones, so a new freeloader can use them and cut Netflix prices ;)
If customers are requesting more data than the last-mile pipes can handle, there are a number of fair ways to handle the overuse:
- At peak times, customers are throttled in direct, formulaic proportion to past (peak) usage
- Customers are charged more for usage at peak times
- Customers are limited to n% of the pipe at peak times
Notice how none of that singles out Netflix, just high usage in general.