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Comment by irishjohnnie | Hacker News Reader

Their gross margins are the result of their positions in the value chain which, in turn, determine their cost structure. What Comcast is trying to do is to extract more rent out of its position.

As others have commented, consumers already pay for both services.

If it's infrastructure cost that you're concerned about I've read somewhere (Bloomberg?) that Netflix offered to co-locate its equipment in Comcast's data centers but the latter refused.

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Generating traffic is easy.

Routing each bit to customer houses is the difficult part.

The offer to put Netflix's servers in a Comcast data center does not help.

I agree with you, but I'm betting that's not where the actual congestion is occurring (although there may be artificial rate limiting)

> Routing each bit to customer houses is the difficult part.

That's what CDNs are for. Which, as the article shows, is how Netflix delivers video to subscribers of every other major ISP. Why is it they can somehow route all that traffic to customer houses but Comcast can't?

To customer houses ? How many CDNs do they have ?

Take "last mile" literally and divide the US in a big grid of 1x1 mile squares.

If Netflix was able to dispatch its traffic up to each of these squares, there wouldn't be any problem. but there wouldn't be any Netflix either :)

> If Netflix was able to dispatch its traffic up to each of these squares

That's not how a CDN works.

Look at the diagram in the article, between the fourth and fifth paragraphs. Every other ISP uses transit networks to distribute Netflix traffic (like all other traffic) to its subscribers. Netflix puts its content on CDNs that are conveniently located to make the transit networks' job easier, by making "netflix.com" endpoints closer to large populations of subscribers. Somehow all the other ISPs manage to "route traffic to customer houses" using that arrangement. Why does Comcast have to be different?

I think maxhou is referring to the segment of the network from Comcast's (or any other ISP's) local data center to its box (I think they're called ATM switches) and eventually your house

Yes; so what? The traffic always has to travel over that segment, regardless of whether the ISP is working with transit networks or not. So whatever the difference supposedly is between Comcast and all the other ISPs, it isn't that. So what is the difference?

The difference is how Comcast interprets its competitive position compared to its peers. The barriers to entry in the last mile is high regardless of the ISP but it is willing to leverage/extract rents/push the boundaries more compared to others that may be building goodwill/not push the regulatory boundary/sitting and waiting.

In other words it is acting like a monopolist or a shrewd business.

In other words, there is no technical reason why it's any harder for Comcast to "route traffic to the customer's house" using the same arrangement as other ISPs. The reason it doesn't is that it's trying to get paid twice for the same traffic, which is a "business" reason (at least for some value of "business"), not a technical reason.

Yes, "trying to get paid twice" is what "extract more rent" and "rent seeking" means in other replies including mine.

That makes no sense. Charging Netflix for congestion their traffic creates on Comcast's upstream pipes has nothing to do with congestion or routing difficulties inside Comcast's network. Comcast still has to route "each bit to customer houses" in the current scenario of Netflix paying for access.

The fact that Comcast is eschewing the Netflix offer of free Open Connect CDN appliances (https://www.netflix.com/openconnect) tells me that this isn't an issue relating to upstream congestion, but rather with Netflix competing with Comcast's own VOD service.

It may not has to do with it today, but it will tomorrow.

As I said, generating traffic is easy. If there is no drawbacks in raising streaming bandwidth on Netflix side, they will continue to do so, 4k streaming, multiple streams per account, YouKnowWhat... all the way until all ISP subscribers will use 100% of their available bandwidth at all time.

I may pay for a XXX Mbit/s access, but I know that no ISP can sustain that XXX limit for all customers at the same time. And I certainly don't want my ISP to shape my fiber access to 10kbit/s because that's the guarantied bandwidth they can offer me.

Note that I'm in Europe, I don't have an resentful/hateful relationship with my ISP, but I can understand the US case is different because cable companies (used to) have bad business practices.

Then the ISP shouldn't sell you bandwidth it doesn't have. That's called "fraud" in most other businesses.

at least my ISP term of sales is clear about it, the guaranteed bandwidth is close to 0.

I do agree though that nowhere in the commercials it is said that you are paying for a peak rate.

"(used to) have bad business practices"

I think you mean "still have bad business practices." Comcast regularly gets rated as the worst company in the country by consumers (in some cases the worst entity, public or private, beating out the IRS for that coveted position).

nearly 1/3 of the US have only a single option for broadband internet, and that company is typically a relatively unregulated company with low business costs that charges high prices. That's just a recipe for bad behavior.

> Routing each bit to customer houses is the difficult part.

But the customer is paying for that to happen. The last mile is payed for by the customer. The deal between Comcast and Netflix is designed to handle the macro level bandwidth, which is only painful when you need to cover distances.

By putting themselves wherever Comcast asks, Netflix removed all but the last mile costs. Those costs are paid for by end users.

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