Level 3 Shaken Down By Comcast Over Video Streaming 548
An anonymous reader writes "It looks like the gloves are really coming off; Level 3 Communications had to pony up an undisclosed amount of cash to keep Netflix streaming to Comcast customers. Perhaps now the FCC might actually do something to ensure that the internet remains open. Level 3's Chief Legal Officer, Thomas Stortz, said: 'Level 3 believes Comcast's current position violates the spirit and letter of the FCC's proposed Internet Policy principles and other regulations and statutes, as well as Comcast's previous public statements about favoring an open Internet. While the network neutrality debate in Washington has focused on what actions a broadband access provider might take to filter, prioritize or manage content requested by its subscribers, Comcast's decision goes well beyond this. With this action, Comcast is preventing competing content from ever being delivered to Comcast's subscribers at all, unless Comcast's unilaterally-determined toll is paid — even though Comcast's subscribers requested the content. With this action, Comcast demonstrates the risk of a 'closed' Internet, where a retail broadband Internet access provider decides whether and how their subscribers interact with content.'"
Wrong approach L3 (Score:5, Insightful)
You should have done what FOX and NBC have done in the past - Cut off Comcast. When that happens the customers invariably blame the cable company for being greedy, not the broadcasters or Level 3 or netflix
Then Comcast would be forced to stop banning netflix, else risk losing customers.
No! (Score:5, Insightful)
Right?
Guys?
anyone?
Alternate viewpoint (Score:5, Insightful)
I generally respect Karl Denninger's [market-ticker.org] viewpoint on these issues since he was one of the people actually involved in building out the internet.
Re:Not to be a dick but nextflix (Score:5, Insightful)
Yes they use a lot of bandwidth, that Comcast's customers pay for in overpriced monthly fees.
So glad I don't have to deal with Comcast anymore
I Disagree (Score:5, Insightful)
Then Comcast would be forced to stop banning netflix, else risk losing customers.
Uh, that's not how I see it going down. That would be like a staring contest and I'd bet that Netflix would blink first.
Customer: Hello, Netflix, I can't stream your movies anymore.
Netflix: Uh, well, that's your ISP's fault for not coordinating with our CDN.
Customer: But the rest of the internet is working fine.
Netflix: Yes, well, you need to get a different internet provider.
Customer: Comcast is the only broadband provider in my area.
Netflix: Well, write them an angry letter because it's not our fault.
So do you think the user is going to quit using Comcast or do you think they'll have no choice but to stop subscribing to Netflix since they can no longer stream movies? I think the latter is more likely what would happen. It's different because Fox and NBC provide a lot of free content and can easily tell the customer that their ISP is blocking the news. With Comcast, they know that Netflix is pulling down tons of money (look at their stock value) and they know that if they hold out they can wring more money out of L3 and, eventually, Netflix. And since in most of Comcast's realm there's a complete lack of a competitor. That's the real issue here, that Comcast customers often have no choice and there's a barrier of a cost to entry for anyone else to enter in as competition with them. Fix that and you solve this whole problem because then your scenario might work if users are really upset enough to change ISPs when Netflix doesn't work because their current ISP is trying to negotiate for more cash.
Re:Alternate viewpoint (Score:5, Insightful)
Of course, in America where you may not have a choice in ISPs, this breaks down entirely and Comcast is free to do whatever they want.
This is excellent (Score:5, Insightful)
Finally, a real example people can point to and say, "SEE!" when talking about net neutrality.
Class action suit? (Score:4, Insightful)
If Comcast are a monopoly supplier (ie customers cannot get broadband from another ISP) then maybe the customers who cannot get Netflix (or whatever else) should bring a class action suit against Comcast.
Re:I Disagree (Score:2, Insightful)
Netflix also provides a direct mailing service. I'd expect that would still hold sufficient value to the customer to make them prefer to keep their subscription to netflix and switch their ISP.
Furthermore if the ISP is the only one in the area you could probably throw words like "monopoly" around in your angry letter.
Re:I Disagree (Score:5, Insightful)
Re:Alternate viewpoint (Score:4, Insightful)
His point is that local bandwidth is cheap but long-haul bandwidth is expensive and the equipment necessary to stream the kind of bandwidth Netflix needs to a significant portion of their customers simply can not be purchased and maintained for the current price of a residential broadband connection.
Since the traffic can not be carried at the current price it won't be, because no amount of complaining or regulating will make the impossible happen. One way or another somebody is going to pay the true cost of moving the bits or else they aren't going to get moved.
I can't directly confirm his numbers but the guy ran a major ISP for several years and has no reason to lie about it now.
Re:Alternate viewpoint (Score:3, Insightful)
Wrong.
Comcast has _BOTH_ cost _AND_ revenue. However what happens here is that its cost no longer matches its revenue model.
It has three options:
1. Recompute its pricing matrix and change retail consumer prices.
2. Try to recoup from what it sees as "disruptive" players.
3. Redesign the network to improve the cost/revenue metrics.
The second option is erroneously perceived as a "lesser evil". It may lead to some or all of the following consequences: FCC revisiting the special status of Cable Operators regarding telecommunications services which allow Cable to skip on some of the "telco obligations", FCC with FTC raising a competition issue which may result in regulations including mandatory wholesale access or any of the net neuterality options.
It should have jacked up the prices until it is back in the black and seriously considered 3 instead of this move. Level3 used to have good lawyers at least at some point. Back around 2000 they managed to twist the arms of Sprint, Ebone, MCI and other major players that were way more entrenched than Comcast. So winding it up so it lends a hand to FCC to do a competition case was a really really really bad move.
Laws Comcast is breaking? (Score:3, Insightful)
Do any of these hold water?
Illegal interference of a business relationship (between for example Amazon and a Comcast customer)?
Simple fraud and wire fraud, by telling customers that they're getting access to the Internet, when in fact Comcast knows its delivering only a subset of the Internet?
Copyright violation, because by filtering out some content, it loses Common Carrier status under the DMCA, and is thus liable for any coyright violations passing through its network?
Antitrust, because they're abusing their local near-monopoly on broadband internet into other areas of commerce.
Re:I Disagree (Score:5, Insightful)
I think you are too 1.0.
Customer: loading netflix...
Netflix: Sorry, Comcast has blocked Netflix because it competes with their own offerings. They were previously sued for this anticompetitive behavior, but it continues.
Your location was detected as [Philadelphia, PA], please click here for information to set up internet with: [ ] Verizon, [ ] RCN, [ ] Clear.
Please click here to upload a video to youtube requesting the department of commerce investigate this matter.
Please click here to connect to Netflix through 7 proxies.
I have comcast basic cable and AT&T for the ne (Score:3, Insightful)
My at&t DSL may only be 1.2 mbps but its a reliable 1.2 and Netflix streaming works reliably. What good
is comcast's "high speed" cable internet if its a high speed road to nowhere?
Re:Class action suit? (Score:5, Insightful)
If Comcast are a monopoly supplier (ie customers cannot get broadband from another ISP) then maybe the customers who cannot get Netflix (or whatever else) should bring a class action suit against Comcast.
They could, but not many consumers are interested in getting a $15 coupon off Comcast cable eight years from now when the lawsuit is over. Our courts, the FCC, the DoJ are all so pro-big business as the result of both political parties' appointments at the behest of lobbyists that breaking antitrust law is just another profitable new business strategy.
It's probably just greed. (Score:4, Insightful)
the equipment necessary to stream the kind of bandwidth Netflix needs to a significant portion of their customers simply can not be purchased and maintained for the current price of a residential broadband connection.
Do we know that for a fact? I am skeptical. Bandwidth usage globally is increasing, and the rate of increase is increasing, and it's only going to get worse. Every ISP in the world has to deal with this every day, every year, and so on. Comcast is a huge company. If carrying Netflix is putting them in the red, why doesn't it do the same to small, local cable ISPs, who only have a few thousand customers? Why aren't the local ISPs' upstream providers doing the same thing? What about ISPs in Europe and Japan, where they provide comparatively enormous amounts of bandwidth to users? Why aren't they going bankrupt when they're sending 10x the bandwidth Comcast provides to each customer?
I may be wrong, but I suspect it's not a matter of losing money carrying Netflix content, but simply a matter of corporate greed.
This is not about Net Neutrality (Score:5, Insightful)
Notice that the dispute is not between Comcast and Netflix -- it's between Comcast and Level3, which doesn't create content, only owns pipes. Level3 and Comcast have a "peer" agreement; they generate a similar amount of traffic, so they accept each others' traffic for free. That's a typical arrangement. However, this was before Netflix changed CDN from Akamai to Level3. Akamai sends much more traffic to Comcast than it receives, so it pays Comcast for receiving the traffic. That's also a typical arrangement. Now that Neflix will be going over Level3 instead, Comcast is just trying to negotiate the same deal w/ Level3 as with Comcast:
Net neutrality may be an important issue, but it's not the issue here.
Re:Or is it Just A Noisy Peering Dispute? (Score:3, Insightful)
How can Comcast complain that the traffic going to consumers is unbalanced? By the very nature of what consumers do the traffic is always going to be unbalanced.
Netfiix can fix this imbalance. Change their front end apps to send an endless stream of zeros to a bit bucket in Level3.
Re:Class action suit? (Score:3, Insightful)
The problem is the customers are the ones responsible for having only Comcast. See, the voters elect politicians who pass laws and ordinances banning competition in the ISP space by granting exclusive franchises. You see a lot of laws being passed now which ban public ISPs. Amazing how people continue to vote for politicians who are so corrupt, but that is what they do. The worst part is, these same people complain about not having a choice of ISPs.
Re:I Disagree (Score:5, Insightful)
GP is right. But it's all about public relations.
Netflix: Uh, well, that's your ISP's fault for not coordinating with our CDN.
Um. No. You'd say that only if you wanted to piss people off.
A real corporation would avoid jargon, and point fingers at someone else... Hell, they do that even when they *are* at fault.
In reality, you'd get something more like:
Netflix: We're sorry, sir. Who is your internet provider? Comcast? Unfortunately, that appears to be a problem that all Comcast customers are experiencing. Please contact your Comcast customer service. In the meantime, can we offer you an free upgrade to your DVD by mail service for three months?
Re:This is not about Net Neutrality (Score:5, Insightful)
Net Neutrality shouldn't mean giving as much bandwidth to anybody as they want, for free. It should mean not targeting specific packets on the basis of content, including whether they're "video packets" etc.
Re:I Disagree (Score:4, Insightful)
Customer:Why do I have to pay a COMCAST SUBSCRIBER FEE for downloading movies?
Netflix:Comcast charges us extra to stream the movie to you. Other ISPs don't do that so our other customers don't have to pay that fee.
Customer: I'll have to get my city council to revoke Comcast's charter. Looks like it's time for the city just to build its own network.
The conversation wouldn't even transpire if Netflix started broadcasting a warning to Comcast customers that their monthly agreement is going to change if Comcast gets their way.
Re:The only free market is the black market (Score:5, Insightful)
As soon as authority gets involved in commerce, the market ceases to be free, and falls prey to regulation and rent-seeking.
That may be true, but there's a catch. There's a minimum amount of "authority getting involved" required to have a free market in the first place - you need stuff like courts and police and land ownership. It turns out that minimum level is also enough that the market will inevitably cease to be free and fall prey to rent-seeking.
Not only that, but both regulation and rent-seeking can occur for reasons other than Government intervention. Take a look at how the stock market functions, for example - the vast majority of both regulation and rent-seeking is carried out by the stock market owners themselves. The Government regulations tend to be restricted to eliminating fraud, and fraud has no place in a free market anyway. Alternatively, look at scientific journals.
Re:I Disagree (Score:5, Insightful)
This obscure reference just went over 99% of Americans' government-educated heads.
Oh, we learn a lot of obscure, meaningless history over here... just the American sort. Do you know who Squanto is? We made a holiday out of him! Do you know who the guy was that signed the Declaration of Independence in REALLY BIG LETTERS was? We name buildings after him! How about that "Monroe Doctrine"? "Remember the Maine"? Betsy Ross? Yeah, Betsy sure was important.
We can't be expected to keep track of every culture who ever raped, pillaged, invaded, or otherwise defiled the British Isles - let alone what the protection payments were called! :)
I think history books the world over concentrate too much on the names and dates, and not enough on the lessons.
Re:I Disagree (Score:5, Insightful)
I take exception to your crack on Americans. I'm public school educated and I knew what Danegeld was without being told.
If historical trivia is your measure of proper education would you like to take a gamble that I could find some reasonably important but semi-obscure history that you're not aware of?
Re:I Disagree (Score:3, Insightful)
I disagree with your disagreement.... :)
L3 is not a small tier 1 provider by any means, and if Comcast wants to pull this crap, then L3 should completely remove all peering agreements with comcast, That would affect comcast's view of the internet quite significantly. In fact, if all ISPs do this, that would leave comcast a tiny isolated wan network. At that point, I suspect the entire internet would no longer function, and they would change their attitude towards forcing content providers to fork over the cash.
As the original synopsis concluded, its not like L3 is pushing data across comcasts network as a transport to other networks, rather this is traffic that comcast subscribers have requested. Comcast already charges their subscribers, those subscribers are requesting that data. This sets a bad precedent, next thing you know they will start asking every ISP for money for voip, start charging Blizzard for the privilege of letting their customers connect to WoW... etc.. etc...
Re:Alternate viewpoint (Score:3, Insightful)
And the reason that competition never materializes is that there is no possibility of competition. This is a natural monopoly. Comcast has already paid for all the local lines to the houses (usually on the taxpayer's dime). For another company to step in they need to:
1. Overcome legal barriers. There usually are many.
2. Run a TON of local infrastructure to every house in the area.
3. To do #2, take out a ton of loans, or spend a lot of cash that would otherwise be profits.
4. Try to make back enough money to make #3 worthwhile.
The problem with #4 is that Comcast will simply lower their rates closer to their marginal cost to compete. Then nobody bothers to sign up with the newcomer, or very few do. Then the newcomer either goes out of business, or sustains the business but never really makes any money as a result, showing a loss.
Sure, consumers IN THAT AREA do benefit from the lower rates. However, this is all just a fantasy since the potential competitor has accountants who can work out that #4 won't ever happen, so they never do #1-3 in the first place.
The cleanest solution is to treat natural monopolies like public utilities in the 1980s. They don't get to bundle services, and they don't get to make large profits. They still make money - more than enough to feed the owners' families.
Re:Wrong approach L3 (Score:3, Insightful)
Most people are stuck between choosing between one or two physical monopolies.
Being physical monopolies, THEY SUCK EQUALLY. If you are talking about the cable monopoly versus the phone monopoly you are still talking about choosing the lesser of two evils. Both will treat you like shit because they think they can get away with it. They think they can because for the most part they can. Their core business model is pushing a monopoly product. So getting them to treat you like a real person that can choose something else is going to go nowhere.
What ever meagre theoretical competitive pressure there might be will be pretty ineffective.
2 natural monopolies is not a free market unless you are a Republican.
Not a peering dispute (Score:2, Insightful)
Comcast wants to paint this as a peering dispute: you send me way more bytes than I send you, ergo you pay.
Comcast is an eyeball network, with extreme Down:Up ratios--what do they expect? It's the nature of the business they're in. Their customers pull far far more than they push. And many customers want bytes from Netflix, which they pay Comcast to deliver to them. Double-dipping, pure and simple. This peering rule of thumb no longer makes much sense, with the world divided into content networks and eyeball networks.
What I think this is really about is Comcast
A) wanting to preserve its extremely high profit margins on its broadband business. For years, the average subscriber has paid his $45/month for broadband, and used it lightly. Now that there's a high-bandwidth killer-app in the form of streaming Netflix, people are using broadband, like broadband, and it's a threat to broadband providers and their massive infrastructure oversubscription ratios.
B) Wanting to favor its own streaming content. Traditional CATV is in trouble, and netflix has a big jump on competitors both in terms of public perception, and technical polish. Comcast wants in that game, and what better way to get a leg up than to leverage your last mile advantages.
Rubbish. It's time for the govt. to step in and take ownership, or heavily regulate, the last mile pipe. Then, allow competitive service offerings through that pipe.
Re:Class action suit? (Score:3, Insightful)
I have a choice of Comcast vs DSL through my local telco - I chose DSL. You are right it is about the same $ for a slower speed, but I have never found the DSL bandwidth to be inadequate - including streaming Netflix and other things I need and want. I made that choice 100% because of the Comcast TOS and reputation.
I think the best way to proceed is to get the pricing out in the open - have Netflix have different price points depending on the internet provider - passing along the fees directly to the consumer so we can make a fully informed decision. I know as a non-Comcast customer, I have no desire to subsidize them via a jacked-up Netflix cost.
Re:Untenable Argument (Score:3, Insightful)
Alternatively, due to Comcast's monopoly abuse, NetFlix and Akamai were absorbing costs that, in a fair market, would be absorbed by Comcast and the consumer.
This is an interesting isomorphic thought exercise, but it contributes very little to the discussion.
Re:I Disagree (Score:4, Insightful)
Funny thing, my government education, and yours, and that of most everyone here, has somehow managed to instill in us enough knowledge of history to know what the Danegeld is. Everyone gains benefits from educated citizens, so everyone should help pay for education. The more educated a populace, the richer the country. Education, being a positive externality, will not be allocated in sufficient quantities just based on individual purchases of education. This is because most of the people who gain benefit from your education (your boss, your spouse, your family, your neighbors and fellow citizens) do not have to pay for your education in a free market, even though they gain benefits. Seeing little demand, the free market will not provide the optimal quantity or quality of education. Only the rich will be well educated, and a poor serving class will not have the tools to be good citizens. Being uneducated, these poor will be unable to contribute as much, and they will be easier for the powerful to manipulate into voting against their own (and your) interests.
A free market in education is not efficient, will not provide higher quality education than government, will not provide enough education, and will lead to an uneducated populace that can not participate effectively in their own governance. That is a structural problem stemming from the fact that education is an externality.
Re:I Disagree (Score:3, Insightful)
You obviously weren't paying attention in class. Don't blame "gubermint skoolin'" for your educational shortcomings. The rest of us know what the Danegeld is.
Re:Class action suit? (Score:3, Insightful)
The real benefit is that this backasswards company stops doing whatever stupidity it is doing at the time, not the discount.
Ahh, but that assumes they do stop. Instead they just keep on keeping on until they are actually forced by the courts to stop. Comcast is a repeat offender. They'll keep breaking the law until it is unprofitable or they are forced to obey.
My prediction: 1) FCC is going to intervene.
They probably will, but it's also likely congress will intervene as well. The FCC may or may not have the authority, but if the courts rule with them (after a long period of legal battle) congress will likely step in and pass legislation to stop the FCC and aid Comcast. If you had not noticed, most of the congress critters who were championing net neutrality have been replaced by hardcore pro- big business republicans. Guess where they got the money to get elected. No really, guess, because that's all we can do because of our insane campaign finance laws.
Re:What is this "shaken down" bullshit? (Score:2, Insightful)
This *isn't* a peering dispute. Comcast is sending Level 3 data to route off somewhere. Level 3 is sending Comcast bits because Comcast subscribers are asking for them. Comcast is routing Level 3's traffic around anywhere but directly to their subscribers, and Level 3 certainly wouldn't need them to in the first place.
So to recap: all data coming from Level 3 to Comcast is requested by Comcast, and paid for by the subscribers. This is simply Comcast's typical greed and hand-waving.
This isn't a peering dispute; Comcast is only try to paint it as one -- and you bought it.
Re:Class action suit? (Score:3, Insightful)
Um the retirement age was set by the government at a time when the average person lived to be only 70. Now when that jumps up to 80 and 90 and we have to feed and take care of people for 3 times longer than expected costs go up with it.
France has basically lost 1 month of active economy and will take several months to a year to get back into full swing. That much is enough to drop their GDP some 5-10% for the year. Incomes will drop.(can you go one month without a paycheck?)
Remember strikers don't get paid, no money in means much less spending(savings, credit, etc make up the difference) however to get back you have to rebuild which takes longer.
Also from what I have seen of retired people every one I know works harder now than they did when they worked for a living. They have enough money to goof off and have fun. but one guy decided to open a small farm stand in front of his home. strictly what he can grow. and each year it has gotten larger. He doesn't have to work, he was a teacher for 35 years. but he puts in 12-14 hour days in the sun farming. In the Winter he teaches skiing. he does it for the free ski passes for himself and his wife that he gets. His Farm stand makes just enough money to pay for the dock, and sails for his sailboat. Which he races 2-3 times a week.
Pretty much every other retired person I know, has side jobs, fun jobs, etc. They no longer work hard because they have to they work hard because they enjoy it. and when they stop enjoying it they change jobs. I know one lady who owned part of an OB/GYN. She was one of the head nurses. She gave that up so she could have free time and is working swing shift part time at a hospital. the pay is lower, but she has more time for grandkids.
being retired doesn't mean you stop working. It means you stop hating the work you do.
Re:I Disagree (Score:4, Insightful)
It also ignores the fact that I drive a red car and lots of other facts.