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Level 3 Shaken Down By Comcast Over Video Streaming 548

Posted by Soulskill
from the premium-tubes dept.
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.'"
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Level 3 Shaken Down By Comcast Over Video Streaming

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  • Wrong approach L3 (Score:5, Insightful)

    by commodore64_love (1445365) on Tuesday November 30, 2010 @08:18AM (#34387328) Journal

    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.

    • by Haedrian (1676506)
      This would defentally not cause any backlash or media campaigns about how the government is ruining free internet will it?
    • I Disagree (Score:5, Insightful)

      by eldavojohn (898314) * <eldavojohn AT gmail DOT com> on Tuesday November 30, 2010 @08:27AM (#34387398) Journal

      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.

      • Class action suit? (Score:4, Insightful)

        by grahamm (8844) <gmurray@webwayone.co.uk> on Tuesday November 30, 2010 @08:33AM (#34387446) Homepage

        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.

        • by 99BottlesOfBeerInMyF (813746) on Tuesday November 30, 2010 @08:52AM (#34387584)

          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.

          • Re: (Score:3, Informative)

            by hedwards (940851)
            Indeed. When TD Ameritrade lost my information form their database, all they had to pay was a paltry number of free trades and were allowed to settle without admitting any wrongdoing. Which as far as I can tell is largely the status quo. The people actually harmed by the behavior rarely if ever get anything substantial out of it and the company rarely if ever has to pay much.

            As far as I can tell that's more or less the status quo.
        • Re: (Score:3, Insightful)

          by pitdingo (649676)

          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.

          • by mwvdlee (775178) on Tuesday November 30, 2010 @09:46AM (#34388160) Homepage

            Amazing how people continue to vote for politicians who are so corrupt, but that is what they do.

            Amazing how people continue to think an alternative to corrupt politicians exist. Some democratic systems, the US one in particular, make minority votes practically useless.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        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: (Score:3, Informative)

          by netsavior (627338)
          I have not used the mail service from netflix in 2 years, and I just expanded my account to 3 dvds at a time (because it also allows me 3 devices streaming at a time). Most everyone I know is the same way, and Netflix corroborates my story, because they just now started offering a streaming only service.

          Netflix is simply the best legal streaming video service on the internet now, sometimes I forget that they do DVDs at all.
      • Re:I Disagree (Score:5, Insightful)

        by Rogerborg (306625) on Tuesday November 30, 2010 @08:35AM (#34387460) Homepage
        So instead the paid the Danegeld. They can now expect a lot more Danes to come demanding their cut.
        • Re:I Disagree (Score:5, Informative)

          by commodore64_love (1445365) on Tuesday November 30, 2010 @09:18AM (#34387866) Journal

          This obscure reference just went over 99% of Americans' government-educated heads.

          "Danegeld" refers to the gold paid by the English monarchy to stop the Danish and Norway Vikings from raiding towns along the east coast of Britannia. I forget the exact date, but somewhere around 800-900 A.D. Many of the Vikings then set-up permanent villages in this area while collecting their tribute.

          • Re:I Disagree (Score:5, Insightful)

            by MightyYar (622222) on Tuesday November 30, 2010 @09:45AM (#34388148)

            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)

            by Buelldozer (713671) <cliff@NoSpAm.gindulis.net> on Tuesday November 30, 2010 @10:00AM (#34388334)

            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:4, Insightful)

            by spun (1352) <loverevolutionar ... minus physicist> on Tuesday November 30, 2010 @11:52AM (#34390166) Journal

            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:5, Insightful)

        by fulldecent (598482) on Tuesday November 30, 2010 @08:41AM (#34387508) Homepage

        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.

      • Re:I Disagree (Score:5, Informative)

        by commodore64_love (1445365) on Tuesday November 30, 2010 @08:52AM (#34387590) Journal

        More like this (from last year):

        Customer: Hello ESPN360.com, I can't watch your sports anymore.
        ESPN360: We're sorry, but your ISP has not paid for access. Please contact Comcast to complain.
        Customer: But the rest of the internet is working fine.
        ESPN360: We're sorry, but your ISP has not paid for access. Please contact Comcast to complain.
        Customer: Are you even listening to me?
        ESPN360: We're sorry, but your ISP has not paid for access. Please contact Comcast to complain.
        Customer: (sigh) I guess I need to call Comcast. Or switch to Verizon DSL.

        Verizon gained a lot of customers because of this. And now Comcast has caved, and they started paying ESPN360.com for access. Ditto Disneyconnection.com. I suspect after complaints or losing customers, Comcast would cave on netflix.com too

      • by grapeape (137008)

        Is that realistic though? I have seen areas that had only DSL and no cable available but I have never seen an area that had cable and no DSL.

      • Re:I Disagree (Score:5, Insightful)

        by bughunter (10093) <.ten.knilhtrae. .ta. .retnuhgub.> on Tuesday November 30, 2010 @09:19AM (#34387884) Journal

        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:I Disagree (Score:4, Insightful)

        by jmichaelg (148257) on Tuesday November 30, 2010 @09:26AM (#34387956) Journal
        The conversation could also go like this:

        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: (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 th

        • Re: (Score:3, Interesting)

          by Sepodati (746220)

          Level 3 is sending 5 times more traffic to Comcast that Comcast is sending back. The peering agreement has failed and Comcast is asking for compensation because of the traffic disparity. Level 3 would ask for the same thing if some business just wanted to dump 5 times the amount of traffic on their network.

          http://blog.comcast.com/2010/11/comcast-comments-on-level-3.html [comcast.com]

          • Re: (Score:3, Interesting)

            by h4rr4r (612664)

            Comcast is a last mile provider, not tier 1. This means no one wants to look at crap on their network and all their customers want to get to level 3's network. In that case often the peering agreements should and do reflect that.

    • See, this kind of belief in market forces only works if there is a competitive market for internet access. Cable and internet providers are natural monopolies - they tend to be the only people servicing a particular area. People must stop believing that market forces will fix everything, especially when market failures exist in so many situations.

      • Re: (Score:2, Interesting)

        by Anonymous Coward

        That seems like a reasonable opinion but all Republicans and most Americans have a quasi-religious perhaps even fanatical belief that a free market naturally corrects these problems. Alas, like all religious beliefs this is a matter of Faith and not subject to change based on facts.

      • ok, I'm not a massive libertarian free marketer, but can't you in most places choose between DSL and cable?

  • Wow! (Score:3, Funny)

    by nomorecwrd (1193329) on Tuesday November 30, 2010 @08:18AM (#34387330)
    Only two levels to go!
    We're doomed!
  • "Sorry, you cannot access Netflix from Comcast Internet. Please contact your local Comcast retentions department for advice."

    • by blueg3 (192743)

      Depends on what that costs versus what paying up costs. I'm sure the company seriously considered that option. I know Time Warner Cable in our area does whenever stations want to get more money out of them.

  • Dear Comcast (Score:3, Informative)

    by LWATCDR (28044) on Tuesday November 30, 2010 @08:19AM (#34387342) Homepage Journal

    You are no longer my ISP.

  • uses a tremendous amount of bandwidth. I know we should be arguing that they need new infrastructure, but just try to convince comcast to spend 2 billion dollars so you can watch fresh prince of bel-air. Not gonna happen.
    • Nextflix=Netflix , it's just a typo and [knock knock] damn, grammar nazis are here already...
    • by theNetImp (190602) on Tuesday November 30, 2010 @08:22AM (#34387364)

      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

    • by Pinhedd (1661735) on Tuesday November 30, 2010 @08:25AM (#34387374)
      Considering that Comcast posted a net income of over 3.5 billion last year I think asking them to reinforce their infrastructure so they can be competitive is not outside the realm of being reasonable.
      • by geoffrobinson (109879) on Tuesday November 30, 2010 @10:20AM (#34388584) Homepage

        Full disclosure: I worked in a Comcast department that helped to determine what future internet bandwidth requirement were going to be. They fired me for reasons I don't feel like getting into, I'll try to give an unbiased account of what I think their thinking is.

        Honestly, Comcast is extremely frugal. This can be both good and bad. In 2008, Wall Street types were encouraging them to take on a lot more debt before the debt bubble popped.

        They do a lot of things in order to free up bandwidth and to satisfy bandwidth demand. It's not like they are sitting on their butts and collecting money. But what they are not going to do is put fiber optics straight to your home, which would be the clearest way to expand the amount of bandwidth. That is extremely expensive and only Verizon is doing that. No other telco is doing that.

        When they are converting analog channels to digital, they are doing that to free up bandwidth. They are trying to roll out Switch Digital Video in order to free up bandwidth (80 or so channels which barely anyone watches in a given service group will be swapped in and out when needed). They split off customers into different service groups to mitigate this as well. They are constantly monitoring this and a lot of hard work goes into this.

        What I think is going on is not that they are worried about cable revenues going down (and I think they know that it is inevitable) but they are freaking out about an increase in web video eating up all their bandwidth. I can't be certain about this. But you have to also understand a corporation has several different parts. One part might not care about something while another part may view Netflix as an existential threat.

        So while I would love to bash Comcast because I feel they screwed me over, I can't sit here and tell you that they aren't doing anything.

        However, Verizon does have a superior product in my opinion which works better for reasons I could get into. But that basically comes down to the fact they don't have much legacy equipment on their system and they went with fiber-to-the-home instead of fiber-to-the-neighborhood.

        • Re: (Score:3, Interesting)

          by NiteShaed (315799)

          Wait, I'm missing something here....

          They are trying to roll out Switch Digital Video in order to free up bandwidth (80 or so channels which barely anyone watches in a given service group will be swapped in and out when needed).

          How does this part work? I thought that digital cable-boxes were basically just a streaming device, with the channel numbers being a code to tell the cable company what stream to show instead of an actual frequency marker. If that's true, then the number of channels should make no d

          • Re: (Score:3, Interesting)

            by geoffrobinson (109879)

            Excellent question.

            Switch Digital Video (SDV) is a cable industry standard which you can find documents detailing how it works. Its all on the back end.

            I believe this is how it will work:
            -analysis goes into which channels get swapped in and out
            -for a given service group, if someone wants to go to channel X they just change the channel
            -on the back end some complicated stuff happens where they determine someone wants that channel and they dynamically allocate bandwidth for that channel and swap out some other

          • Re: (Score:3, Interesting)

            by Rockoon (1252108)
            You are confusing channels (the analog signal on the wire) with channels (the digital stream the decoder "tunes" into... ie, the station)

            The idea being that there is a small set of popular stations that there is always someone in the neighborhood tuning in 24/7 to .. so analog channels are assigned to each of the perhaps 20 "pop stations" and every user shares the same stream when watching that same station.

            Then there is the set of unpopular stations and normally only 5 of the maybe 100 are tuned into b
    • ...and Comcast is ALREADY billing you to provide those bits. What they are trying to do is double-dip on the traffic and charge both sides except Level 3 is already charging Netflix for the bandwidth provided to them so in reality the content is being triple charged. Charging an additional fee in the middle makes sense if you have a non-equitable transit service and are not directly peering, but in this case it's just greed and cost shifting.

      • by martyros (588782) on Tuesday November 30, 2010 @09:04AM (#34387690)
        Read the cnet article -- it has an interesting response from Comcast:

        Unlike the peering relationship between Level 3 and Comcast, Comcast and Akamai, which had previously delivered Netflix's streaming video, had a commercial arrangement, a source close to Comcast confirmed. In other words, instead of swapping traffic between Comcast and Akamai for free, Comcast charged Akamai a fee to deliver its traffic including the Netflix video content.

        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:

        "Comcast offered Level 3 the same terms it offers to Level 3's CDN competitors for the same traffic," Waz said. "But Level 3 is trying to undercut its CDN competitors by claiming it's entitled to be treated differently and trying to force Comcast to give Level 3 unlimited and highly imbalanced traffic and shift all the cost onto Comcast and its customers."

        Net neutrality may be an important issue, but it's not the issue here.

        • by timeOday (582209) on Tuesday November 30, 2010 @09:24AM (#34387932)
          If the problem were simply an imbalance between Comcast and L3, then Comcast could demand payment to make up the shortfall. But if, as appears to be the case, Comcast threatens to resolve this by targeting video traffic specifically (which in practice means netflix), then they're in the wrong.

          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.

        • Why should Level 3 have to pay Comcast to send content to their customers?

          Comcast's customers pay them to provide access to the Internet as a whole. Customers are requesting data (Netflix video) from Level 3 (who Netflix is paying to deliver the video). It would seem to me that Comcast's job here is to transport the data their customers are requesting from wherever it resides to the customer, that's what the customer pays them for in the first place.

    • >>>uses a tremendous amount of bandwidth

      Which is why Comcast and other ISPs starting charging a Per Gigabyte rate (after you exceed their cap). If customers want to watch videos online, then they'll just have to pay the additional expense of that "tremendous amount of bandwidth". Or else watch less.

      BTW I think it's time for an ATT-type breakup for Comcast, Time-warner, and other monopolies.

    • by duguk (589689)

      uses a tremendous amount of bandwidth. I know we should be arguing that they need new infrastructure, but just try to convince comcast to spend 2 billion dollars so you can watch fresh prince of bel-air. Not gonna happen.

      Not commenting, just saying:

      In October, Internet monitoring service Sandvine said: [boingboing.net]
      Netflix streaming represents 20 percent of all U.S. Internet non-mobile bandwidth use during prime-time hours.

      I read it here [boingboing.net].

    • uses a tremendous amount of bandwidth. I know we should be arguing that they need new infrastructure, but just try to convince comcast to spend 2 billion dollars so you can watch fresh prince of bel-air. Not gonna happen.

      *I* pay for that service. That is the point of the customer paying for the internet, to get data streamed from other places to my box. If suddenly Comcast wants someone else to pay for my data stream that is fine, but they need to stop charging me too. Trying to charge two parties for the same data stream, that is unethical.

      Further more, EVERY data stream from netflix to a comcast customer is paid for by the comcast customer already. Comcast wants it to be paid for twice.

  • No! (Score:5, Insightful)

    by Haedrian (1676506) on Tuesday November 30, 2010 @08:21AM (#34387354)
    Keep the government out of my internet! The corporations can solve their problems in a way that the consumer is not effected!

    Right?

    Guys?

    anyone?
    • Nobody save a moron would make the ridiculous claim that customers will not be affected by either government involvement or lack thereof. The issue is, in which way will the customer be most positively, or least negatively effected. Unfortunately this was handled poorly by Level 3, who should have said "no problem, cut us off, we'll get our lawyers to start the class action suit on behalf of your customers right away." They should have then sent out snail mail to all their customers who have comcast (det
    • Do not bring up that the government set up local monopolies. That argument is dead. Companies could be offering Internet connections via WiMAX or 3GPP LTE an areas currently dominated by cable and DSL, but they are not.

      The free market fails when the majority of consumers are ignorant or apathetic.

      • In my area there are companies offering internet connections via WiMAX and 3GPP LTE. They both suck. Their speeds drop during peak times (because they oversold the bandwidth they have available) they have horribly low caps (10GB/month) and their latency pretty high.

        Some of these problems can be alleviated by increasing the bandwidth available to each access point. The problem lies in who that bandwidth is purchased from. It's either the local telco who offers residential DSL service or Charter. I susp
      • by shentino (1139071)

        Or lulled into a sense of helplessness.

      • by Haedrian (1676506)
        "The free market fails when the majority of consumers are ignorant or apathetic."

        They should have thought of that before they decided to invent the free market.
    • These aren't corporations.
      And this is not a free market.
      They are monopolies and monopolies need to *directly* regulated (i.e. price fixed), so they don't abuse their customers. See your local phone and electricity monopoly for examples.

    • by theNetImp (190602)

      Oh you mean like the way the banks managed to keep us from having a recession recently and didn't need a bailout right?

  • by Wonko the Sane (25252) * on Tuesday November 30, 2010 @08:21AM (#34387360) Journal

    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.

    It's not about content, it's about volume and flows, and who pays for the infrastructure build necessary to handle them.

    What amounts to poaching other people's resources works well right up until you drive that other party into the wall and force them to spend a crapload of money for which they receive nothing in return. That is, they don't receive any renumeration for the additional expense - but you do!

    This is the base problem with all overcommitted services where the business model is predicated on fractional use of maximum possible resource consumption. When that model is violated costs go up dramatically. This is ok provided the person who has the cost also gets the revenue that is occasioned by the violation of the original model.

    But in the case at hand, Netflix and similar get the revenue, but Comcast gets the cost.

    I saw this one coming a mile away. If L3 manages to get the FCC involved and Comcast is prohibited from doing this they will be forced instead to either cap-and-charge customers or dramatically raise their prices, which will also blow back on the content folks like Netflix.

    Suddenly that $8 "video any time" subscription becomes not $8, but $28 as Comcast adds another $20 to your monthly cable internet bill.

    And there goes the pricing model that everyone loves so much about Netflix!

    • by edremy (36408) on Tuesday November 30, 2010 @08:28AM (#34387410) Journal
      But Comcast does receive something in return- customers. Customers want to access Netflix, and (presumably) won't use an ISP that won't carry Netflix. Yes, this may require Comcast to expand their services, but that's the price to maintain customers.

      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.

      • by Wonko the Sane (25252) * on Tuesday November 30, 2010 @08:35AM (#34387464) Journal

        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.

        • by gottabeme (590848) on Tuesday November 30, 2010 @08:55AM (#34387610)

          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.

      • Re: (Score:3, Interesting)

        by vlm (69642)

        Customers want to access Netflix, and (presumably) won't use an ISP that won't carry Netflix.

        Two problems:

        1) Comcast is a monopoly cable internet provider in its area. There is no possibility of competition so they can pretty much do what they want. They have 6.897 million reasons for the government not to regulate their monopoly.

        http://www.opensecrets.org/orgs/summary.php?id=D000000461 [opensecrets.org]

        2) Comcast probably provides movies and videos on demand for $$$. The strategy is to use their monopoly internet service to boost profits in their MOD/VOD service. Frankly, as a guy whom purchases his VOIP and hi

        • There is no possibility of competition

          There is a possibility of competition - DSL, WiMAX, 3GPP LTE. But for some reason, competition never materializes.

          • Re: (Score:3, Insightful)

            by Rich0 (548339)

            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 m

    • Re: (Score:3, Insightful)

      by arivanov (12034)

      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 regardin

    • >>>Netflix and similar get the revenue, but Comcast gets the cost.

      Yeah.
      And?
      If Comcast doesn't like it, they are free to (1) hand the network back to the city or county government that owns it, or (2) raise their internet rates to support upgrading lines to handle the load. Just as gas companies raise their prices when demand goes up (like summer vacations).

      Comcast is a business and and they should either "man up" and stop bitching. Or quit. I'm sure Google or Apple would love to have a governmen

      • (2) raise their internet rates to support upgrading lines to handle the load

        I do believe this was one of the suggestions mentioned in the article I linked to.

        Of course this shifts some of the costs on to the customers who don't use Netflix but maybe they won't complain as loudly as the Nexflix users.

  • The customers get screwed.

    I heard this on the radio and there was some noise about Comcast losing cable TV business. WAAAAA! If I'm paying you to provide me with internet and I'm doing so in preference to paying you for TV maybe you should take that as a sign that your customers want generic internet access instead of cable TV. Instead Comcast sees its own business as a threat to itself and then tries to get someone else to pay for it. Netflix has a good reputation, but they aren't going to just eat this co

    • They only lost 1/2 a million - or about 0.4% of total US households.

      Comcast is hardly in trouble. BTW a lot of those cusomters are moving to Free TV (antenna). Why pay for something that is transmitted-to-air, and now with Digital TV there are 2-3 times more channels than under the old analog system. I get 40+ of them in my area - all free.

  • by 1sockchuck (826398) on Tuesday November 30, 2010 @08:29AM (#34387416) Homepage
    Comcast says the issue with Level 3 is a peering dispute [datacenterknowledge.com] and says it "offered Level 3 the same terms it offers to Level 3s CDN competitors for the same traffic." The issue seems to be that the Level 3's addition of Netflix as a customer may have altered the balance of the traffic exchange between Level 3 and Comcast. In other words, Comcast says the volume of traffic is the issue, while Level 3 says the type of traffic is the issue.
    • You make a good point. Additionally, Netflix has just made a deal with Level 3 to take most of the traffic they used to do with Akamai and now do it with Level 3. Akamai already had a deal with Comcast where they paid an additional fee because they sent more traffic to Comcast than Comcast sent to them. It looks to me like Level 3 got the Netflix traffic by undercutting Akamai on price.
      This is like a deal between Exxon and BP to deliver each others gasoline over their pipelines at no cost because they eac
    • by ZaMoose (24734) on Tuesday November 30, 2010 @09:02AM (#34387678)

      Precisely. All the Network Neutrality pushers are being played for suckers by Level 3. It's dirty pool on their part -- they're trying to get a better price in a market that was previously covered by "gentlemen's agreements" between ISPs and are attempting to incite a NetNeut flashmob in order to get their pricing.

    • Re: (Score:3, Insightful)

      by jonsmirl (114798)

      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.

      • by Agripa (139780)

        Netfiix can fix this imbalance. Change their front end apps to send an endless stream of zeros to a bit bucket in Level3.

        Generating bogus traffic to encourage or alter peering relationships is not unheard of. Often it works because service providers usually lack the traffic analysis capabilities to detect it.

        The Peering Playbook: Strategies of Peering Networks [sacramento.ca.us]

  • This is excellent (Score:5, Insightful)

    by multipartmixed (163409) on Tuesday November 30, 2010 @08:31AM (#34387432) Homepage

    Finally, a real example people can point to and say, "SEE!" when talking about net neutrality.

  • by dnaumov (453672) on Tuesday November 30, 2010 @08:36AM (#34387468)

    is Netflix should start billing Comcast for agreesing to deliver content to Comcast customers. I wonder how Comcast would like THAT.

  • by DoofusOfDeath (636671) on Tuesday November 30, 2010 @08:41AM (#34387506)

    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.
  • The UK (Score:2, Interesting)

    by zandeez (1917156)
    You guys have it better than we do at the moment. Ed Vaizley (Communications Minister) has supported the idea of paying extra for access to certain content on the internet. http://www.bbc.co.uk/news/uk-politics-11773574 [bbc.co.uk] As you can imagine I'm not too pleased about this, you guys are still looking to your government to help you, ours has already said they'll do the opposite.
  • by gtvr (1702650)
    Already waiting for FIOS here, but if Comcast had cut off Netflix that would have driven me to DSL in the interim. Admittedly, streaming video takes more of Comcast's bandwidth than static pages, but there is streaming video from Apple trailers, youtube, porn, news sites and plenty more. Either Comcast builds and bills a service that supports that, or not. If not, they will lose out business to companies that can.
  • by voss (52565) on Tuesday November 30, 2010 @08:47AM (#34387550)

    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?

  • A Simple Solution (Score:3, Interesting)

    by jpapon (1877296) on Tuesday November 30, 2010 @09:33AM (#34388024) Journal

    I find this whole argument ridiculous. Isn't the simple, effective solution to simply charge customers based on the amount of data they consume?

    I mean, if I want to use Netflix, shouldn't I pay for the bandwidth required to use the service? Why should that cost be shared by my neighbor, who only uses the internet to check his email and the news?

    Charge consumers per byte of data they send/receive. Yes, it sucks if you are a bandwidth hog, but its really the only fair solution.

    I mean, there's a reason other utilities, such as electricity, water, or waste disposal don't give unlimited plans. It's just not a reasonable way of doing things. You should pay for what you are in fact consuming, rather than subsidizing the consumption of your neighbor who has a hundred torrents going all night, every night.

    I agree, it sucks but it's really the only fair solution. It might stifle growth of some services which consume lots of data, but it would also have major benefits, for examples companies would be motivated to reduce the amount of bandwidth their services provide.

  • by rickb928 (945187) on Tuesday November 30, 2010 @10:56AM (#34389220) Homepage Journal

    The Internet is assymetrical. I click a few times, and in comes gigs of movie. Even when I wax on about something important here, or send a Christmas email of a few kilobytes, I read many more. One post on facebook yields me megabytes of web page.

    This is an old complaint. Multiple providers used to complain about peering arrangements in the late 90s, and then they got together and dealt with it. Sprint and Cogent get into hissy fits regularly, mostly because Cogent undercuts Sprint access pricing, and Sprint tries to hurt Cogen by raising their peering fees. It all goes away.

    Now the cable companies are whining that other content providers are taking advantage of their networks by pouring data into their gateways without compensating these poor media delivery networks for the effort.

    This would be a lot easier to deal with if the cable co ISPs, in particular, had a content delivery business that they could sell to non-subscribers, but they don't. So they want to encourage their subscribers to 'stay at home' and use the content they DO have, which is pretty much on-demand TV and pay-per-view movies. So far, subscribers aren't as interested as expected, and seem to prefer Netflix. Pricing has a lot to do with this, but massive numbers of new releases are the big driver.

    So do the cable cos have a beef here? Should they be compensated by other Internet media providers for the highly assymetrical traffic they are receiving?

    No. They already are being compensated by subscribers.

    I pay Cox about $50/mo for Internet service, and I rarely watch or stream anything. My limited gaming is no great burden, the issue there being latency. My occasional downloads of ISOs for a Linux distro are so rare they can't be causing Cox any real trouble. I don't Hulu, don't Netflix, don't even YouTube. But I may have to. My video bill with Cox is closing in on $100/mo, and it's not worth it. In high season, I pay about $3 per show that I WANT to watch on TV. That's about 30 shows, assuming it is October and all my favs are on. Now that several have ended for the season, it actually costs me almost $5 per show tha I WANT to watch. The rest is idle channel-surfing, entirely optional viewing, and I could not do any of it and not feel cheated. Seems like a lot. If I could stream current episodes of some programming, I could kill my cable. Actually, I could kill my cable since only one show can't be had over the air, and I can deal with that. I can use ATSC and be done with cable. I live so close to the DSL box I can get slammin' speed and Qwest seems ready to call me back. I even have a wireless DS option that's good for 5MB down, and the hardware isn't too expensive. I may yet have to exercise my freedom and go elsewhere. I can buy a ChannelMaster DVR at Fry's for $300 if I'm too lazy to whip up a media server/PDVR out of stuff I'm not using any more.

    But this is really about the ISP, this case being a cable co, trying to get paid twice. I pay for access to content. They want the providers to pay separately. Imagine the Post Office making you buy a stamp to send an envelope, and then having to buy another stamp to pick up your incoming mail. Nice.

    Of course, in the end, we pay.

  • by Doc Ruby (173196) on Tuesday November 30, 2010 @02:25PM (#34392870) Homepage Journal

    If a Comcast customer set up a proxy server at some cheap:bandwidth hosting company, they could get Netflix data sent to the proxy, encrypted there, then sent down to their home (and the reverse for requests). A simple passphrase and XOR could make the encryption extremely low overhead, and easily set up over ssh or SSL. These hosts can cost as little as $10 a month but be reliable, which added to Netflix's charges is still cheaper than paying for Comcast TV.

    And indeed all traffic could be routed through that simple VPN, protecting everything from Comcast's prying, now that Comcast has proven (again) that it cannot be trusted. Email, web, IM, everything.

    That's the principle. What's the current best software to set up the proxy at the host and at the LAN?

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