Net Neutrality

Netflix's Comcast Deal is Good for Consumers

Companies looking to please consumers, not regulators, will lead to faster connections and more choices.

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Last weekend, The Wall Street Journal reported that the Internet streaming service Netflix and the telecom Comcast had reached a deal to allow Netflix to connect directly to Comcast's servers to stream video content. The deal, whose financial aspect was not disclosed by either company, means Netflix subscribers who use Comcast can expect a smoother experience, with less buffering and pixilation. Perhaps more importantly, the deal shouldn't cost Netflix subscribers or Comcast users any extra money. All good so far, right?

Cue the cries over net neutrality. "Net Neutrality is dead," wrote John Shinal for USA Today. Information Week's Doug Henschen said the deal "acknowledges a weakening of Net neutrality rules that once ensured free and equal access to Internet bandwidth regardless of capacity demands."

Let's take a step back. Many Netflix subscribers have noticed the service getting slower in recent months, something measured in this Netflix chart. Extreme Tech explained what was happening in a post over the weekend, just before the Netflix-Comcast announcement. In short, the flow of internet traffic relies on "peering," an arrangement by which traffic to and from various internet users, including Netflix and you and Reason.com and every website on the internet, is carried across whichever physical networks, owned by various companies and other entities, are needed to get from point A to B. As Extreme Tech points out, peering doesn't work well with "heavily asymmetrical connections" like the ones Netflix, which accounts for up to a third of U.S. internet traffic during peak hours, creates. Extreme Tech and others accused broadband providers of "throttling" Netflix, though with the most prominent case, Verizon, Netflix said it had no evidence or belief that the telecom internet provider was throttling the service's users. Once upon a time, Netflix was accused of "throttling" customers who rented too many DVDs.

The Washington Post's Tim Lee notes that while, indeed, the Netflix-Comcast deal isn't technically about net neutrality, "it's hard to see a practical difference," forcing net neutrality advocates "back to the drawing board." And it "threatens the survival of independent backbone companies like Cogent," the company that Netflix pays to carry its traffic to the Internet. It's not clear that would be a bad thing. While cutting out the middleman for Netflix subscribers who use Comcast doesn't appear to be saving any money for the consumer, some consolidation of backbone companies could be useful. Netflix is not the first content provider to strike a deal with an Internet service provider (which is what telecoms like Comcast also are) to directly pipe their media wares to Internet users. A Bloomberg report points out companies like Facebook and Google have similar deals with Comcast, and relays one industry researcher's "surprise" Netflix didn't use the issue as leverage in the upcoming regulatory showdown over Comcast's plan to acquire Time Warner Cable.

Indeed, the Netflix-Comcast deal could be used by opponents of Comcast's proposed Time Warner Cable acquisition to argue that the Federal Communications Commission (FCC) should block it. Part of what animates net neutrality proponents to oppose deals like that between Netflix and Comcast to improve users' experience is that the telecoms involved "wield too much power," as Information Week's Henschen wrote in his conflated net neutrality argument. In promoting the deal to get past regulators, Comcast's CEO Brian Roberts argues that the two companies don't currently compete for customers in any part of the United States. That's a result of the highly regulated cable market. As Virginia Postrel explained in the July 2000 issue of Reason, government policies created cable monopolies, even in places where there were multiple cable companies to choose from, and incentivized, and sometimes required, them to "screw their subscribers" and instead "please the powers that doled out their franchises." Back then, the fear was that the media conglomerate AOL Time Warner's fight with ABC over the carriage of ABC-owned channels was a sign of a media environment where consumers would have access to less and less content. Today, one of the concerns about the proposed Comcast-Time Warner Cable merger is that it could spell the end to the ubiquity of channels like CNN, owned by Time Warner, which spun Time Warner Cable off as an independent company five years ago. For example, Directv, a satellite provider, dropped The Weather Channel earlier this year, and, as The Street suggests, a channel like CNN, facing considerable ratings difficulties, may similarly no longer be considered essential by cable providers. Cable television could become a "sushi menu," allowing consumers to choose which channels they want on their televisison. 

The availability on your television of TV-quality content from internet services could speed that process of increased choices, and Netflix's deal with Comcast could be a harbinger of that kind of expansion. The ability to watch Netflix on your TV blurs the distinction between television and internet content. Conceivably, the streaming service could eventually negotiate with Comcast, and other televisions providers, to be offered directly through customers' set-top boxes. Most cable providers already try to offer in their packages some kind of on-demand content, from the broadcast and cable networks they carry as well as premium (subscription) channels like HBO or Showtime. Verizon has also partnered with DVD rental company Redbox to bring that company into the streaming business. As the share of internet traffic consisting of streaming videos increases, the ability of companies like Netflix and Comcast to negotiate more direct ways to bring content to consumers becomes more important to ensuring a quality of service customers will keep paying for. Government regulations that stifle competition among cable companies leave business moves like Comcast's acquisition of Time Warner Cable the only option for some companies to expand to new markets. The way to promote more competition is through less regulation, not more, allowing cable companies and other media/content companies to negotiate, self-regulate, adapt, or fall to the wayside based on the demands and desires of media consumers, television watchers, and Internet users, not government regulators and monopolists seeking to retain unfair competitive advantages.

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  1. I don’t have an opinion on Net Neutrality one way or another.

    However, given the current regulatory landscape in this country — government-protected geographic cable and telephone monopolies — it does not make sense at this time to not have Net Neutrality. If, say, Comcast was making it difficult to get to my favorite content provider (who may not have the resources to execute a Netflix-like deal), I may not have any other option other than to pay more because there is no effective competition where I live because of Comcast’s geographic monopoly. For example, at some point, Comcast could make it difficult to get to any news source that isn’t controlled by NBC Universal (disclaimer: that is currently barred with an agreement with the FCC).

    Until the monopoly system in this country is reformed, then I think net neutrality has to be around.

    1. Agreed.

      Surely Mr. Krayewksi has heard all the stories of Comcast thwarting cable competition from Google Fiber and others all over the country through extensive lobbying, “special legislation” in Kansas etc.

      1. Comcast thwarting cable competition from Google Fiber and others all over the country through extensive lobbying, “special legislation” in Kansas etc.

        History bears out that more rules, regulations and additional government has traditionally been a bulwark against lobbying.

      2. sjl2112|2.26.14 @ 4:59PM|#

        Agreed.

        Make two accounts have them agree with each other.

        Brilliant.

    2. “Until the monopoly system in this country is reformed, then I think net neutrality has to be around.”

      Most of the US can currently obtain internet service from Cable, phone lines, cell server and/or satellite.

      There’s no monopoly on internet access.

      1. There’s no monopoly on internet access.

        Truly.

        I believe that in my area there are several options. Comcast is, of course, the fastest, so if you want that sweet 24mb download speed, you gotta go Comcast. But it’s not the only way to connect to the internet.

        Of course in these here modern times, Monopoly has been defined down to mean “the most popular or prevalent”.

      2. “There’s no monopoly on internet access.”

        Technically you are correct but practically you are DEAD WRONG.

        In today’s marketplace access to the internet must certainly be “broadband” or “high-speed” for an efficient delivery of the kind of content the vast majority of consumers require such as streaming video. That’s not possible with dial-up and DSL is such an old technology that it barely qualifies as “broadband.”

        If you’re lucky to live in an area where fiber-optic cable is available with a TELCO then bully for you but the vast majority of this country does not, including myself. So the only real option is cable. Comcast knows this and has currently put data caps in my area and surcharging for overage. Because they are a defacto monopoly they can get away with gouging their customers. This is the problem with government regulated monopolies. The only real solution is to force Comcast to open their infrastructure to competitive cable companies so consumers have a choice.

        Watch this short video of Milton breaking it down
        http://m.youtube.com/watch?v=tdLBzfFGFQU#

    3. I don’t have an opinion on Net Neutrality one way or another.

      it does not make sense at this time to not have Net Neutrality.

      Go fuck yourself you statist doublespeaking fuck.

    4. “However, given the current regulatory landscape in this country — government-protected geographic cable and telephone monopolies — it does not make sense at this time to not have Net Neutrality.”

      Two wrongs do not make a right. The second wrong sometimes helps the first wrong continue longer.

  2. Sorry to threadjack, but thought I’d share another nut-punch case of the state committing someone against his own will and interfering with the family, ostensibly for his own good. This one is in Alaska: http://www.policestateusa.com/2014/bret-bohn/.

  3. Netflix’s Comcast Deal is Good for Consumers

    I have a hard time believing that. I have Comcast as a monopoly provider and have been satisfied with everything they do and any contact I have with them. Netflix’s I have and am satisfied with their service.

    1. Random names I never seen before all saying the same thing about net neutrality.

      sock puppet sock puppet sock puppet fun.

      bassjoe, sjl2112, and 21044, you are all the same person, i sure hope you get payed for this. Otherwise you are one sad pile of shit.

  4. You don’t need two cable companies to have competition.

    DSL, Cell and satellite exist and considering that none of these things existed in most markets as little as 15 years ago one would think a wait and see strategy would better serve customers.

    Just because Cable right now is the go to broadband provider by no means is it guaranteed to remain so.

    1. The evidence is strong that cable has more market share because, well, it’s better. That’s not abuse of monopoly power. Otherwise, as soon as someone offers a better service, we’d have to bring the DoJ down upon them for daring to serve the consumer.

      And yeah, the market is internet service, not a KIND of internet service. Otherwise, Burger King would have a monopoly on Whoppers – no one else has ’em, right? Never mind that there’s a robust market for burger joints and, expanding the thought, robust fast food market.

      1. They do have a monopoly on Big Kings, I can’t get those anywhere other than Burger King.

      2. Cable is better sure. With the exorbitant prices the us pays compared to other countries there is obviously room for competition that should bring prices down, so why isnt there?

        It is a monopoly and it shouldnt exist in a free market. I cant stand libertarians who cheer on companies business practices while not lokking at the big picture. Its like celebrating a murderer for exercising thier second amendment rights.

        1. Sorry I suck at typing on my smartphone.

    2. People always forget about the best kind of competition for “monopolies” there is: simply doing without whatever the good or service is. Nobody forces anybody to pay for a cable television service.

      1. A cable television service, sure you can do without.
        The internet, in this day and age, you simply can’t!

        1. “The internet, in this day and age, you simply can’t!”

          An assertion is not an argument and a presumption you would have to “do without” is incorrect also.
          Wanna try again?

    3. You clearly have no understanding of how the technology works. Moreover, you have no understanding of the history of telecom regulation in this country, the evolution of wireless and broadband services, how spectrum auctions work, etc.

      If your knowledge matched your vehemence, you would be in better shape. I have forgotten more about the above subjects than you will ever know apparently.

      When you understand how DSL works, its distance limitations, satellite latency, wireless signal propagation, please come back and lecture us all.

      Until then, shut the fuck up.

  5. I do think the amount of competition in ISPs for “last mile” service, is a bit lacking…

    However, net neutrality is not the answer, and will likely lead to everything the net neutrality pushers think they are protecting against.

    If they want to improve things they should be looking for ways to foster new competition.

  6. As mentioned in the article, the main problem resides in the fact that cable companies are horrible local monopolies, which results in US customers paying way more for broadband than most other countries.

    But it also threatens the basic functioning of the internet:
    – Customers pay their ISP (Comcast, Time Warner, Verizon… Tier 2 or 3 providers) to get access to the internet
    – Web companies (e.g. Netflix, Google, Facebook, Apple…) pay a provider (Tier 2 usually) to carry their traffic to the rest of the world
    – These Tier 2 companies connect directly with networks owned by ISPs when possible (at Internet eXchanges)
    – In order to reach every part of the internet, those Tier 2 companies also connect with Tier 1 networks (like Level 3) who connect everything (think of it as “the backbone”, they can reach any other network on the planet, without having to pay for transit).

    The problem I see with the Comcast-Netflix deal, isn’t that Netflix may pay a provider for direct access to their network, that’s not uncommon.
    It’s the fact that Netflix HAD TO pay Comcast, because like Verizon, the connection between their Network and Cogent’s (Netflix’s Tier 2 provider) is full, thus creating a serious bottleneck, which degrades the quality of Netflix’s videos for their customers.
    When a connection is full, providers usually upgrade them, or add new ones, but Comcast refuses to do so (and they can, because they’re a monopoly, so their users can’t go anywhere), so Netflix had to pay.

    1. and they can, because they’re a monopoly, so their users can’t go anywhere

      Sure they can.

  7. It’s a classic case of double dipping, because Comcast charges their users for access to the entire internet, and now they’re also charging Netflix for access to their customers.

    Only competition in the ISP industry can solve this problem, giving the customers the power to go elsewhere if their providers don’t give them quality access to a site they like.

    1. It’s a classic case of double dipping, because Comcast charges their users for access to the entire internet, and now they’re also charging Netflix for access to their customers.

      You make that sound like it’s weird or bad. How is it different from a magazine or newspaper selling both copies and ads?

      1. Monopolies are not natural. I think that is his point.

      2. This is very different from the magazine business model. Magazines have 2 types of customers, the readers and the advertisers.
        In this case, the ISPs have one type of customers: people like you and me paying them to get access to the internet.
        It means that the traffic coming from Netflix to me has already been paid by Netflix to their provider (Cogent) and by me to my ISP.
        What Comcast is doing is extorting Netflix into paying them to reach me, which is not how the internet works, again because everybody has already been paid to send and receive this traffic

      3. Because people don’t buy a magazine for the ads, the same way you don’t watch TV for the commercials. Netflix, however, is exactly the type of thing that people pay to get access to the internet for. If I’m paying for a 50Mbps “tube” of bandwidth and I expect that my ISP is giving me 50Mbps for everything I want to access on the internet, including Netflix.

        If an ISP starts limiting Netflix or Hulu trying to squeeze money out of them by inconveniencing me until the service is no longer worth me paying for, they are essentially blackmailing Netflix and denying me what I have ostensibly been paying for. Now imagine that you’re an internet startup with a new media streaming service, but you can’t reach any customers because Comcast wants you to pay an exorbitant fee that you can’t manage; now not only is ISP competition restricted, but so is competition on the internet. Media monopolies will begin to emerge online, with only the biggest and most powerful media sites able to survive, further choking off competition.

        Eventually, I could see internet services being sold the way that premium television channels are today, with different internet packages offering different tiers of service to certain kinds of websites and services online instead of the unfettered free-for-all it is today.

        And I don’t see how any of this is good for the consumer.

        1. essentially blackmailing Netflix and denying me what I have ostensibly been paying for

          Then you stop giving them your money.

          And a market demand has been created so relax and wait for the next disruptive innovation to provide you with what you want at a price point that will eventually come down to whatever you think is fair.

          1. This cannot happen due to government interference. You are cheering free market principles that are only free market insofar as they help the monoplizing company. Fucking idiotic at face value and I cant for the life of me understand how normally logical libertarians support such counyerproductive idiocy.

            1. In other words you’re cheering on comcast’s ability to use the statists for gain when it suits them and free market when it suits them. Just fucking brilliant on you guys’ part.

              Their business model is antiethical to libertarianism. They use the force of goverment to profit.

              But yeah lets dismantle neutrality before we address their use of government force.

        2. “And I don’t see how any of this is good for the consumer.”

          The failure of your imagination is not an argument.
          Please tell us how more government regulation will be good for the consumer.

          1. It’s basically like if General Zaroff gave you a bullet proof vest before he started hunting you. You’d have to be quite stupid to not take it on principle.

            Of course the best solution is to not have assholes like Zaroff around in the first place.

  8. You wrote this because you had to. Just can’t help yourself.

    1. Tony|2.26.14 @ 7:11PM|#
      “You wrote this because you had to. Just can’t help yourself.”

      Sorta like the reasons you lie and demand ‘daddy’ make rules for you.

      1. Whereas you prefer no rules?

        1. Tony|2.26.14 @ 8:48PM|#
          “Whereas you prefer no rules?”

          Yes, having mommy tell you what to do is the only way poor wittle Tony can deal with rules.
          Poor wittle Tony, the moral midget.

          1. Silly Sevo, Tony doesn’t need rules, he just needs there to be rules for other people.

            1. So that shit in your house, I can just come and take it, or what?

              1. I would encourage you to try. PLEASE!!

              2. Tony|2.27.14 @ 10:55AM|#
                “So that shit in your house, I can just come and take it, or what?”

                So, shitpile, unless someone tells you you can’t, you’re such a moral infant you presume you can?
                Put it the other way, if the government tells you to kill people, can we presume you’d smile big and open the poison valve?

  9. No matter how much Comcast sucks, mergers and acquisitions are none of the government’s goddamn business.

    1. “No matter how much Comcast sucks, mergers and acquisitions are none of the government’s goddamn business.”

      I’ll agree and add that no matter how much Comcast sucks, adding government to the mix will only make it worse.

    2. The problem stems from the fact that only government is powerful enough to unfuck the consumer with their fucked up laws while maintaining the fucked up laws that created the fucked up problem in the first place.

      1. Sounds like the fucked up consumers are the problem for creating the fucked up laws in the first place.

        1. Not the consumers, the fucked up electorate.

  10. The whole problem is that companies like comcast exist in the first place because of government interference. If we had a truly free market net neutrality wouldnt even be an issue.

    However, I am concerned with the anti net neutrality crowd’s desire to shoot the horse while we’re riding it.

    I think the prudent thing to do is ensure a free market for isps and then dismantle net neutrality.

    1. I totally agree.
      The government created those local monopolies when they broke down Bell into baby-Bell regional monopolies.
      The fact that this Net Neutrality debate is happening in the US is because there’s no competition. Seriously, countries with a competitive broadband market don’t have this debate!

  11. No this is so exciting. I have waited for something like this

  12. Long time reader of both the site and the forums, this one just ticked me off so mush I crated an account. Cable company monopolies are crazy, where I live, there is 1 cable provider allowed in town. I live half a mile out of town. I can’t get cable. I can’t get cable internet. Dish Network has a DSL plan (what DSL used to mean, Direct Satellite Link) I can’t get that either (though I wouldn’t want to with their data caps). I’ve only got 2 options, a 56k link through my phone company or a plan that says it is a 15Mbs link through my phone company (which graciously allows you to pay like $5 less if you keep internet and stop phone service) (which often does less than 3Mbs when when tested, I have to buffer Youtube videos, lets put it that way). But to do to regulation, I have 1 choice for internet, there is actually a good chance this won’t even post, because the product is that inconsistent. But I have no other choice, because?

  13. You simply need to read reddit and here all those people bemoaning why Korea has such cheap internet rates to realize…

    So, why doesn’t Korea Telecom come over and eat Comcast’s lunch?

    Its obvious that there are regulatory barriers or natural barriers making this harder than it seems

    1. Korea is the size of a state. How much of their population is centered in Seoul?

      Bringing fiber to every rural farm house in America is a much more expensive proposition.

      1. Im pretty sure every promising young cable company doesnt close shop because the costs of providing internet to half a continent is too high.

        Please just think about your logic and dont make me spell out how terrible of an argument that is.

      2. Im pretty sure every promising young cable company doesnt close shop because the costs of providing internet to half a continent is too high.

        Please just think about your logic and dont make me spell out how terrible of an argument that is.

      3. This is a stupid argument because nobody is talking about bringing gigabit fiber to remote ranchers in Wyoming. Even our densest cities, such as NYC, have absolutely pathetic internet options compared to Korea and lots of Europe.

  14. Google is the #1 internet site in the world. Start working at home with Google! Just work for few hours & have more time with friends & family. I earn up to $500/week. It’s a great work at home opportunity. I can’t believe how easy it was once I tried it out. Linked here http://www.Pow6.com

  15. Really? Comcast is committing fraud in my opinion. Everything I say here is my opinion as a current Comcast customer. I pay for business internet. They promise unlimited download with 50 Mbps. They do not just have an issue with Netflix where they cannot handle the volume. They have the same issue with Hulu, Amazon, and Xbox video. I get service interruptions with all services. They are based on how many people are using the network at the same time which is a huge inherit flaw with their infrastructure. On top of that they send techs out and show my entire area red which means their infrastructure is overloaded and they know it. On top of that it is not just the speeds but the latency. When they get high volume their latency goes in the tank and disconnects service to many providers. The government should step in and call them to the carpet. In addition a class action lawsuit should be filed by their customers. Until Comcast quits committing fraud and advertising unlimited download at whatever speeds and then providing spotty service at best they will continue to take advantage of their customers basically stealing their money for falsely advertised services. This is an opinion of a customer of 1.5 years in a 3 year contract I am about to break to go back to AT&T. I may have to pay extra for not having unlimited download but I had AT&T service and never had service interruptions like I experience on Comcast…

  16. Really? Comcast is committing fraud in my opinion. Everything I say here is my opinion as a current Comcast customer. I pay for business internet. They promise unlimited download with 50 Mbps. They do not just have an issue with Netflix where they cannot handle the volume. They have the same issue with Hulu, Amazon, and Xbox video. I get service interruptions with all services. They are based on how many people are using the network at the same time which is a huge inherit flaw with their infrastructure. On top of that they send techs out and show my entire area red which means their infrastructure is overloaded and they know it. On top of that it is not just the speeds but the latency. When they get high volume their latency goes in the tank and disconnects service to many providers. The government should step in and call them to the carpet. In addition a class action lawsuit should be filed by their customers. Until Comcast quits committing fraud and advertising unlimited download at whatever speeds and then providing spotty service at best they will continue to take advantage of their customers basically stealing their money for falsely advertised services. This is an opinion of a customer of 1.5 years in a 3 year contract I am about to break to go back to AT&T. I may have to pay extra for not having unlimited download but I had AT&T service and never had service interruptions like I experience on Comcast…

  17. In addition Comcast’s process is to threaten their customers with techs coming out, not finding a problem and charging $100. Instead of fixing their issues which is on their own network. In addition their network techs come out see the red for the area and cannot do anything but supposedly escalate that ends up in the same process being repeated over and over. It is so bad their own techs call and say they are not coming out because they know they have an issue and still never fix it. Even their supposed account reps that sell you the service and in particular their managers like Kevin Shriver refuse to help their own customers. Saying the tech process which is broken is where the customers need to go and they cannot do anything to help. Comcast is a joke and an example of a modern day company committing fraud through advertising and then blaming service providers like Netflix when in reality their own network is to blame that cannot handle modern loads. Even worse they know the customer load to a single point of presence for an area is overloaded and they continue to sell/market that area making things worse. They even have CSR managers like Zed that try to toute this news as the issue and blow you off. This is out of hand and the Comcast customers need some help as a whole. This whole Netflix thing is a big joke IMO. Why isn’t AT&T in the news with this? Get real and until Comcast is called to the carpet they will keep robbing their customers and committing fraud

  18. IMO the only thing the public can do currently is cancel their Comcast service and go to another provider no matter how painful/costly that is. This will fix the problem and end the Comcast nightmare we all know as customers exist today way past Netflix.

  19. I dust-off this subject by mentionning this blog post about Netflix on ABC News
    http://abcnews.go.com/blogs/bu…..-internet/
    and this article on Forbes
    http://www.forbes.com/sites/ma…..r=yahootix

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