
Talk of an Internet Fast Lane Is Already Hurting Some Startups - czottmann
http://www.technologyreview.com/news/527006/talk-of-an-internet-fast-lane-is-already-hurting-some-startups/
======
jcrites
> Gillis Cashman, a managing partner at MC Partners in Boston, says it makes
> sense to charge extra to big content providers like Netflix, whose services
> at peak hours can sometimes consume more than 30 percent of total Internet
> traffic. Video is “significantly congesting these networks, and causing real
> issues for carriers where they have to spend a lot of money upgrading
> networks, and pushing fiber deeper into their networks,” he says. “There is
> currently no model for monetizing that required investment.”

This argument doesn't make sense to me. The ISP's customers are using the
ISP's network by downloading Internet content. The nature of the content
should be irrelevant to the discussion. The ISP's customers are purely
responsible for that usage, and it is part of - from what I understand - the
service they are already paying for. The ISP's network is only "congested" if
it is incapable of delivering on the service that was advertised (assuming for
the sake of argument, some particular speed of access).

Thus, how can Cashman argue that "there is no model for monetizing the
required investment?" Isn't that exactly what ISP customers are buying when
they pay for access to the Internet through the ISP? The onus should morally
be on the ISP to make a good-faith attempt to build sufficient connections to
any content that's popular enough to saturate the links providing it.

Furthermore, why isn't it naturally the ISP's responsibility to price their
access sufficient to cover current usage and expected growth in usage? New
use-cases for the Internet are constantly going to appear. It is the ISP's
responsibility to provide Internet access with sufficient throughput that it
is not congested for any reasons under the ISP's control; and to price their
access sufficient for investment to achieve the throughput.

"The latest BigMac hamburger caused hungry residents to swarm McDonalds and
caused drive-through lines to be congested today in Cloudville. Gillis
Cashman, managing partner at McPartners, Inc. says that, despite selling happy
meals in record numbers, delays in drive-through lines will continue, since
since there is "currently no model for McDonalds to monetize the required
investment" to upgrade its drive-throughs.

~~~
piqufoh
How's this for an analogy;

"Electricity supply companies have found that almost 30% of the total
electricity capacity in their networks is being consumed by customer's light
bulbs. In order to support future demand, the electricity supply companies
will begin charging light bulb manufacturers for light bulb users electricity
usage."

Completely bonkers.

~~~
sschueller
But there is one giant difference between how electricity and internet is sold
. Electricity is a metered service.

It would probably be much better if internet service was metered but it would
not go over well after we all have been used to the unlimited pipe.

~~~
FollowSteph3
Landlines phones generally aren't metered but it works...

~~~
vidarh
For phones the demand is very different: a subscribers connection is either in
use or not. When it is in use, it typically consumes no more than 64kbps at
most. And it is easy to model expected peak demands in normal (non-disaster)
scenarios because everyone that people might be _calling_ tends to have a
fairly low number of inbound connections, so the total peak bandwidth usage is
still quite small - miniscule by todays standards.

When you're paid per subscription, and you at most carry 64kbps through a
small local area before long distance fees kick in, it works.

Even so, in Europe (and I believe _most of the world_ ) landline usage _is_
metered. It is the US model of free local calls that is unusual.

------
adamnemecek
Every one of these articles should be mentioning the fact that in the 90's,
the ISPs got $200 billion dollars to build a fast internet infrastructure that
they never delivered.

[http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_0026...](http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_002683.html)

~~~
noxxten
Not only did they not deliver, but they intentionally sabotaged US efforts to
stay up to par with other countries. US infrastructure is woefully behind
compared to other nations (we're only recently starting to see fiber optics as
a serious competitor to DSL). Even still, as old and outdated as US
infrastructure is, the idea of a bandwidth limit or speed restrictions are
imposed by the ISP, not actually a physical constraint. Sure, there are limits
to the loads a node can handle in an area; But with each node typically
serving 200 customers, at a conservative $30/mo... That's a $72,000 annual
budget upgrade and/or expand THAT SINGLE NODE. A typical ISP will handle
hundreds, if not thousands, of nodes depending upon a location.

We don't need fast lanes or bandwidth caps on the internet. We need an ISP
that isn't ran by greedy tyrants.

~~~
rayiner
> US infrastructure is woefully behind compared to other nations

Reconcile your claim with Akamai's State of the Internet, which shows the U.S.
ranked #10 globally, at 10 mbps average connection speed:
[http://www.akamai.com/dl/akamai/akamai-
soti-q413.pdf?WT.mc_i...](http://www.akamai.com/dl/akamai/akamai-
soti-q413.pdf?WT.mc_id=soti_Q413) (page 23). That number would put at about at
#6 in Europe (see page 29), ahead of the U.K., Germany, and France, and not
far behind Sweden and Ireland.

~~~
saraid216
I was curious, so I pulled their appendix (p39) to actually look:

Top Twenty Percent above 10 Mbps:

    
    
      irb(main):057:0> bar.sort { |a, b| a[:perc_above_10].to_f <=> b[:perc_above_10].to_f }.reverse.collect { |item| item[:country] }[0..20]
      => ["South Korea", "Japan", "Netherlands", "Switzerland", "Czech Republic", "Hong Kong", "Belgium", "United States", "Denmark", "Sweden", "United Kingdom", "Finland", "Canada", "Ireland", "Norway", "Austria", "Taiwan", "Israel", "Russia", "Singapore", "Poland"]
    

Top Twenty Percent above 4 Mbps:

    
    
      irb(main):058:0> bar.sort { |a, b| a[:perc_above_4].to_f <=> b[:perc_above_4].to_f }.reverse.collect { |item| item[:country] }[0..20]
      => ["South Korea", "Switzerland", "Netherlands", "Czech Republic", "Japan", "Israel", "Denmark", "Canada", "Austria", "Hong Kong", "United Kingdom", "Belgium", "Romania", "Luxembourg", "United States", "Germany", "Russia", "Sweden", "Poland", "Finland", "Spain"]
    

Top Twenty Average Speed:

    
    
      irb(main):059:0> bar.sort { |a, b| a[:avg_speed].to_f <=> b[:avg_speed].to_f }.reverse.collect { |item| item[:country] }[0..20]
      => ["South Korea", "Japan", "Netherlands", "Hong Kong", "Switzerland", "Czech Republic", "Sweden", "Ireland", "United States", "Belgium", "Denmark", "United Kingdom", "Finland", "Austria", "Canada", "Norway", "Taiwan", "Israel", "Singapore", "Germany", "Poland"]
    

If you intersect all three for "higher than United States", you get:

    
    
      irb(main):080:0> (ary_one[0...ary_one.index('United States')] & ary_two[0...ary_two.index('United States')]) & ary_three[0...ary_three.index('United States')]
      => ["South Korea", "Japan", "Netherlands", "Switzerland", "Czech Republic", "Hong Kong"]
    

What bothers me about the data is the implicit distribution skews in the Peak
and Avg numbers, but that's a problem with every line, so not material to the
subject here. It _may_ signal a methodology weirdness, but it's lunchtime and
I don't feel like paging back to see if I can find something showing that
Akamai is counting things it shouldn't be.

~~~
adventured
I always find it fascinating when people take the data and proclaim that
America should be stacked up against nations with single digit millions of
people living there, much less postage stamp size areas like Hong Kong or
Luxembourg.

Most of the comparisons are hilariously ridiculous. The proper comparisons
are: China, Brazil, Japan, Indonesia, UK, Russia, India, Germany, France,
Turkey, Italy, Mexico - large scale industrialized nations.

Comparing Norway or Luxembourg or Hong Kong with the US, as though they can
possibly be compared in any sane respect what-so-ever is absurdity to the
ultimate degree.

The fact that we compete at all against tiny nations with 5 or 8 million
people is a stunning accomplishment.

~~~
rayiner
Half the population of South Korea lives in the Seoul metro area, which has
the same population density as the city of San Francisco. The whole of Hong
Kong is a single city, again about as dense as San Francisco. The whole
country of Japan is about as dense as the state of Massachusetts, the 2nd
densest U.S. state. It's about twice as dense as New York, the 7th densest
U.S. state.

Dense U.S. states outperform the overall U.S. average significantly (and
comparably to Japan):
[http://www.bizjournals.com/boston/blog/techflash/2014/04/rep...](http://www.bizjournals.com/boston/blog/techflash/2014/04/reportmass-
had-third-highest-internet-connection.html?s=image_gallery).

Out of the 10 U.S. states with the fastest internet, 8 are just the densest
states (+D.C.) in a different order.

~~~
adamnemecek
The thing is that the internet speeds even in the dense areas are
disproportionately slower.

~~~
rayiner
How do you get that? Massachusetts's average is 13.5 Mbps. Japan is 12.8. New
Jersey, Maryland, and Delaware are 12 and up, above Switzerland, Sweden, Czech
Republic, etc. The dense U.S. states compare very favorably to the top-5.

South Korea is the outlier because half the country lives in a single megacity
with the density of San Francisco. The U.S. can't compete with that geographic
advantage.

------
swombat
I wish those articles referred to this by its proper name: it's not about
creating an internet "fast lane", it's about creating "slow lanes" for people
not willing to pay extra for the "normal lane".

On the good side, all this will mean in the long run is that the VPN industry
will be booming. No bandwidth throttling via VPN, after all.

~~~
ColinDabritz
While they can't discriminate between types of traffic on a VPN, they can
throttle all VPN traffic, and react to higher VPN bandwidth use. And probably
will, if allowed to.

------
higherpurpose
Last I checked Wheeler said "if the ISPs abuse these new rules and put sites
on the "slow lanes", I'll bring in the _real rules_ (referring to Title 2
reclassification)".

So I wonder what's his reaction when he found out that the ISPs are _already_
abusing the new rules, before the rules to allow fast lanes are even passed:

[http://arstechnica.com/information-
technology/2014/05/level-...](http://arstechnica.com/information-
technology/2014/05/level-3-claims-six-isps-dropping-packets-every-day-over-
money-disputes/)

[http://knowmore.washingtonpost.com/2014/04/25/this-
hilarious...](http://knowmore.washingtonpost.com/2014/04/25/this-hilarious-
graph-of-netflix-speeds-shows-the-importance-of-net-neutrality/?tid=rssfeed)

------
stedaniels
Non-USA internet users should be helping protest this in the USA. If its
allowed to happen there, it'll set a precedent for the rest of the world. "Say
no to double-dipping!"

~~~
sschueller
Another interesting thing which is only now starting to go away for these
unlimited plans is cell phone service in the US.

In most countries you only pay for outgoing calls (unless you are roaming).

In the US you pay for incoming calls as well (your minutes are deducted) and
in addition the person calling you is also paying for that call.

So there is double dipping going on there as well. At some point I was even
paying for incoming SMS.

~~~
mratzloff
Yep. I pay for every spam text I receive. (Thankfully it's rare.)

------
CalRobert
Fortunately, many countries in the EU (Germany, Ireland, France, not so much
the UK) are happy to give you permission to build your startup here and fall
under EU net neutrality legislation.

------
Negitivefrags
This entire problem comes down to the fact that internet isn't priced the way
other utilities are.

You don't pay your water company a fixed rate based on the size of the pipe to
your house. You pay based on water actually delivered. You don't pay your
electricity company based on the maximum number of amps that can flow down the
wire, you pay for the electricity consumed.

Internet should be paid in bytes delivered. Then all the incentives will be
aligned for all parties.

High usage end users pay for more of the network than low usage end users,
which they should because they are the ones putting strain on it.

The ISPs would then prefer to transport the larger content that users demand
because they will be paid more for it. Thus they are also incentivised to
create more and better infrastructure to deliver it.

~~~
sschueller
I agree but unlike electricity or water where quality of service is regulated
(water quality etc) internet service is not.

We would need some sort of regulation to force ISPs to provide a pipe that
doesn't suffer random packet loss or connection problems. In addition you
would need some way to make ISP upgrade to better pipes or you will be stuck
with 56k for ever.

I believe all new homes in the US are now equipped with a minimum if a 200A
circuit by law which would equate to your internet speed minimum being
regulated.

~~~
crazy1van
> I agree but unlike electricity or water where quality of service is
> regulated (water quality etc) internet service is not.

It is very regulated. Starting a new utility that relies on public property
(easements for landlines or spectrum for over the air) requires cutting an
epic amount of red tape. In fact, it is such a messing process that only the
very politically well connected companies can even consider entering the
market.

It's definitely regulated. It just isn't regulated in the way that you want.

------
mixologic
What would the FCC/Comcast do if they didn't have a 900 lb gorilla to go
after? What if consumers were using the exact same amount of high bandwidth
services, except instead of it being mostly Netflix and Youtube, it were 50 or
100 similar services?

~~~
hrjet
This might be something that is not just beneficial to ISPs. Probably the
major content services want it too, because they can strangle upcoming
competition at the expense of a few dollars.

So the 900lb gorilla might not be actually running away.

~~~
mratzloff
They're increasing barriers to entry, as they do in every maturing industry.

~~~
batoure
Netflix doesn't want this to go through, their market saturation is not nearly
high enough.

76% of american's have some form of extended television service,
cable/satellite.

Netflix covers around 10% of US households.

They see them selves as being in competition with these other providers. It is
in their best interest to keep the cost of providing Netflix as low as
possible until their % of households is significantly higher.

So when you talk about protectionism you probably need to back out a level.
Because remember the big business of the companies pushing the "internet fast
lane" is also television. They have layers of conflicting interests in their
wish to constrain Netflix.

------
hackuser
Pro tip for those unhappy with their ISPs: You get what you pay for.

If you pay for a consumer, price-oriented package, expect price-oriented
service in return. There is a reason your office doesn't use consumer
Internet, and that a 1.4 Mbps T1 costs $400/month, while low-end 6 Mbps DSL
costs $30/month -- 4x bandwidth for <10% of the cost, what a deal!

I shouldn't have to say this on Hacker News, but what you pay ISPs for is
quality of service and support. If you want that at home, pay for a business-
class service. Comcast offers business-class to residences, for example; we've
used it many times and the services and support have been excellent.

~~~
smackfu
Is there really a reason that a crummy T1 still costs $400/month? Other than
all the existing places that have a 10-year-old T1 where that used to be the
fastest option, and the phone company doesn't want to drop prices.

~~~
angersock
Don't those contracts usually come with certain service and uptime guarantees?

------
derekjobst
This is classic price discrimination. As television channel packages become
less of a moneymaker for cable companies, they need to find new forms of
revenue and methods to segment the market. In separating certain content from
other, especially internet data which is all the same to them, the ISPs are
able to better maximize prices. Truly a tragedy, and all the more reason net
neutrality is vital to the future of internet freedom.

------
eurleif
>It will also avoid investing in payment systems or in mobile wallets, which
require ultrafast transaction times to make sense.

WTF?

~~~
ggchappell
Someone doesn't understand the concept of consistency and transactions in
distributed systems.

Regardless, I think we can all agree that slow payment processing is a Bad
Thing.

~~~
mantrax5
Who is that someone? Distributed systems don't need any particular speed of
interconnect to work. In fact, it's one of the benefits of distributed system
designs.

~~~
ggchappell
Yes, that's what I was trying to say. The "someone" is whoever was quoted in
the article; that person does not understand your point.

But it remains true that I, as a consumer, want my payments to be processed
quickly. So do most other consumers, I imagine. But this has nothing to do
with "making sense". I just want it to happen.

------
TomGullen
All this happened here in the UK as well with iPlayer back in 2008:
[http://news.bbc.co.uk/1/hi/7336940.stm](http://news.bbc.co.uk/1/hi/7336940.stm)

(Earlier reference in 2007: [http://www.out-law.com/page-8384](http://www.out-
law.com/page-8384))

"Simon Gunter, from ISP Tiscali, said the BBC should contribute to the cost.
He said the BBC did not understand the issues involved."

Can't find how it was settled, not at all IIRC.

------
FollowSteph3
If you look at the history of the phone, which this is very similar too,
initially the phone companies charged you for everything. Long distance call,
oh that will cost you. Anything at all that will cost you.

Then eventually a player comes in that disrupts the model. What free long
distance on weekends and evenings. How is that even possible.

Then one day competition takes over, et I mean logic ;) and suddenly the phone
prices make sense. Long distance calls are something of the past.

I believe ISP are going through the same thing. However since they can't
easily start charging by the call what they are trying to do is charge not
only the person who is paying to have a phone line but also the caller. Except
that now the caller has to pay for their own phone line and a fee to connect
to the end line, which is already being paid for by the end customer. Aka the
last mile is double dipping in fees cause they can because there is no
competition. Just like the long distance calls from before. Amazing how
quickly the phone companies went from recovering costs to can make profits
from no fee long distance calling when competition finally came...

~~~
danielweber
This comment reflects a deep misunderstanding of the history of the PSTN and
its regulatory and deregulatory cycles. Telephone service is also vastly
easier to predict and model than Internet usage.

------
barretts
This is a terrible article. It's just VCs talking their books. I hate the
FCC's slow/fast lane proposal but you can't write about it only from the
perspective of those with financial interests in the outcome (especially
without making clear the importance of those financial interests).

------
NicoJuicy
Actually, this gives a great opportunity for startups in Europe because of Net
Neutrality and investors in video and high speed delivery.

I'd hope that Europe realizes that, but we don't get anything done fast
because of the obsessive administration :(

------
hackuser
I know ISPs attract little sympathy and HN readers naturally do sympathize
with startups and smaller organizations (as do I), but consider:

In open markets a seller charges what the market will bear in order to
maximize profit. And of course it benefits society because resources are
allocated efficiently, i.e. to those with the greatest demand for them (those
willing to pay the most). Why should this market be any different? I'd expect
that any business, discovering they had an asset someone would pay for, would
charge as much as they could for it. There is nothing dirty or underhanded
about it, even if it challenges the status quo we all are accustomed to (or
the notion that everything on the Internet is free). And it's not like big
ISPs are stomping widows and orphan children -- Netflix, for all its
victimhood, can stand up for itself and I'm sure maximizes its profit wherever
possible. (It may be different for startups.)

I don't want to be absolutist about it, but what I said is a factor. Other
factors are that the ISPs benefit from public goods such as local monopolies,
and benefit from all the innovation that created the Internet and the services
that their customers are paying them for, so they do owe something to
maintaining that ecosystem.

And the clear solution, as has been said before here, is customers paying for
metered bandwidth, and also for latency or other SLAs if they want them (which
long has been common for businesses ISPs) -- why should someone who mostly
uses email want to pay for the same latency that a Netflix customer or gamer
needs?

~~~
guizzy
Not only do they benefit from public goods, but it's a market where the
barrier to entry is so high that competition cannot happen efficiently. Now
before our american libertarian friends come frothing at the mouth, the
barriers to entry are absurdly high _before_ any sort of government
interference, especially in North America, and with a captive customer base,
it's just inherently a bad market to showcase capitalism.

So with inefficiencies due to a lack of competition comparable to a government
agency AND a profit motive rather than the public service motive that
government agencies have, you've got the worst of both worlds. Companies that
barely compete to offer good service with the explicit intention of sucking as
much of your dollars as they can for a service you can't really go without.

------
drivingmenuts
So, if ISPs are free to charge extra for bandwidth used by premium content
providers, are they also free to charge extra based on other factors?

In other words, could the Koch Brothers start an ISP that gave a break to
conservative information providers and charged extra to competing political
views?

~~~
pawn
I don't see why not. Heck, one faction may start paying the ISPs a bribe to
throttle its competitors.

Businesses with money could do this too. Imagine WM paying Comcast to throttle
Amazon traffic or make 1 in 5 page loads fail.

That could be where we're headed, if we don't fix this problem now.

------
artellectual
seems like someone really wants to destroy the US economy further, with all
the NSA spying fiasco, and now this. seems like the US government has an
unlimited amount of bullets to fire on its own foot.

------
fredgrott
seems that some networking startup will solve this as its peer problem with
too many video downloads but not enough upload traffic

that is the problem with net fairness via speeds,etc is that underlying
network ecosystem is not static it will change and with that change comes new
problems in being fair with speeds. etc

------
mantrax5
I know this argument doesn't make sense at first blush, but it does at second:

1\. People don't like metered Internet (which is odd given we don't mind
metered water and metered electricity).

2\. ISPs want to keep advertising unmetered Internet.

3\. Some % of the customers use a lot more traffic, and most of that is
Netflix.

4\. The ISP want to charge Netflix, which will in turn pass the costs to their
customers, and so these customers who use more traffic will indirectly pay
more to the ISPs for their traffic.

I wish they'd just lay it out simple like that. At least then we won't have to
nitpick their statements for logical inconsistencies.

Or... maybe they can just switch to metered Internet. And this whole net
neutrality issue will vanish in a puff of smoke.

~~~
talmand
The reason I would disagree with metered Internet is because based on the past
behavior of the major ISPs it would result in even worse pricing schemes. I
simply do not trust them.

To me the only way metered would work is if all these government sanctioned
monopolies in communities are lifted so that any company can offer service to
any customer.

Or, I suppose, the service is a utility governed by representatives of the
community.

------
blazespin
Harsh reality time: 2 choices. Either Netflix ponies up, or everyone has to
pay per GB to their ISPs. I honestly don't think the average consumer wants to
be constantly tracking how much BW they're using per website. That might work
for a single person cell phone, but doesn't work for a family.

~~~
nknighthb
That's fine. Since the problem isn't last-mile, but interconnection, the per-
GB cost is miniscule. I'll estimate $0.025/GB, but that's way too high, just
to avoid getting to the point where one might realistically quibble over the
real cost.

I could stream 10mbps video 24 hours/day for 30 days and my bill at $0.025/GB
will be about $80 for bandwidth, on top of the ~$40 I pay for my existing
connection, which we'll just assume we'll let the cable companies continue to
gouge me on.

If I'm streaming high-quality HD video 24/7, I can live with a $120 Internet
bill.

I'm not actually doing that, of course. In reality, even I (combined with 4
other family members on the same connection who aren't power users, but do
watch some streaming video and otherwise make fairly active use of my
connection) rarely use more than ~500GB/month. Even if I used a terabyte every
month, it'd be about $25 extra. Meh.

In the end, it's not consumers that don't want this. It's the cable companies.
They hate the idea, because it puts front and center the fact that they are
and should be just a dumb pipe. They don't provide content, they provide a
conduit. This is exactly the public perception that they fear.

~~~
tzs
> That's fine. Since the problem isn't last-mile, but interconnection, the
> per-GB cost is miniscule. I'll estimate $0.025/GB, but that's way too high,
> just to avoid getting to the point where one might realistically quibble
> over the real cost.

That's half the per-GB cost that Amazon and Microsoft charge for S3 and Azure
transfers to the internet for those customers using the highest volume below
the "call for pricing" level, and so get the lowest published rate. I don't
offhand see any reason to expect Amazon and S3 to be paying more for bandwidth
than last-mile providers do, nor for them to be marking it up to their
customers more. Are you sure $0.025/GB is too high?

~~~
nknighthb
Very, very sure. I can pay far, far less than AWS and Microsoft charge for
bandwidth in any US datacenter managing my own equipment.

Meanwhile, HN-darling Digital Ocean charges their VPS customers just $0.02/GB
on overage. That's right, for _overage_ above the 1-9TB they include with
their plans, DO charges _less_ than I'm estimating the cost to be for massive
providers to exchange traffic at far larger and more cost-effective scales.

Linode charges $0.10/GB, and that's _still_ less than AWS charges for the
first 10TB. And again, that's _after_ the 3-20(!)TB Linode's plans include in
the base cost.

Bandwidth is cheap. The US has all the fiber capacity between POPs that it
needs. Adding or upgrading interconnects between Comcast and
Cogent/Level3/whoever is _not_ laying fiber across the countryside, it's
buying switches or turning on ports and running cables from one cage in a
datacenter to another cage in the _same friggin ' datacenter_.

