
Internet Tolls And The Case For Strong Net Neutrality - tweakz
http://blog.netflix.com/2014/03/internet-tolls-and-case-for-strong-net.html
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Nursie
I really get annoyed by all this. It's not Netflix traffic, it's my traffic.
It's data I requested from my ISP, and the ISP carry the traffic because their
customer wants it and pays for the service. If you're not making money from me
then charge me more, don't threaten and extort the services I want to use!

~~~
exelius
I agree with you to a point. The problem with this scenario is that the ISP
business is built off the principle of giving users high download speeds, but
with the expectation that they won't be maxing out their connection all that
frequently. The higher the average/peak usage, the higher the infrastructure
costs to provide good service.

It used to be that the only people who did this we're downloading games or
movies off BitTorrrent: when that was the case, it didn't affect the ISP
business model that much.

Enter Netflix. It's pretty ubiquitous and even your grandma can use it.
Everyone loves it and everything works well. For a while. Then Netflix decides
they want to push 1080p videos out to all their users instead of 720p. This
doubles or triples the bitrate of the videos overnight. With adaptive bitrate
players, the stream will adjust to use all available bandwidth.

Who should bear the cost of technical changes that Netflix makes? Many would
say "the ISPs! Stick it to the man!" But at the end of the day, ISPs are a
business. If their costs rise, they will raise prices on consumers unless they
can cover those costs another way.

In the end, you're gonna pay the ISP one way or another. Which is more fair to
you? ISPs raising rates across the board (including some people who aren't
netflix users) to cover those costs, or passing the costs on to Netflix, who
then pass them to Netflix subscribers only. It's all about who should bear the
cost for technical upgrades given the way the ISP business model works today.

~~~
Nursie
I prefer option 3 - ISPs charge more for people that use more. I know this
would require marketing changes, and many customers wouldn't like it, so it
won't happen and instead they'll just keep doing what they're doing and trying
to extort money from data-heavy services.

Option 1 is unfair to some people, Option 2 puts a huge barrier to entry in
place for businesses. Option 3 is the only real solution IMHO.

~~~
exelius
Option 3 is data caps and/or metered billing. It's not exactly the most
consumer-friendly option, but the ISPs would love to do it that way if they
could.

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pessimizer
I love metered billing. The problem with it is that the video streamers will
discover how much more bandwidth than everyone else they're using, and AT&T
and Comcast's all-you-can-eat video services that use the same wire will look
a lot more attractive to them.

Ultimately, that may be a threat to network neutrality as the prices are
raised on the metered internet in order to shift bandwidth to those siloed TV
services, and the public won't care because they're not streaming video over
the open internet anymore.

~~~
exelius
Well, the reason it works for all-you-can-eat video services is that the cable
companies are providing a distribution service to the content owners. So for
HBO, they provide both cable distribution and caching of video for HBO Go.
They could pretty easily do the same for Netflix; considering Netflix is
basically HBO that's sold outside the cable companies at this point. HBO does
in effect pay the cable companies for distribution in that the cable companies
take a percentage of the monthly HBO subscription fee that the customer pays,
so I don't see why Netflix shouldn't.

I think a lot of geeks are in love with net neutrality because they see it as
a fairness thing and think it will keep the cable companies from gouging them.
In reality, it's just about cost allocation. Companies are going to take their
profits under net neutrality or not; and the profit margins on cable aren't
astronomically high. Netflix would never have gotten off the ground under true
network neutrality; the costs have to be allocated somewhere.

If you want pure speed though; metered billing is the way to go. Look at how
fast mobile data has become in the US relative to the rest of the world -- a
large part of that is because it's profitable for Verizon and AT&T to have
customers use more data. Businesses are going to make their profits and
regulation isn't going to have much effect on the prices that consumers pay --
but under the right rules, if you create a situation where companies can make
more money by providing a better service, everyone wins.

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notdonspaulding
> For any given U.S. household, there is often only one or two choices for
> getting

> high-speed Internet* access and that’s unlikely to change.

> Furthermore, Internet access is often bundled with other services

> making it challenging to switch ISPs. It is this lack of

> consumer choice that leads to the need for strong net neutrality.

Spot on. The reason Comcast and others can play this game is because they're a
monopoly at the local level. They've worked _with the help of regulation_ to
snuff out all serious competition. Pull back the regulation (at the local,
state, and federal levels) and watch the competition spring up, and watch the
Comcasts of the world change their practices when they actually have to
compete.

~~~
coldpie
I'm actually switching away from Verizon for my cell phone service this
weekend precisely because of their role in destroying net neutrality. I expect
T-Mobile to be slightly worse, or at least no better, in terms of service-per-
dollar but at least my conscience will be clear. Who knows, maybe it'll even
be better!

~~~
lbearl
I actually switched from Verizon to T-Mo about two years ago, and while it
isn't better than Verizon, it isn't substantially worse. If you live in a
fairly well populated area (cities of over 5000 people or so), or along major
roadways, I've never had any issues. The only time Verizon did much better
than T-Mobile for me was driving through Western Colorado and Utah, where
T-Mobile had no service, and Verizon barely had voice.

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colinbartlett
"But when we ask [ISPs] if we too would qualify for no-fee interconnect if we
changed our service to upload as much data as we download there is an
uncomfortable silence."

~~~
cheald
That was a really weak part of the post. Settlement-free peering is when I
route your traffic and you route my traffic and they're about even so there's
not really anything to be gained by you paying me $1000 this month and me
paying you $1000 next month. If Netflix were to start routing Comcast traffic
to the general internet at the same rate that they route traffic from their
data centers to Comcast, that would be a rather different story.

Offering to just accept and blackhole traffic is silly, and everyone involved
knows it. I'm really disappointed that Netflix chose to present that argument
in their post, because it's deliberately misleading about the nature of
settlement-free peering.

~~~
Natsu
Is it? I think that Netflix offers quite a lot to Comcast subscribers and far
less to Comcast itself, which is the crux of the problem.

~~~
cheald
Sorry, I'm not sure what you mean.

Netflix originates a lot of traffic, but it doesn't accept non-Netflix traffic
for routing. That is, I can't send a request for gmail.com to my ISP, who then
sends it to Netflix, who then sends it to Google. Netflix does not have a
neutral network which routes traffic regardless of origin or destination -
they just accept requests for Netflix and serve responses from Netflix.

~~~
Natsu
I mean, literally, that Netflix traffic is valuable to Comcast's customers
(it's their movies) and not valuable to Comcast (it competes with their other
offerings).

~~~
kyleashipley
Isn't it valuable to Comcast as well in the long run? I know several people
who have updated their internet packages to ensure high quality Netflix
streaming. I have to imagine Comcast's profits on that upgrade far exceed the
delivery costs.

~~~
dragonwriter
> Isn't it valuable to Comcast as well in the long run?

No, because Comcast offers streaming video services to which Netflix is a
direct competitor. Comcast would rather Netflix _not_ _exist_.

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Touche
This is hilariously wrong. Netflix is paying ISPs because they dumped their
CDN providers and started doing it on their own. They did it because it was
cheaper for Netflix to cut deals than to use a CDN (who, by the way, also pay
ISPs).

> imagine the plight of smaller services today and in the future.

This is flat out a lie, smaller services uses CDNs.

~~~
notdonspaulding
This situation _has not_ been caused by an _action_ of Netflix's, it _has
been_ caused by an inaction of the big ISPs. Interconnects are a boon to a
distributed internet, and as Netflix points out in the post, ISPs routinely
employ them - for free - in other situations. The main difference is that they
typically can't extort the customers on the other end of the connection so
easily; i.e. other ISPs and companies whose products don't visibly degrade
when subjected to interconnect bottlenecks.

> This is flat out a lie, smaller services uses CDNs.

The reason Netflix is targeted here is not because they aren't using CDNs.
It's because it's the first popular service that could easily be blackmailed
in this way. The end result is that Netflix's cost have gone up in order to
get access to the same 10Mbits/sec that their customer has already paid for.
Those costs will be borne by Netflix (and its customers) and the ISP has
effectively double-charged. Don't kid yourself by thinking the ISP won't turn
that into a regular practice for _any_ company that is successfully reaching
its customers with a latency/bandwidth-sensitive service.

~~~
dhimes
_the ISP has effectively double-charged_

This is the crux. Remember when ATT started charging for _receiving_ text
messages as well as sending them?

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driverdan
If we let the free markets work we wouldn't even be discussing net neutrality.
ISP monopolies and duopolies are the cause of this problem. If there was
competition consumers would choose the ISP that gives them proper, fast access
to the services they use (eg Netflix).

~~~
rhino369
It's just not practical to dig up an entire cities worth of streets to lay a
second transmission line. You are legally allowed to compete with the cable co
and telephone co. But it's rarely attempted because it's not profitable. They
already have a network, building one is very expensive.

Competition is actually our problem. In countries with only 1 telecom choice,
the government regulates it. It often lets ISPs pay to rent the transmission
line that the telecom owns.^1 Instead America lets the cable company compete
against the telephone company and we get two poor choices.

If you want nationwide fiber? Give ATT and Verizon their monopoly on ISP
lastmile networks, but force them to lease your line to indie ISPs.

Just calling for more competition sounds like a good idea, but it won't work.

^1you can actually do this now for DSL in America.

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trekky1700
Net neutrality I can see being a very important topic to Netflix. I could
definitely see ISPs charging extra for Netflix services due to "load" or some
BS like that (when really it would be to make up the damage to providers
cable/satellite offerings).

Net neutrality is good for everyone, all links and all bytes should be equal.

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Fuxy
This is where the beauty of popcorn time just shines because it's the same
amount of data but it's coming from everywhere.

If Netflix could implement something like this and charge for it ISP's asking
for a kick back would be lost.

Unfortunately the MPAA and RIAA would never go for that since they don't get
to put their DRM everywhere.

Atually the MPAA and RIAA should be backing Netflix on this one since if
Netflix fails the most likely replacement for it will be popcorn time and then
the won't be making any money at all.

Then again Netflix will probably destroy net neutrality by complying with
their demands before it fails.

~~~
roc
> _" This is where the beauty of popcorn time just shines because it's the
> same amount of data but it's coming from everywhere."_

The net neutrality decision not only opens the door to monopolists 'shaping'
traffic by peer, but also 'shaping' traffic by protocol. [1]

Even if your data is coming from 'everywhere', they can squeeze it down to
almost-nothing. The MPAA is likely popping champagne over the prospect of
finally having a tool with which to kill casual bittorrent use. [2]

[1] And shaping traffic by _device_ is also on the table. I hope game console-
and platform-makers are preparing for this.

[2] Yes, people could tunnel that traffic through a proxy or VPN. But the ISPs
only have to kill casual use to significantly harm the network. And throttling
_all_ VPN/SSH traffic and using that as a cudgel to extract fees from more
companies is also not only feasible, but perfectly in line with their
incentives.

~~~
Fuxy
True however if it was used for legitimate proposes like by Netflix what's
your excuse for throttling if it's not piracy.

Plus I suspect that if they ever go to such draconian lengths there would just
be a lot of random protocols popping up and it will turn into another race of
cat and mouse until the filters get so bloated it can't handle the traffic
anymore.

~~~
dragonwriter
> True however if it was used for legitimate proposes like by Netflix what's
> your excuse for throttling if it's not piracy.

Without the Open Internet rules that were struck down, the excuse is "we're a
for profit business, and (1) Netflix is a fat stream of revenue that we are
enabling and we don't see a reason to do that without getting a big cut, and
(2) Anyway, Netflix is competing with our streaming video services which are
one of our major sources of revenue, so if our customers have degraded access
to Netflix, that just makes our service that Netflix competes with more
attractive, and brings us more revenue. So, considering both of those factors,
its win-win for us to provide Netflix the choice of (1) give us more of your
money, or (2) have your service work less-well, if at all, for our customers."

This is, fairly exactly, the kind of harm that Open Internet order was
designed to prevent -- to the extent that broadband providers that are also
video (cable TV or internet streaming) providers discriminating against
competing video services was one of the things called out to illustrated what
was prohibited by the non-discrimination provision.

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rsync
"Big ISPs aren't paying money to services like online backup that generate
more upstream than downstream traffic."

Maybe not paying money, but if you're running an offsite backup provider
(ahem) and you're not getting special cut rates on your all-inbound usage ...
you're not going to be in this business very long.

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ethana
Remember when Netflix did the price hike and got a consumer backlash? Hey
maybe if they could indirectly price hike through IPs, then no one would
notice ;)

~~~
notdonspaulding
No. There's no scenario here where Netflix walks away with more money from the
consumer.

