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Netflix Agrees to Pay Comcast to End Web Traffic Jam

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Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#41

Post by rosser »

bbosh wrote: post #34
scelerat wrote: post #20

And so the precedent is set. This is the direction I see things going: For $70 a month from Comcast you can get Amazon, Google, and Facebook. For only $10 more a month you can add Netflix and Spotify. Want Pandora? Sorry, you'll have to switch to AT&T for that. The broadband providers are used to this type of packaged service given their history as cable television providers. It's how they make their money beyond pro…

> I don't see any other way around this. Vote with your feet.

That's not an option for entirely too many people to be meaningful.

Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#42

Post by itsprofitbaron »

Beyond looking at the implications for Net Neutrality (since we don't really know the implications of this deal going forward in relation to this); for people who are wondering why this has happened, this looks like this is part of Netflix's Open Connect Project[1] which is a single-purpose CDN network - and is essentially a paid-peering deal.

As part of the Open Connect Project, Netflix has deployed servers which are hundreds of terabytes in size in strategic locations all over the work and they contain ~60-90% of the data required for that particular country.

These devices either live in the ISP (which is what Netflix wanted to happen with Comcast) or live in an internet exchange where multiple ISPs can connect to the Open Connect devices.

There are 3 core benefits in doing this:

- Better Streaming due to fewer hops to the client

- Netflix avoids rate limiting (if they're inside the ISP Network)

- Peering is free (usually) and is essentially where two ISPs connect their infastructure and agree to maintain their own sites without bandwidth charges. It's common throughout the industry and content-providers are always looking to peer with ISPs to drive down their overall costs of operations.

[1] http://openconnect.netflix.com

Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#43

Post by justincormack »

res0nat0r wrote: post #24
aaronblohowiak wrote: post #14

Earlier quoted context omitted.

Local Cable companies are not a free competitive market; they are state-sanctioned local monopolies.

Actually they are natural monopolies.

The cabling is a natural monopoly. Who is allowed to service you over it is not. Thats why many countries have some degree of unbundling of service and provision of wires, eg I can get many providers of ADSL here over the same phone lines that are owned by a monopoly provider. Alas not for fibre though yet (UK).

Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#44

Post by aleem »

scelerat wrote: post #20

And so the precedent is set. This is the direction I see things going: For $70 a month from Comcast you can get Amazon, Google, and Facebook. For only $10 more a month you can add Netflix and Spotify. Want Pandora? Sorry, you'll have to switch to AT&T for that. The broadband providers are used to this type of packaged service given their history as cable television providers. It's how they make their money beyond pro…

That is not going to happen. The onus is not on the consumer, it's on the service provider. The service provider may transfer the costs onto the consumer but Comcast won't directly charge the consumers a premium. That would be a bad move and Comcast would lose out its customers to competitors.

Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#45

Post by teddyh »

jaggederest wrote: post #4

Wow, Netflix has decided to negotiate with the terrorists? I'm pretty disappointed. Edit: Having read more of the non-paywalled version, I have to say I think they're shooting themselves in the foot, even if Comcast was offering a better price than Cogent. It sets a terrible precedent, and gives Comcast the leverage to bump the price extortionately at the end of the deal.

> negotiate with the terrorists?

The term you should be looking for is “paying the danegeld”:

That if once you have paid him the Danegeld, you never get rid of the Dane.

— Dane Geld, Rudyard Kipling

Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#47

Post by lhnz »

jaggederest wrote: post #4

Wow, Netflix has decided to negotiate with the terrorists? I'm pretty disappointed. Edit: Having read more of the non-paywalled version, I have to say I think they're shooting themselves in the foot, even if Comcast was offering a better price than Cogent. It sets a terrible precedent, and gives Comcast the leverage to bump the price extortionately at the end of the deal.

You don't understand.

This is the creation of an economic moat (a term coined by Warren Buffet.)

The gatekeeper creates a toll and the tradesman agrees to pay the toll. This is an entry cost to new market players and therefore reduces competition. This toll may be increased as the biggest player (Netflix) grows in size and this benefits them, as eventually new startups have $1+ million startup costs and nobody is willing to invest in that cost-payoff scenario.

This is a win-win negotiation for both Comcast and Netflix but a loss for consumers. Unfortunately it's just how the game is played.

Re: Netflix Agrees to Pay Comcast to End Web Traffic Jam

#50

Post by cmircea »

aleem wrote: post #44
scelerat wrote: post #20

And so the precedent is set. This is the direction I see things going: For $70 a month from Comcast you can get Amazon, Google, and Facebook. For only $10 more a month you can add Netflix and Spotify. Want Pandora? Sorry, you'll have to switch to AT&T for that. The broadband providers are used to this type of packaged service given their history as cable television providers. It's how they make their money beyond pro…

That is not going to happen. The onus is not on the consumer, it's on the service provider. The service provider may transfer the costs onto the consumer but Comcast won't directly charge the consumers a premium. That would be a bad move and Comcast would lose out its customers to competitors.

Not when their competitors will do the same. Heck, what competitors? Many areas only have Comcast service!
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