Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Level3 is without peer, now what to do?

cringely.com

Post reply on HN
Print view View original

41–50 of 392 posts

Re: Level3 is without peer, now what to do?

#41

Post by jbooth »

kasey_junk wrote: post #12
brokenparser wrote: post #2

This wouldn't happen if those ISPs didn't have local monopolies. Networks should be opened by selling traffic wholesale to other companies so that they can compete for subscribers on those networks. The network owners would have more than enough money for upgrades and if they don't, downlevel ISPs will sue them.

I'm not making a claim about the veracity of the counter argument to this, but it is easy to state. If network providers had to sell traffic wholesale to other companies, they would have less incentive to upgrade them as those networks then become pure commodities. Right now the local monopolies can use their networks to sell high margin services (cable) bundled with low margin services (internet traffic). If they ha…

The article said that their cable business is way less profitable than their internet business. I haven't done any research on the topic, but given that they have to pay content providers for cable, and don't for internet, I'm inclined to believe Cringely -- even though in a normal market it should be a low-margin business, selling undifferentiated bits for $.

Re: Level3 is without peer, now what to do?

#43

Post by logfromblammo »

xhrpost wrote: post #4

I like the article overall but I don't understand the author's proposed solution. The issue as it stands is apparently a lack of peering, in that big ISPs are using transit to reach large content providers rather than directly peering to those networks. So how would "kicking them out" for a maxed out connection work? If I buy transit from Level3 and my connection maxes out, I'm no longer allowed to be a customer of L…

I think the proposal is to simply sever the link when the peering connection saturates. The traffic out through the link from LazyISP is generating more traffic in through the link than the pipe can handle. LazyISP pretends that this is not their problem, that the Internet is somehow trying to shove its traffic through poor ol' LazyISP's pipes.

The claim is analogous to traffic exiting a Autobahn-style limited-access highway and attempting to reach its destination faster by taking the narrow country backroads to get to the on-ramp of the next highway. The only real reason for any traffic to route to LazyISP is if one of the endpoints is in there, and there is seldom a reason for that traffic to go anywhere but the shortest route between the end point and the nearest backbone highway access point.

The typical argument from LazyISP is so ridiculous on its face that it makes me furious every time I see it. All of those guys present asymmetric upload and download speed to residential customers. Every last one of them. And they pretend that when all of their customers' asymmetric bandwidths are summed up, the total is somehow magically supposed to be symmetric.

Every business on the planet whose cash flow depends on pushing bits out to the Internet goes directly to the backbone with content delivery networks, or at least to an ISP that is serious about peering. They are not going to an ISP with crappy interconnects. There is no way in hell that any cul-de-sac on the network map like a last-mile ISP is ever going to push as many bits to the backbone network as it pulls from it, especially when they do nasty tricks like throttling, port blocking, and hidden metering.

The point is that a steaming pile like Time Warner does not have any internal content providers that any of its customers want to connect to, precisely because of its business practices. If Time Warner cannot connect to the Internet, it has nothing to offer the customer through that precious last mile connection except television channels. So they stop paying the $25-150 a month and try to make do with standing on a ridge waving semaphore flags at each other. LazyISP needs Level 3 more than Level 3 needs them.

Therefore, when LazyISP tries to extort them, the correct response should be, "Fuck you," as they flip the off switch.

Re: Level3 is without peer, now what to do?

#44

Post by Jtsummers »

api wrote: post #25

While I agree with the general thrust of the article, there is one fallacious argument here. Cringely argues that cable breaks even and money is made on the net, but that's an artificial distinction. What if cable disappeared? Would they still make money if they had to pay for the upkeep of the network with only Internet fees? The desperation and risk of this game of chicken convinces me that the answer might be "not…

> Would they still make money if they had to pay for the upkeep of the network with only Internet fees?

In parts of the country, slower-speed copper, fast-download cable, and a few fiber networks are already built out. The cable distribution giants like Time Warner Cable and Comcast are already making a 97 percent margin on their “almost comically profitable” Internet services, according to Craig Moffet, an analyst at the Wall Street firm Bernstein Research. As Levin points out, “If you are making that kind of margin, it’s hard to improve it.” And most Americans have no choice but to deal with their local cable company.

-- http://www.technologyreview.com/news/510176/when-will-the-re...

If that's accurate, I suspect that they could live without cable as we know it today and still make plenty of money. Working on finding out more numbers to see what the revenue breakdown is between cable and internet, though I wouldn't mind if someone else chimed in.

EDIT: Found this [1] for Comcast. For 2012 and 2013 they've lost video customers, increased internet customers. Had growth in revenue for both categories, but a greater increase from internet (percentage and absolute).

So the way things are heading, cable leaving would cost them a lot. However, they can probably make up for it elsewhere, and, ultimately, should be planning on cable TV going the way of the dodo regardless of the nearterm revenues and profits. It's not a viable longterm strategy, like SMS (while immensely profitable) for cell carriers, a good short term strategy but as content shifts to the generic data channels the specialized channels will fall into disuse.

[1] http://files.shareholder.com/downloads/CMCSA/3182774232x0xS1...

EDIT 2: Check out page 53 of the linked filing.

Video revenue for 2013 was $20.5 billion. Programming costs were $9.1 billion. So the net, ignoring any other costs, right there is $10.4 billion. If the ISP side of the house is actually making 97% margins like the claim in the Technology Review article, then it is making almost as much as the video side of the house. At the current growth rates it'll surpass the video profit, but not revenue, sometime in the next few years. Their NBCUniversal acquisition may reduce their programming costs, I'm not sure of the legalities involved in that (their growth and acquisitions could put them afoul of anti-trust/monopoly laws and regulations).

Re: Level3 is without peer, now what to do?

#45

Post by opendais »

kasey_junk wrote: post #36
rlpb wrote: post #31

Earlier quoted context omitted.

> they would have less incentive to upgrade them as those networks then become pure commodities Pit DSL against cable, as has happened in the UK. The POTS network is owned by one company (BT) and the cable network by others. Retail customers generally have a choice of connecting to the Internet by either. BT (POTS network owner) are required to sell traffic wholesale to competitor ISPs (who then buy their own transit…

That describes almost precisely how the US system works.

[text removed since it seem to have confused the person who replied]

http://news.cnet.com/FCC-changes-DSL-classification/2100-103... "The ruling puts phone companies on the same regulatory footing as cable companies, which are exempt from having to offer access on their infrastructure to competing Internet service providers."

Re: Level3 is without peer, now what to do?

#47

Post by ep103 »

lifeisstillgood wrote: post #35

1. Peering is based on equal traffic both ways. At the moment we tend to download gigabytes with a few bytes of request. As video-communications really takes off (yes chicken and egg - see below) this will get lost in the noise 2. rise of ad-hoc local networks This might come out of mobiles, this might be me dreaming, and it might come with sensible home router designs, but ultimately most of the traffic I care about…

The problem is your point #3 has never been true, though. In each case, in American history (though I don't know about water), the utility was privatized for _years_, became local monopolies, and used that monopolistic advantage to become one of the most major Washington lobbying industries of the time, often to the massive detriment to specific sections of the economy. In each case it was only _after_ an alternative industry rose in lobbying prominence in washington (often, the next one on your list) that the previous utility lost their position as #1 lobbying firm in Washington, that their competitors were able to then force anti-trust lawsuits, and or get fair government regulation.

The railroads were monopolized until the late 1800s, the original American idea of a fat cat comes from railroad owners who made profits at the expense of midwestern farmers. That was eventually regulated when oil became a major lobbying industry, whereupon oil and gas subsidies became the new norm and we regulated the railroads. Electricity is a general complex area, but outside of domestic coal-based electricity production, my understanding is that the majority(?) of American electricity comes from nuclear power, which in turn is a regulated monopoly. That industry is so locked that Northern America imports much of its electricity from nuclear plants in Canada, and Texas is actually on Mexico's electricity grid.

I was somewhat hopeful that as Wallstreet rose to replace other industries as one of the top lobbying firms in America that they would end up pushing for net neutrality so as to commoditize their network costs, but instead they simply pushed for B2B fiber to be regulated completely differently (and more sanely) than consumer networks.

I don't want to wait for something better than the internet to come around, before we get net neutrality back.

Re: Level3 is without peer, now what to do?

#48

Post by opendais »

kasey_junk wrote: post #12
brokenparser wrote: post #2

This wouldn't happen if those ISPs didn't have local monopolies. Networks should be opened by selling traffic wholesale to other companies so that they can compete for subscribers on those networks. The network owners would have more than enough money for upgrades and if they don't, downlevel ISPs will sue them.

I'm not making a claim about the veracity of the counter argument to this, but it is easy to state. If network providers had to sell traffic wholesale to other companies, they would have less incentive to upgrade them as those networks then become pure commodities. Right now the local monopolies can use their networks to sell high margin services (cable) bundled with low margin services (internet traffic). If they ha…

And those people are completely 100% wrong.

DSL got screwed for around 10 years by having more expensive regulatory costs than Cable.

Why yes, if you tax X more than Y, Y is going to have the advantage.

Re: Level3 is without peer, now what to do?

#49

Post by [deleted] »

spankalee wrote: post #21
spindritf wrote: post #17

Except it’s actually right (not wrong) because those bits are only coming because customers of the ISPs — you and me, the folks who have already paid for every one of those bits — are the ones who want them. What is the source of the notion that, because you paid for your consumer broadband, all bits are paid for and the charge for carrying them cannot be split with the other side of the connection? Why is it so biza…

No, it's not, because the other side also paid for it to their ISP, CDN, or the build-out and operation of their own CDN. What Comcast and friends are asking for is a _third_ payment, just because. And don't be mistaken, if they win this battle they will start looking for the fourth payment, which is from their customers for faster service to "premium" sites like Netflix, HBO, iTunes, etc.

[deleted]

Re: Level3 is without peer, now what to do?

#50

Post by droopybuns »

So on the one side is the fat-cat ISP who doesn't want to make expensive capital investments ih their transport.

And on the other side is the fat-cat vc funded video content providers, who don't want to pay for the their mp4-based saturation of all the pipes.

This is a negotiation. There are two active media campaigns that are trying to gin up our anger against The Other Guy (tm) as part of their negotiations. I just can't get invested in this nonsense.

Post reply on HN