Comcast CEO Brian Roberts Opens Mouth, Inserts Foot 343
lpress (707742) writes "At a recent conference, Comcast CEO Brian Roberts rationalized charging Netflix to deliver content by comparing Comcast to the Post Office, saying that Netflix pays to mail DVDs to its customers but now expects to be able to deliver the same content over the internet for free. He forgot to mention that the Post Office does not charge recipients for those DVDs. The underlying issue in this debate is who will invest in the Internet infrastructure that we badly need? Comcast has a disincentive to invest because, if things bog down, people will blame content providers like Netflix and the ISP will be able to charge the content provider for adequate service. If ISPs have insufficient incentive to invest in infrastructure, who will? Google? Telephone companies? Government (at all levels)? Premises owners?"
Re:Classify net access as a utility? (Score:4, Informative)
Which is what all the big 'telecommunication services' plan to do anyway. FIOS and its kin will be maintained where they exist already, a pathetic fraction of the country, but not expanded. The cable companies plan to continue making their money on cable tv, hobble their internet access to prevent the internet from competing (excepting possibly those like Netflix that pay them specifically, but watch! Netflix may still get screwed despite paying) and the telephone companies plan to continue building out new *wireless* services where they can charge premium per mb rates, but no one besides google is expanding conventional unlimited hardwired internet service in the US either way. Google may only be lukewarm on network neutrality but they are _not_ one that would flee the field rather than comply. So in this case the damage of regulation could approximate zero.
Land lines are a natural monopoly and it's not like these lines were laid out in the first place without subsidy and privilege from the government, at all levels. In fact the taxpayer has already paid for an awful lot of capacity that he never received and never will.
Getting the government involved is almost never a good choice economically, but the 'almost' is still important, and natural monopolies are the biggest exception.
Re:He also forgot to mention... (Score:0, Informative)
actually you do pay the foreign carriers, it's in the postage you have to buy for the letter.
You just don't get a detailed bill for it.
Re:He also forgot to mention... (Score:2, Informative)
The Universal Postal Union (Score:5, Informative)
I want to send a letter to someone in a different country, say, the USA, or England, I pay Canada Post to deliver it. I do not have to pay the United States Postal Service or Royal Mail to deliver my letter sent from Canada.
Postal settlements for delivery abroad are made peer-to-peer.
The Universal Postal Union (UPU, French: Union postale universelle) is a specialized agency of the United Nations that coordinates postal policies among member nations.
In 1969, the UPU introduced a new system of payment where fees were payable between countries according to the difference in the total weight of mail between them. These fees were called terminal dues. Ultimately, this new system was fairer when traffic was heavier in one direction than the other. As a matter of example, in 2012, terminal dues for transit from China to the USA was 0.635 SDR/kg, or about 1 USD/kg.
As this affected the cost of the delivery of periodicals, the UPU devised a new ''threshold'' system, which it later implemented in 1991. The system sets separate letter and periodical rates for countries which receive at least 150 tonnes of mail annually. For countries with less mail, the original flat rate is still maintained. The United States has negotiated a separate terminal dues formula with thirteen European countries that includes a rate per piece plus a rate per kilogram; it has a similar arrangement with Canada.
Universal Postal Union [wikipedia.org]
Re:Classify net access as a utility? (Score:5, Informative)
No, not unless you would like your Internet access technologies refreshed and upgraded about as often as your water pipes or electric lines are. Which is to say approximately never.
In the past 10 years, I have never turned on my water tap and had no water come out. In the past 5 years (which is as far back as I have log files from my UPS), I've experienced 2 power failures lasting longer than a few minutes (I recorded 7 outages lasting less than a few minutes, but some of those were when I unplugged the UPS or turned off a breaker to do some electrical work), one was a regional power outage, and one was caused when a car accident took down a utility pole.
However, I experience regular internet outages, the last one was last week, and lasted for 3 hours, cable TV was fine, but internet (for me and a neighbor down the street) was out. It took 30 minutes to get someone at Comcast to realize that there was a problem, but they had no idea what was wrong, nor any ETA for a fix.
So I *wish* my internet connection was managed as well as water and power.
Re:He also forgot to mention... (Score:5, Informative)
I think you have this wrong unless I'm not understanding correctly what you mean.
If this was the case for you with your video game services then you already buying into some good data centers into the backbone and then later on some ISP's backbone link is congested they would then charge you extra to deliver your service to their customers even though you've already paid to be in the internet backbone in your data centers! It's ridiculous that any ISP thinks this is reasonable.
I've paid for my bandwidth, the service (Netflix in this case/your video game service) has paid for their bandwidth now Comcast is double dipping because it knows it can since it has a monopoly.
Have any ISP in any other country try this if there is competition I bet you they will not last long.
Re:He also forgot to mention... (Score:5, Informative)
The problem was that Netflix didn't give a shit about some customers because they paid the lowest bidder to be their bandwidth host.
Concern with network issues is why Netflix has offered CDN appliances at no cost for more than two years [netflix.com] to ISPs. Comcast chose to refuse Netflix's offer to colo within their own DCs on their own internal network, which would have reduced latency and bandwidth costs to nothing. I tend to believe that Comcast is more concerned with Netflix's effect on their own content offerings, and pushing the additional costs to Netflix has the additional benefit of making *them* take the PR hit for any price increases that result.
Re: He also forgot to mention... (Score:0, Informative)
Re:He also forgot to mention... (Score:4, Informative)
Re:Classify net access as a utility? (Score:5, Informative)
FIOS and its kin will be maintained where they exist already, a pathetic fraction of the country, but not expanded.
Well, frankly, yes. Verizon has said for several years that the cost of rolling out FTTH for FiOS was so high, and the adoption rate low enough, that they are done with expanding it for the foreseeable future. Verizon is a business, and FiOS just isn't making much profit. And that is with Verizon having no obligation to share its fiber with other providers, unlike the copper TDM network sharing requirements for UNE-P and DSL. If Verizon had to treat FiOS like a utility and/or line share, it would have been deployed in even fewer places or not at all. It sucks, but it's true.
To be treated as a utility generally means to be compensated in a "cost-plus" environment. You are allowed to charge consumers what it costs you, plus a little margin. Fair enough for water and electric, say, but those are industries where the infrastructure was built a long time ago and a need to upgrade customer-facing physical plant is not really an issue. Bu if you want to build a new power plant, or a sewage treatment plant, you have to go to a state/local Public Utilities Commission and ask permission to raise your rates to cover it, which can take a long time for review and approval. Imagine doing this every time you want to buy a new OC-3, refresh your CPE/modems, or install new wireless towers! Network upgrades will slow to a crawl. Being a regulated utility is good for steady state maintenance and uptime but bad for capital-heavy upgrades and investment.
People forget that even though the old "Ma Bell" phone network was regularly upgraded, that wasn't because of regulation. Ma Bell was actually a business with a regulated/utility portion (local phone service) and an unregulated portion (long distance and other services). For decades, the unregulated part of their business made enough money that it effectively subsidized the regulated local phone service infrastructure and upgrades. When Ma Bell was broken up, local phone service rates actually went up because the ILECs no longer had the unregulated, profit-making businesses to subsidize them. And it is entirely possible that the same thing would happen if ISPs were treated as utilities and were not using TV, phone or other high-profit services to subsidize Internet access.
Re:Classify net access as a utility? (Score:4, Informative)
Actually, if internet service were a regulated monopoly it could be much more efficient than it is now. Compare to water and power, which as regulated monopolies were required by law to continuously invest in infrastructure to provide service with good reliability and safety margins, in return for which they made a guaranteed profit. Then it was deregulated in many areas, but since the companies were still effectively monopolies, there was minimal competitive pressure so the companies slashed their investment in infrastructure, while jacking up rates, in order to maximize short-term profits. The result is worse service with higher prices because there's neither competition nor oversight. And high return for company officers and short-term investors.
For natural monopolies, competition doesn't force efficiency, so you have to have regulatory oversight. If you have neither competition nor oversight, you get screwed.
Re:Classify net access as a utility? (Score:5, Informative)
You assume that in order for the internet to be a 'utility' it has to somehow be made available (instantly) throughout the entire United States. That's not how utilities are rolled out. municipal water is still missing in many, many areas of the country that use wells and septic tanks. The west coast of Florida comes to mind. Most of Montana. Heck, lots of farms w/o indoor plumbing well into the 1950's even if they had a well. Electricity - same way. Telephone same way - I was using party lines in the 1980's which was huge improvement over having to walk to the store on the main road to get make a call.
The OP isn't asking for 10Mbp country wide, tomorrow.. The ask is to start setting standards, start setting prices that include a capital improvement component and start rolling it out. Maybe it will even catch up and pass water!
And BTW Sweden has far less population density than USA, and more inhospitable terrain to cover...
Re:He also forgot to mention... (Score:4, Informative)
I actually know quite a bit about routing. Enough to know that you don't call an interconnect a 'route'. A route is a destination prefix with a valid next-hop. But go right on ahead and think you know all about internet routing just because you read a blog entry or two.
And yes, you do let interconnects get congested if there's no business case for upgrading them.
I'm not saying I disagree with your opinion. As an operations wonk, it pains me to see capacity issues and my natural inclination is to fix it.
However, that shit costs money, and not lunch money either. This is when the business side interfered with the tech. Unless there's a good business case for it, those links aren't getting upgraded until there is.
In this case, there was no business case to do so. If Netflix was complaining about the quality of service because of the saturation on the Cogent interconnect, all they had to do was alter their routing policy to send the traffic for Comcast's prefixes out their Level 3 links instead. It's a trivial and often performed piece of BGP traffic engineering. Netflix decided not to do so (because Level 3 is a crapload more expensive than Cogent) and make a public stink about it.
Even after the public stink failed, Netflix *still* decided not to send the traffic out Level 3, opting to purchase direct links into the Comcast network (and, shortly thereafter, into AT&T's network as well. Strangely enough, people don't seem to have an issue with AT&T telling Netflix to go fuck themselves, just Comcast). That decision should tell you a couple things - Bandwidth ain't cheap. It's cheaper than it was 10 years ago, on a per mbit/gbit cost, but the amount of traffic crossing has scaled up even while prices have been scaling down. And it should tell you just how expensive Level3 is to actually use.
You're basically saying that, just because the Cogent link was saturated, Comcast should have instantly gone ahead and upgraded their links with Cogent, nevermind that the guys doing the complaining had links to another Comcast transit provider, who's links *weren't* saturated.
When bandwidth costs are the clear majority of your OpEx, you think twice about doling out CapEx and additional OpEx if there is another option. You would make a horrible network operator.