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Network The Internet

Netflix CEO On Net Neutrality: Large ISPs Are the Problem 181

KindMind writes: At Wired, Netflix CEO Reed Hastings has posted his take on net neutrality. He lays the problem at the feet of the large ISPs. Hastings says, "Consider this: A single fiber-optic strand the diameter of a human hair can carry 101.7 terabits of data per second, enough to support nearly every Netflix subscriber watching content in HD at the same time. And while technology has improved and capacity has increased, costs have continued to decline. A few more shelves of equipment might be needed in the buildings that house interconnection points, but broadband itself is as limitless as its uses. We'll never realize broadband's potential if large ISPs erect a pay-to-play system that charges both the sender and receiver for the same content. ... It's worth noting that Netflix connects directly with hundreds of ISPs globally, and 99 percent of those agreements don't involve access fees. It is only a handful of the largest U.S. ISPs, which control the majority of consumer connections, demanding this toll. Why would more profitable, larger companies charge for connections and capacity that smaller companies provide for free? Because they can."
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Netflix CEO On Net Neutrality: Large ISPs Are the Problem

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  • In Other News (Score:4, Insightful)

    by sexconker ( 1179573 ) on Tuesday August 19, 2014 @08:24PM (#47708335)

    Cats on Dogs: Dogs are the problem.

  • I'm shocked! (Score:5, Insightful)

    by Livius ( 318358 ) on Tuesday August 19, 2014 @08:26PM (#47708347)

    In the absence of governments preventing them quasi-monopolies will act like quasi-monopolies?

  • Poor argument (Score:3, Insightful)

    by Anonymous Coward on Tuesday August 19, 2014 @08:34PM (#47708385)

    While I agree that ISPs are a big part of the problem, the downside isn't that we don't get our utopia, the downside is that other countries are able to provide a more competitive near-utopia, locking us out of a leadership position on development of the Internet. That's the real fail, here. If we fail to lead, there will be others that are all too happy to fill our shoes and take our money to do so.

    No, I didn't RTFA.

  • by Anonymous Coward on Tuesday August 19, 2014 @08:49PM (#47708495)

    TFA sounds a little naive.

    While I'm quite certain there's that "because they can" factor in there, and I've seen it first-hand when working for companies, it's just not as simple as how much data tan go through the fiber. There's lots of hidden costs that have nothing to do with interconnect bandwidth, like switching gear, power used by said gear, maintenance costs related to that, including salaries for qualified technicians spread all over the coverage area available to handle issues and outages (not that their crew is anywhere near "capable", but salaries are salaries even if they were monkeys).

    So, yeah, they can. And there's probably a lot they do only because they can. But it's not that a single fiber would handle all the traffic, with zero cost. Bigger ISPs have bigger costs. They have more widespread coverage, which means their technicians have to travel more (or have to be more), they also need more switching gear, relays to amplify (well, re-create) the signal (which you do need every few km even with oh-so-state-of-the-art fiber, and they cost a crapload of money), routing, which is not the same for a huge ISP as it is for a town-wide ISP.

    Scale doesn't necessarily decrease costs, and the nature of video streaming is that it's not perfectly balanced load either. With those ISPs, you need different co-location agreements.

    Should they charge for it? Hell no! They should pay! Better netflix = more users, they're just too dumb to notice.

    The gist of the matter is, that big ISPs are usually also big telecoms, and telecoms are used to operating with huge profit margins. Anything that pushes them into, not read, but less than obscene profit, they fight. Because they can. They don't really need to provide good service, their quasi-monopoly on the telecom side guarantees they won't die if suddenly people decide to switch ISPs (they won't switch cell companies as easily, because they probably all collude to fix prices - just speculation, but I wouldn't be surprised).

    So, big ISPs need governmental incentives to do what small ISPs must do due to natural market forces (competition).

    What does this tell you?

    Telecoms shouldn't be allowed to act as ISPs. It creates market imbalance.

    Generalize it a bit further: companies should be specialized. So they actually have to be good at what they do to prevail.

  • Re:Big Data (Score:5, Insightful)

    by bistromath007 ( 1253428 ) on Tuesday August 19, 2014 @08:56PM (#47708539)
    "Oh, and it would be nice if the US government would not make it so damned difficult for me to start a proper ISP."

    You just mentioned the gun that's being used.
  • Re:I'm shocked! (Score:2, Insightful)

    by Anonymous Coward on Tuesday August 19, 2014 @09:13PM (#47708615)

    But government is the problem, dumb-asses. The reason you only have one broadband provider in many areas is because local governments signed contracts with these corporations that allows them exclusive usage of communications infrastructure, state governments passed laws that prevent local municipalities from building their own infrastructure, and the federal government shields them from any sort of federal regulation through the FCC which now works for said companies due to regulatory capture.

  • by Obfuscant ( 592200 ) on Tuesday August 19, 2014 @09:15PM (#47708639)

    Or, pull a Google, and do one town at a time and watch the incumbents suddenly offer free peerage and lower rates.

    "One town at a time" was pretty much how the incumbents got where they are. Yes, they bought out other companies to get to the size they are, but those companies did it one town at a time, for the most part. Nobody fell off the turnip truck with billions of dollars putting cable in a hundred cities at the same time. It's like nobody comes out of the womb weighing 600 pounds, it takes a lot of time to get there, and THEN you get your own TV show.

    Anyone who thinks they'll get to be the next Comcast or TWC by a massive multi-city buildout is, well, I'd rather they not clutter up the neighborhood with their poorly planned systems. They'll only be in the way of, and muddy the waters for, the next real competitor.

  • Re:Big Data (Score:3, Insightful)

    by Khyber ( 864651 ) <> on Tuesday August 19, 2014 @09:21PM (#47708675) Homepage Journal

    "netflix refuses to pay a commercial CDN"

    Their contract with movie makers probably stipulates that they maintain full and sole control of the data and allow no other company to touch it.

  • Re:Play hardball (Score:5, Insightful)

    by Jason Levine ( 196982 ) on Tuesday August 19, 2014 @09:58PM (#47708887) Homepage

    In many cases, these big ISPs are also big Cable TV providers. Netflix (and Internet Video in general) threatens their Cable TV model and so must be dealt with. They can't simply block all access to Netflix. The FCC might be weak willed but it still has enough of a spine that it wouldn't ignore this. (Not to mention the lawsuits and bad press that the company would get.) Since they can't block it, they attack it with a two pronged attack:

    1) Institute data caps and overage fees. This means there is no a hard limit on how much Internet Video you can watch. They might be forced to set them high at first, but that also means that they can leave them where they are and lock out HD streams. (Note that Time Warner Cable wanted to make a 5GB cap but was forced to back out of that plan due to bad press and customer outcry.) In the case of overage fees, this will direct money to the cable companies' pockets in case users still try to watch Internet TV. It also makes Internet TV more expensive so that Cable TV will look like a better deal by comparison (even though that "more expensive" is the result of the cable companies' overage fees).

    2) Make fast-slow lanes. If Netflix doesn't pay up, their site will be slow and nearly unusable. Then the cable companies can tout how you won't need to wait for their video services to buffer. If Netflix does pay up then the cable companies make money off of Netflix. This will also force Netflix to raise their rates (to cover this new cost of doing business) resulting in a more favorable - to the cable companies - Netflix/Cable TV price comparison. (Just like the overage fees.)

    So this isn't just the big ISPs not wanting to pay to upgrade their networks. It's also them protecting their old business models against these newfangled competitors.

  • Re:Play hardball (Score:5, Insightful)

    by Areyoukiddingme ( 1289470 ) on Tuesday August 19, 2014 @10:03PM (#47708917)

    Notify customers of these big ISPs that within two months they will no longer be providing the full service via that ISP.. sit back and watch the ISPs customers leave in droves.. of course, this is just turning the tables on the ISP net neutrality rules, but when the ISPs are already playing hardball and have their own man in charge of the FCC, then it's time to give them a taste of their own medicine.

    You forget who Comcast owns. They wholly own NBC and Universal Studios, two major sources of Netflix content. And they're already screwing with the availability of NBCUniversal content on Netflix. If Netflix tries to play hardball, a whole boatload of shows and movies will just vanish out of their catalog.

    A media company that owns the last mile is an abomination, and the FTC should do something about it.

  • Re:Big Data (Score:5, Insightful)

    by AK Marc ( 707885 ) on Tuesday August 19, 2014 @10:52PM (#47709161)

    Netflix does not have to pay ATT/Comcast/Verizon a single dime. All it needs to do is [...] buy proper transit

    So they don't need to pay those three, but they must pay someone, for what amounts to transit to themselves. Transit was a concept when a small ISP bought from a large ISP to get the small number of users to The Internet across unequal networks. Peers are when the networks were more even.

    It was always from the consumer point of view. Only recently did the concept of charging content for content transit. If my ISP is charging for content transit, I want my rebate/discount. They are getting paid twice for the same thing.

  • Re:Poor argument (Score:5, Insightful)

    by StormReaver ( 59959 ) on Tuesday August 19, 2014 @11:29PM (#47709361)

    While I agree that ISPs are a big part of the problem, the downside isn't that we don't get our utopia....

    A bigger part of the problem lies with people who believe that paying a fair price for service, and then receiving the paid-for service, is some form of utopia rather than a requirement.

    No, I didn't RTFA.

    That was self-evident.

  • Re:Big Data (Score:5, Insightful)

    by Wycliffe ( 116160 ) on Wednesday August 20, 2014 @12:01AM (#47709493) Homepage

    They don't want to pay for bandwidth anymore.

    What's so unreasonable about this? Netflix isn't wanting this for free, they are wanting peering agreements.
    Basically, they are saying, let us run fiber directly to you so that:
          1) Our customers get a faster connection
          2) Your customers get a faster connection to us.
          3) Your customers are no longer bogging down your internet connection with traffic to us
          4) Your customers get a faster connections to the rest of the internet
          5) You don't have to buy bigger pipes to the rest of the internet therefore saving money.

    It's a win/win for all involved. There is no reason money needs to be continually exchanged as it's now a private
    lan between the two companies and I'm sure Netflix would gladly pay for the hardware.
    The only reason they don't want to peer with netflix is because they feel like they own the customers and
    are willing to hold their own customers hostage in the hopes that netflix will cave.
    Netflix unfortunately is not critical enough to do the opposite. (i.e. peer with us or your customers
    can't use netflix) as netflix actually has competition unlike the people they are trying to peer with.

  • Re:I'm shocked! (Score:5, Insightful)

    by dywolf ( 2673597 ) on Wednesday August 20, 2014 @08:14AM (#47711159)

    Because this, just like healthcare, gun control, and the environment, is an absolutely unheard of problem that no one else in the world has ever had to confront and solve ever before.

    I mean just look at Europe and Australia and Canada and the rest of the developed world... ....shootings all the time cause they still havent solved gun crime yet either. ...And the internet....why they're just as bad off from monopolization sticking them with shoddy customer service, low speeds, high prices, and no consumer choice. ...And let's not forget one anywhere in the developed world can afford to even have children cause they cost an arm and a leg, everywhere.

    We can't just look to other countries cause there are TOTALLY brand new unheard of problems that no one has ever faced or solved before, ever.

"An organization dries up if you don't challenge it with growth." -- Mark Shepherd, former President and CEO of Texas Instruments