In the previous three installments of this blog I looked at the issues behind the demands of Comcast and Verizon to charge content providers for creating an Internet ‘fast lane’. In particular I have focused on the recent actions between Comcast and NetFlix. In everything I have read about this issue I never saw any specific reason cited why Comcast thought they needed the extra payments from NetFlix, and this blog series has been about looking for such reasons.
In the earlier blogs I looked at the various components of the Comcast network and my conclusion is that end-user customer fees ought to be covering the cost of the wires, or at least that is how all of the companies smaller than Comcast and Verizon see the issue. I then looked at the issue of preparing the network for peak video usage during simulcasts. Again, my conclusion is that this is a function that is a normal part of making your network operational and doesn’t seem like a reason to charge a premium price to get what is supposed to be there. Finally, I looked at peering, data centers and the network of routers and switches. My conclusion there was that peering generally saves money for Comcast and Verizon and that their savings from peering are far larger than their costs.
In the months leading up to the announcement that the two parties had reached a deal, I had seen numerous complaints from customers who said that their NetFlix was not working well on both Comcast and Verizon. And there were numerous articles like this one asking if Comcast and Verizon were throttling NetFlix. There was clearly something fishy going on and it and it was clear that both Verizon and Comcast were somehow slowing down NetFlix bits as compared to other bits. The complaints were all coming from NetFlix traffic and we didn’t see the same complaint about AmazonPrime or other video providers. And I heard no complaints anywhere about the speeds on the TV Anywhere products offered directly by Comcast and Verizon. I know I was watching Game of Thrones online in HD through my Comcast subscription and it always worked perfectly.
Then, when there was an announcement, it was made to sound like NetFlix was the one who was requesting premium access from Comcast. The Verizon deal was done much more quietly and there was no similar insinuation there. But almost instantly after Comcast struck the deal with NetFlix the speeds popped back up to former levels
One has to ask if NetFlix really got premium treatment of their bits or if Comcast simply removed whatever impediments were slowing them down. I will be the first to admit that I, like almost everybody else, am an outsider and we really don’t know what the two parties discussed as part of this announcement. But when I look at the facts that are known to me, what I see is that Comcast and Verizon were flexing their monopoly powers and slowing NetFlix down to extract payment out of them
There is no doubt that the NetFlix traffic causes cost to these two companies. Video traffic has been growing rapidly on the Internet and NetFlix is the largest single provider of video. But I step back and have to ask the basic question of what end-user fees for Internet are supposed to cover. A customer pays for a connection of a given speed, and it seems to me like these companies have promised a customer that they could use that speed. There is the caveat that Comcast has a data cap – a topic of another blog – but as long as a customer stays under that data cap they ought to always get the speed they have purchased. It shouldn’t matter if that customer chooses to use that speed and capacity to watch NetFlix or read silly telecom blogs – they have paid for a certain level of performance.
For Comcast to say that their network is not capable of delivering the accumulated speeds they have sold to customers sounds to me like they have oversold the capacity of their network. They want customers to buy fast speeds, but they don’t actually want them to use it. I’m not a lawyer, but this starts sounding like fraud, or something similar to fraud.
I simply don’t understand why the FCC would listen to any argument that says that content providers have to somehow pay extra to get normal performance. Because that is what it looks like NetFlix had to do. I can imagine as part of that agreement that there was a nondisclosure signed of the terms, and this NetFlix is not out yelling like they probably ought to be
But the long-term results of what Comcast and Verizon have done is that end users are going to pay twice for video access. They already pay to get a data pipe which is large enough to receive video. And now the cost of movies or movie subscriptions is going to increase to cover what NetFlix has to pay to deliver those movies. NetFlix is certainly not going to eat such costs.
And so the consumer is being screwed by a clear case of corporate greed. I have come to the conclusion that Comcast extracted payments out of NetFlix simply because they are large enough to do so. That is an abuse of monopoly power, and that power is only going to get worse if they are allowed to buy Time Warner.