Comcast and one of Netflix’s bandwidth providers, Level 3, are in a spat. Level 3 accuses Comcast of adding a charge to carry Netflix traffic on their network. Comcast says, with some justification, that the Level 3 arrangement is in line with its other peering agreements.
What bothers me about this disagreement is that it’s similar to the way that cable systems and TV networks negotiate. The recent Fox/Cablevision spat, where Cablevision dropped Fox programming for a month that included the first two of games of the World Series, is just one example of how cable and content monoliths are more than willing to screw their customers as part of the negotiation process.
It’s a prime sign of an poorly-regulated oligopoly when a cable company can drop key programming for a month without being fined. Customers who purchased Cablevision service with the reasonable expectation that they’d be able to watch Fox can’t just switch providers, since many locations are only served by cable, and satellite services require multi-year commitments. Similarly, Comcast customers have a reasonable expectation that they can watch Netflix without worrying whether Comcast will come to a deal with Netflix’s ISP.
I’m looking forward to the FCC’s net neutrality rules, which are scheduled to come out before Christmas, with anticipation and trepidation. I hope they address this kinds of squabble, but if they don’t, we’re in for years of bickering as ISPs try to chisel the last penny out of their peering agreements, while Netflix customers watch the “Retrieving” or “Buffering” screen instead of their on-demand movie.
stuckinred
So you give us a link to FT that is ppv!!! :)
mistermix
@stuckinred: Sorry, forgot that FT gives you a freebie if you come from Google News. I replaced it with one of the thousand other links to the same story on a free site.
Pococurante
Capitalists playing hardball over serious money? Whoa.
Consumers do have alternate ways to get their movies in the interim. Pretty sure it was Netflix’ original business model actually.
jeffhfromoxford on Youtube
I just bought Apple TV, which streams Netflix (8 bucks a month) and YouTube and other content over wifi (all of which is free). It also streams off of my macbook so whatever I download (i.e., piratebay) I can play. Apple TV cost me 99 bucks, no monthly service charge. I dropped Starz/Encore (14 a month) and picked up netflix.
The goal is to get the cable monkey off my back–180 a month! for wifi, basic, HD, and HBO, with DVR. Aside from the esposa’s two daytime dramas, we only watch The Soup, Chelsea Lately, and Walking Dead right now. Everything else is old folks programming–almost two hundred channels aimed at the aging WaPo, CNN, Time Magazine demo And this says nothing about the ridiculous channels I pay for as part of the bulk package: hunting, rural, catholic, bible-thumping, fox biz, all the fricking ESPNS, and so on. This is slightly hyperbolic, but cable is a loser’s game unless you enjoy 60 Minutes or the View or Wolf Blitzer. I realized this a few weeks ago when we were watching some DVRed program that was not all that interesting while I was surfing the web on my laptop. I thought, “Why are all the things I really want to watch on my laptop and not on that huge flatscreen in front of me? Oh yeah, that’s the monitor that plays cable television.”
I don’t need cable; I can find alternatives beyond the tired dish v. cable binary. I can get my Tim and Eric, my pay-cable shows like Californication (albeit a little later), and other content on Netflix. I’m on youtube on a bigscreen now. I listen to any of hundreds of internet stations on my new apple tv and over my new sound system. I’m not a fanboy. Uncle Steve just packages this stuff so that a non-techy like me can do what they comment about on gizmodo.
Honestly, it’s when you open up an alternative to cable that you realize that you could buy individual episodes on iTunes and can envision a post-cable life. I’m looking down the road to dropping WiFi and using the unlimited data plan I’m already paying for on something like an iPad 2.
I’m not saying that cable is going away tomorrow, but within a couple of years, cable will look like the NY Times did ten years ago: very dispensible in retrospect. Tune in, Turn on, and Drop out.
mistermix
@Pococurante: In other words, people should shut up and just take whatever the monopoly decides to dish out today, no matter what they promised yesterday, because money is involved.
Pococurante
@mistermix: Hmm that confused me. So I went back to my post to see where I said we needed to shut up. Nope, nothing.
What I did say was that consumers had an alternate way to get their product. That’s voting with the dollar. Which is pretty much the only recourse we have. Well, that and being shrill on the internet.
I don’t want QoS being used to penalize people who post way more on their facebook then their neighbors. I don’t want it used to limit online commerce. But, like you, I’m completely fine that sources whose bandwidth consumption is magnitudes beyond email or online games pay the premium. Just like I’m fine that trucking companies pay more in road taxes to offset road wear.
I get that you don’t like the tactics. But that’s the way open commerce has always worked, ever since Og the Caveman From Over There said he’d stop importing amber if he didn’t get first choice of the organ meats Over Here.
We have an alternative while they
dickduke it out.WereBear
@Pococurante: What you don’t get is that someone already paid their almighty dollar to get service that is now not being provided, and they have no recourse.
Getting something else may be possible, but not in the damn budget.
Mike Kay (Democrat of the Century)
@mistermix: but if you get films via mail, it’s good economic policy as it’s stimulative (ie postage stamps).
Really, I’m surprised at your thoughtless purchasing decisions that stab America and John Maynard Keynes in the back.
stuckinred
@mistermix: That’s why I put the smiley face on my comment! :)
jimBOB
My impression is that most places have a choice of ISP, and if Comcast starts dicking with Netflix availability, their customers may go elsewhere. I sure would.
jon
If they keep fighting like this, maybe we’ll get municipal wi-fi and municipal cable.
/opium dream
Xboxershorts
To understand this, one needs to understand the difference between a settlement free peering arrangement and a paid transit peering arrangement.
Settlement free means a mutual fee free sharing of traffic.
Paid Transit is just that, you pay per megabit fee for traffic the carrier brings to you.
The peering arrangement Comcast has with level3 is a paid transit relationship. Comcast pays level3 for all traffic that level3 carries into Comcast’s network. The fee for transit is negotiated up front and a contract is signed.
At the time that contract was signed, Level3 was not the carrier of record for Netflix and Comcast negotiated their contract with Level3 based upon an historical record of transit traffic.
Level3 changed that when they became the carrier of record for Netflix. meaning that now, all Netflix traffic into Comcast’s network will be carried by Level3 with the incumbent increase in fees paid to Level3 for the increased megabits of traffic.
I don’t blame Comcast at all for wanting to recover those increased expenditures. They did not exist when the Transit contract was negotiated and with the popularity of Netflix, those fees are likely substantial.
if Level3 knew they were likely to acquire the Netflix contract while negotiating the transit contract with Comcast, then it is not much of a stretch to say that Level3 was not negotiating in good faith.
Here in the world of NANOG (North American Network Operators group), Level3 has a reputation for leveraging their substantial network presence much to the detriment to ISP’s and their clients.
AB
Look on the bright side — they can’t even bring themselves to play nice until the deliberation over the neutrality rules is complete, not even to leave themselves the “this bad behavior is purely hypothetical and we’d NEVER do that” argument. What they’re doing sucks, but the timing might be a silver lining.
Jay in Oregon
It never occurred to me that the Netflix streaming problems I’ve been having are due to my ISP, since they started at the same time as the Wii moving from using a disc for Netflix to being a software download.
When I first moved to this town, Comcast was the only place to get high-speed internet; we were a bit off the beaten track for DSL. Time to start looking again, I guess.
ChrisS
When it comes to the telecom service monopolies, it seems that the only thing in their interest is squeezing another fee or subscription from their hostage consumer.
I pay $129 a month for HD digital cable (no premium channels) and internet access (restricted to two non-satellite choice that have similar plans and prices). I also pay $169 a month for two phones (one iPhone) with the basic minute plan and unlimited text (the pricing tiers appear to be set so that you only have one real choice) that provides me internet access. In addition, I pay $70 a month for a mobile broadband card for job-site internet access (which is recouped through the company), I could tether the iphone, but the company I work for doesn’t support the iPhone, restricted to AT&T doesn’t provide 3G service in the area I work in. But there is an awful lot of duplication of service for what I really need – occasional downloads of files, streaming music/video, email/internet surfing.
I’m sure that there are ways around paying for the duplication of service, but fuck, I work 12 hours a day, sometimes 6 days a week. I don’t have a lot of time to fuck around with the insanity that is the telecom market. I can switch to a couple of other service providers, but none offer quite the same package of channels/services despite eerily similar pricing tiers.
And now they want very much badly to charge me by what services I use on the internet. Dime a youtube video? Penny a photo download? Quarter for a Hulu download?
Mike Kay (Democrat of the Century)
@jon: how dare you advocate a gubmint takeover.
But seriously, I bet a lot of left leaning libertarians would be uncomfortable with government directly controlling the internet. I mean, would you want Mayor Sarah Palin or Rudy Giuliani controlling your access to the net.
EIGRP
Slightly, OT, but when I see the Fox plea at the bottom of the screen to call Time Warner, I’m actually thinking about doing it and telling them I don’t care if they carry Fox or not. Maybe I’ll ask them if my bill will go down if they drop Fox.
OK, I called them. The guy laughed and said I was the first person to call and say it would be fine if they dropped Fox. On the question of if my bill would go down: No.
Eric
ChrisS
@ChrisS:
And now they want very much badly to charge me by what services I use on the internet. Dime a youtube video? Penny a photo download? Quarter for a Hulu download?
I know that’s not what’s happening here, but if telecom providers could get some room under net neutrality to alter pricing based on usage or traffic, they could certainly wiggle their way into setting up new fees and pricing “tiers”. Like AT&T: 200 mb for $15 or 2gbs for $25. What kind of fucking choice is that?
nwithers
Reminds me of a Kenyan proverb:
“When elephants fight, it is the grass that suffers.”
ChrisS
@Mike Kay (Democrat of the Century):
My municipality controls my water. They fix the pipe and I pay them for a certain minimum amount and any amount over and beyond. It doesn’t matter what I use the water for or when I use the water. I pay, they provide. They don’t try to charge me fees for using special water from Maine or deep glacial springs from Canuckistan. They don’t pretend to be my friend while reaching for my wallet.
Xboxershorts
Here is a much more detailed nuts and bolts type discussion among the Internet Engineering folks about this very subject. Note that there is much criticism of Level3 in this little chat…
http://www.merit.edu/mail.archives/nanog/msg15016.html
Xboxershorts
I post the links to the technical discussions because, more often than not, the media and even our government officials are ignorant of the relationships that do exist between Tier I carriers like Level3 and ISP’s.
And most people reallly do not understand how the internet actually works. And without that understanding, it’s impossible to make rational arguments regarding net neutrality.
jeff
The problem is that you believe that you are your TV station’s customer. You aren’t. You’re the product. The advertisers are the customer
RalfW
Whatever the FCC says on Net Neutrality, unless it is complete capitulation to monopolists, will be investigated by numerous serious, grim GOP House panels, as they accept huge wads of unregulated cash in gratitude. Oh, it won’t be bribes, just some Citizens, United in their hatred of consumer rights.
burnspbesq
Mistermix:
“Similarly, Comcast customers have a reasonable expectation that they can watch Netflix without worrying whether Comcast will come to a deal with Netflix’s ISP.”
No, they don’t, and the current unpleasantness makes it obvious that they don’t. Whether they should be able to have that expectation is a different question. You’re busted for trying to disguise a normative statement as a descriptive statement. And sloppy writing is, as here, nearly always evidence of sloppy thinking.
ChrisS
@Xboxershorts:
And those threads are near impossible to read.
But I understand that there underlying issues between the various parties trying to make a buck off the internet. The point, however, is that the consumer is the one that ultimately gets hosed in the process (either through diminished products/services or higher prices).
Xboxershorts
@ChrisS:
This is always the case.
Extra costs are passed on to the end user/customer.
But Comcast *might* actually have a valid point in this dispute. See my wall of text above.
BGK
@Xboxershorts:
Heh indeedy! We were a legacy client of Level3, which became the case when they bought out the CLEC which ran fiber to our building. For six months, we tried to re-up our contract to a higher bandwidth level, but quite literally couldn’t get anyone to return our calls, even though we wanted to give them more money.
We went with a different, local CLEC. Of course, they peer with…Level3! And we have constant latency and bandwidth constraint issues to our remote datacenter. Without naming names, it’s a Terremark datacenter which is also, arguably, the major Internet hub for the western hemisphere. That there are latency and bandwidth issues into a location which could probably be lit with just the light leakage from the fiber trunks running into the building is droll, to say the least.
liberal
@jimBOB:
Yeah, but there are limited numbers of choices, and initiating access might be expensive.
Fact is that broadband access is a “natural monopoly”; it’s plain economically inefficient for someone to have N+1 pipes coming to their house. The right solution is to treat it as such, and regulate it as such.
Jack
@jimBOB:
I’ve lived in several places, including France along with different locations in the US, and the ONLY time I had a “choice of ISP” was in the olden days of dial up. I have NEVER had a choice of ISP for high speed connection. I’m on Comcast in northern Mississippi, I had to go with TimeWarner in Austin, and in neither location was AT&T DSL available, even though it was available in other neighborhoods. Perhaps I could have gone with satellite internet, but there is such a loss of speed in both directions that it’s not really a comparable service.
In other words, there is NO competition for ISPs. “Going elsewhere” is not an option if you want high-speed access to the Internet. Unfortunately, since WiMax seems to have died, there won’t be a solution to “the last mile” infrastructure issue as there was in television, where satellite IS a reasonable alternative to cable. Recall the screams from the cable companies about satellite companies carrying local stations? That’s because they knew they were losing their state-provided monopoly. I have gone to satellite TV because I despise the cable providers based upon their previous behavior of customer abuse.
What is really sad, though, is when I lived in France I had a higher speed Internet connection at a lower price than any I have had in the US, with better uptime to boot.
Dan
Just to clarify, I think Fox cut access to their channels because of the Comcast fight; you give the impression that Comcast prevented its customers from viewing fox channels, but I believe it was the other way around.
That’s not to defend either company. both are about as evil as can be.
Martin
@jeffhfromoxford on Youtube: Cable is going away, mainly because more and more people are doing what you are doing – and most young people don’t even bother signing up for cable.
What Comcast is doing is backlash against this reality. Acquiring NBC and tolling Netflix is them furiously trying to stuff the genie back in the bottle. They’re in a catch-22. Ad revenues are down so the only way to funnel enough money to networks, who have relatively fixed production costs is to raise subscription rates, which causes more people to abandon cable. Adding more networks is supposed to be a draw, but more networks requires more money, so that too builds a vicious circle.
The only possible end-state to this is ad-supported and fee-based fully on-demand programming. No fixed channels. No schedules other than when certain programs will be released except for live events. It’s painful to move to that model, because every step is a financial risk, but consumers are forcing it. There will probably be less top-tier programming done under this model because it’ll be deemed too risky and more mid-tier (documentary, reality, low-budget stuff) because it’ll hit the ROI sweet spot in a marketplace not constrained by a limited number of prime-time channel slot.
Netflix (and therefore Hulu, etc.) isn’t long-term viable either because the fixed fee only works for stuff where the production costs have already been recouped. Fine for generating additional revenue on already profitable assets, but even if every person in America was subscribing, it’d produce insufficient revenues to cover current production costs of shows.
It’s an interesting move. My guess is that all of this comes to a head before 2011 is out. Net neutrality will simply become a necessity to sort the markets out, and the networks will have a new, monetized mechanism to distribute content that will break them free of the cable providers. It’ll be interesting.
alhutch
@Jay in Oregon: Don’t know where you are in Oregon, but in my neighborhood in SW Portland, Comcast is the only game in town for high speed internet (too far from the Qwest central office for DSL and on the wrong side of the street for Verizon DSL/FIOS service).
I’ve been in a pi$$ing match with Comcast for 6+ months now about the inability to stream Netflix at any appropriate speed during peak hours (and I have a 20+ MB downstream connection, per Comcast). Had techs out twice only to be told everything is working fine. Netflix points a finger at my ISP as the problem.
It sucks because my high speed internet connection sits idle for 19-20 hours per day, but when I want it to perform requested tasks, it doesn’t adequately. I’ve always had a sneaking suspicion that Comcast doesn’t want this competition and is slowing frustrating consumers as one way to choke it out.
jimBOB
@Martin:
That sounds about right to me, though if you break it down, the revenue stream from near-universal subscriptions wouldn’t be small change. Imagine 100 million subscribing households at $20/month (doable if everyone drops cable). That would be $24 billion/year, which I should think ought to fund a fair amount of programming.
We already dropped our cable a couple of years ago. Whenever I go to a hotel or other venue with some flavor of cable, I always marvel at how worthless it is – typically it’s hundreds of channels of fuzzy analog SD, stuffed with tripe and advertising, for which people pay princely sums every month. It’s early days for streaming, but I can’t see how it doesn’t eventually win.
J Price Vincenz
@Martin: You really caught me there. I had forgot about the one-time production cost for television content; although most film budgets are built around revenue streams from different release expectations, theatrical being just one of many. And the growth of product placement, especially its being perceived as a form of legitimacy rather than selling-out, makes me think that movie content is changing to the new business environment we have been discussing here in this thread. What always amazes me is that my esposa’s two daytime programs, OLTL and AMC, aren’t available as an on-demand function or a stand-alone channel. I mean, come on, there must be a million cable viewers that would re-ride the first decade or two (or even the whole show), if the stupid people at ABC realized that, like the game shows (that were paid for by the first round of revenues from advertisers and have been drawing new revenue as the Game Show Network and could be exploited further), their soap operas could be real sources of real revenue for the foreseeable future. I can’t imagine anyone ever rewatching news and that split-screen BS that parades for “analysis,” but I’m hopeful that the future of television does not include national news but perhaps is more like this blog, which is one of my primary sources of what is happening and what that means. NPR, ABC, CBS, NBC, Fox especially: they can all disappear from my radar, as they are only entities that release programming I might or might not desire to see. Certain kinds of programs, such as you suggest, probably will predominate in our future, but I also see stuff like Tim and Eric/Check it Out, Doug Benson’s podcast “Doug Loves Movies,” stand-up and live music, and even more overtly political gigs (God, the teabaggers really put on a show last year) in my viewing future. Generally speaking, I am optimistic about the decentralization of television and even movies (though “Paranormal” and “Blair Witch,” both of which were the supposed to be John the Baptists leading the way for new, low-budget content, have been few and far between), but, really, that optimism comes from my total disregard for the old, angry, managed outrage machine that is the networks and their “boomer and older” programming. Andy Rooney, Matt Lauer, Glenn Beck, Tweety, Regis Philbin, Olbermann, Bono,, Leno, McCain: They’re all Network-created tools, old white POSs telling me what to think. Television is literally all drama: radio went down with a little dignity at least.
Best wishes and thanks for your thoughtful reply.