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The FCC won't allow net neutrality to regulate the way companies like Netflix connect to the Internet

Netflix was hoping for an end to internet tolls by calling to expand the scope of net neutrality, but the Federal Communications Commission (FCC) isn't having any of it. 
 
According to National Journal, the FCC denied Netflix's call to expand net neutrality so that it covered companies and their methods of connecting to the internet. 
 
More specifically, Netflix CEO Reed Hastings wanted the FCC to regulate the way companies like Netflix connect to the internet so that they wouldn't have to pay tolls to other companies (like Comcast, for example) to make sure its video gets to customers quickly and without any issues. 
 
"Peering and interconnection are not under consideration in the Open Internet proceeding, but we are monitoring the issues involved to see if any action is needed in any other context," said an FCC spokesperson.
 
Netflix agreed last month to pay Comcast to ensure that its movies and TV shows stream easily without traffic jams on Comcast's broadband network. While it's not clear how much Netflix is paying Comcast, the new deal will span several years and Comcast said it would connect to Netflix's servers at data centers operated by other companies. 
 
But Netflix wanted this to be a one-time deal until it managed to push laws in place that eliminated these tolls. 


Having to pay Comcast means Netflix could end up having to pay tolls to other providers like Verizon and AT&T -- and there's no way these tolls come cheap. The streaming company already pays high prices for content licensing from content providers, and having this extra fee on the table (and potentially from many big cable companies) would really put a damper on Netflix's cash flow. 

"Some big [Internet service providers] are extracting a toll because they can—they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay," said Hastings. 
 
"If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future."

Big cable got even bigger this year when Comcast acquired Time Warner Cable (TWC) in February for $45.2 billion USD. Comcast has about 25 percent share of the broadband market while TWC controls around 12 percent. As far as the subscription cable TV market goes, Comcast currently controls roughly 19 percent and TWC controls around 9 percent. Together, the pair would control about a third of the markets (37 percent of broadband; 28 percent of cable TV). 

Source: National Journal



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RE: So then what will net neutrality protect?
By SteelRing on 4/1/2014 3:21:12 PM , Rating: 2
Netflix actually shot themselves in the foot by agreeing to the contract in the first place. In effect they're showing everyone and FCC that there are solutions in the marketplace to resolve this and thus the law is no longer needed. If they had refused to pay, of course, Comcast will launch its own Comflix service and Netflix might even go bankrupt before the case goes to court but the law might have gone thru with now-deceased Netflix as your prima facie evidence.

Problem is Hastings is not willing to sacrifice Netflix on the altar of net neutrality. So there you go.


RE: So then what will net neutrality protect?
By karimtemple on 4/1/2014 3:37:26 PM , Rating: 1
Again, Net Neutrality is about packets. This is about traffic. Comcast is not blocking anything.

It's just that even though the Netflix service wants to use a far greater proportion of throughput than other traffic, Comcast is treating Netflix the same as all other traffic. That doesn't work out well for Netflix, especially since they flipped a switch this year which tries to push out everything at ~1080p, which in this case made everyone's service degrade because the pipes didn't get any bigger.

The solution is to hook up the servers farther up the pipe. Putting their service on or closer to the 'backbone' increases the available traffic -- or widens the pipe so-to-say -- and that new "Super HD" setting stops stepping on everyone's dicks. Netflix asked Comcast to let them do this, and Comcast said "not for free." You have to understand, this is a special relationship that is limited in nature. It's not something everyone can just sign up for. By design, it can only be a few groups that Comcast allows to do something like this. As you can imagine, something like that wouldn't be free.

Like I said, in a buyer's market, it wouldn't go down this way. But we don't buy the wire from the service providers because Americans hate stuff they think is communist, and we don't more strongly regulate the wire because Americans hate stuff they think is socialist. So, it's their wire, it's their show.


RE: So then what will net neutrality protect?
By bsd228 on 4/1/2014 4:49:32 PM , Rating: 2
quote:
It's just that even though the Netflix service wants to use a far greater proportion of throughput than other traffic, Comcast is treating Netflix the same as all other traffic. That doesn't work out well for Netflix, especially since they flipped a switch this year which tries to push out everything at ~1080p, which in this case made everyone's service degrade because the pipes didn't get any bigger.


Let's not ignore what this is really about. Comcast had their own netflix type service and would rather you use it rather than netflix. That's the entire store here, people.

There's an inherent fault in letting ISPs be content servers. Net neutrality was the means to keep them behaving properly.


RE: So then what will net neutrality protect?
By karimtemple on 4/1/2014 5:31:53 PM , Rating: 1
Says "let's not ignore what this is really about," ignores everything previously said. lol.

I am an avid Netflix supporter -- a fan -- and a fervent hater of the way telecom is done here. I hate this stuff as much as anyone. But we need to face facts here, too. Comcast is not blocking anything, and they're not charging for anything that's crazy to charge for. Netflix needed more throughput than they were previously paying for, so they paid more for more. It's actually a pretty straightforward situation.


By bsd228 on 4/1/2014 7:44:05 PM , Rating: 2
quote:
I am an avid Netflix supporter -- a fan -- and a fervent hater of the way telecom is done here. I hate this stuff as much as anyone. But we need to face facts here, too. Comcast is not blocking anything, and they're not charging for anything that's crazy to charge for. Netflix needed more throughput than they were previously paying for, so they paid more for more. It's actually a pretty straightforward situation.


Comcast's history definitely includes blocking of traffic.


RE: So then what will net neutrality protect?
By drlumen on 4/1/2014 4:53:44 PM , Rating: 2
If there is a disparity between ISP's for peering or carriage agreements then the ISP's should sort it out. I'm sure Netflix pays a ton for their bandwidth through their ISP. Why does their ISP not pass that on to the others downstream? If, after all the downstream peers are agreed and paid then the Netflix ISP should go to them with possible rate increases. In essence, the Netflix ISP would serve as their customer (Netflix) advocate. If the current Netflix ISP can't arrange proper peering or carriage then Netflix goes to another ISP.

What's to keep TWC, Comcast, AT&T or Verizon from setting fees so high that Netflix can't afford them? The Netflix traffic suffers and, once again, guess who is ready to step in with their own VOD or pay channel offerings?

It's ridiculous that the FCC is turning a blind eye to this.


RE: So then what will net neutrality protect?
By karimtemple on 4/1/2014 5:25:08 PM , Rating: 2
What you're not getting is that there's nothing wrong with the peering. That's all going as previously agreed. The problem is that peering, as it is, isn't enough for millions of customers simultaneously doing high-definition video streams pretty much all the time. By all accounts, in terms of traffic, Netflix and YouTube are most of the Internet. Video is a lot of data. Video streaming is a lot of throughput.


By drlumen on 4/2/2014 12:15:48 PM , Rating: 2
Peering is the problem. ISP's such as TWC or Comcast (et al ISP's) aren't wanting to provide the bandwidth to XO Communications (Netflix ISP) because most all of the traffic is one way - downstream. The et al don't believe the peering is fair as there is not as much traffic carried upstream by XO. Therefore the et al aren't willing to provide the extra bandwidth due to the disparity in upstream/downstream traffic.

This is where the ISP's need to sort it out. Should Netflix be required to cut a deal with every little ISP known to man just to serve their customers? Or, should the ISP's sort it out so that Netflix (or any other company) should only be billed by their primary ISP?


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