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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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The ignorance around this issue is nuts
By Milliamp on 4/2/2014 2:51:42 AM , Rating: 2
Netflix is about 30% of peak traffic and ISP's could charge them a bunch of ways, lets break them down:

They could

5. Charge them 30% of costs x 2, an amount far above their typical profit margins
4. They could change them 30% of costs, and their standard profit margin
3. They could charge them a cost alone.
2. They could charge them an amount much much lower than (like 5% of) cost for only their direct interconnect.
1. They could provide unlimited connectivity to Netflix for free donating the circuits to them.

We all agree that #5 should be illegal because its anticompetitive.
#4 is standard bulk rate pricing with enough for some profit margin, this would be considered fair in most other industries.
#3 is what a lot of people probably believe the terms should be in this case
#2 is likely what ISP's are actually offering
#1 is what netflix is publicly demanding and saying should be written into law.

I agree Netflix shouldn't be on the hook to cover ISP networks but I don't agree that their connections should be outright donated and I especially don't agree that should actually be the written law.

Claiming that charging any amount of money at all should be made illegal is a pretty good way to ensure that Net Neutrality (intended mostly for scenario #5) never sees the light of day.

If your response to me is "How do you know Netflix is shooting down option #2 and not option #5" my answer is I don't have to because hastings himself said #1 was the only option they were interested in on a blog post. He made no mention of accepting compromise and even here the article says the Comcast agreement is only intended to be temporary.

Net Neutrality was never intended to outlaw scenarios #2 through #4.




RE: The ignorance around this issue is nuts
By zzeoss on 4/2/2014 9:41:06 AM , Rating: 2
Where i live, there's no Netflix.
Here's my simplified view of the situation:

Comcast's/etc clients pay for internet.
Netflix pays their isp/isp's to send data throught he internet.
Downstream is cheap, upstream is expensive still true?

Client requests data from Netflix.
Client requests data from Wikipedia.

The difference is the volume.
Client is not billed on volume or on peak traffic. Should he be? It's the client that requests the data, Netflix provides, Comcast facilitates.
Client pays Comcast for the service of unrestricted access to internet.
Why should there be a tax on Netflix that provides what Comcast's client requires?
If Comcast's clients "abuse" Wikipedia, will Comcast go after wiki to pay up for delivering what clients requested?

Another view:
If we reduce the situation to absurd, Comcast would have 30% less clients due to the missing content available from Netflix.
If no content would be available Comcast would have 100% less clients (i am referring to Comcast as ISP).


And all this nonsense would not matter if Client would send as much data to Netflix as he receives. Would this cheat be allowed? (waste of traffic).


RE: The ignorance around this issue is nuts
By Milliamp on 4/2/2014 11:43:26 AM , Rating: 2
>Why should there be a tax on Netflix that provides what Comcast's client requires?

There isn't a special tax on Netflix. Saying so would be like saying there is a special tax on you if I ask you to send me a file because you are also paying for Internet.

If I pay for Internet and request a file form you, should your Internet then be free?


By Milliamp on 4/2/2014 11:46:46 AM , Rating: 2
Also traffic is traffic, it doesn't really matter if you are sending or receiving it.


RE: The ignorance around this issue is nuts
By zzeoss on 4/3/2014 1:31:30 AM , Rating: 2
>>If I pay for Internet and request a file form you, should your Internet then be free?

You word your question as if Netflix does not pay for internet at all!! They do. They pay to send. Client pays to receive. Everyone pays!

Where i live we have thousands of ISP's. Even ISP's with 100-200 clients (connected directly to Cogent).
If Netflix opens in my country, should they negotiate with each of these thousand ISP's?


By Milliamp on 4/3/2014 8:02:41 PM , Rating: 2
I see what you are asking and I can explain it.

Netflix does pay for Internet BUT they also have the option to connect directly with large ISP and send them the traffic they have for them.

This would be like you keeping a connection to the Internet and then realizing a lot of your Internet traffic is between you and your neighbor. You could just pay to run a cat5 cable to your neighbors house for his traffic and then you wouldn't have to pay your Internet provider to carry it any more. This is called peering.

This is what Netflix is doing with ISPs because they have so much traffic.

Their argument is however that they want to peer with ISPs for free so they don't have to pay to deliver the traffic over the Internet or pay ISPs to deliver it directly to them. By bypassing their own Internet provider and forcing ISP's to give them connections for free they want their traffic to be free.

This would be like if your neighbor told you "well I won't charge you to use my NAS but if you are going to run a cable to my house you buy the cable and give me 1/16th of the cost of my 16 port switch and we have a deal"

At that point do you tell your neighbor he violated your net neutrality, accuse him publicly of being a greedy criminal, and call the police? You do if you are Reed Hastings.


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