[opendtv] Re: Does Netflix/Comcast Deal Remove Obstacle To TWC Merger? - Forbes

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 26 Feb 2014 07:11:32 -0500

On Feb 25, 2014, at 7:41 PM, "Manfredi, Albert E" 
<albert.e.manfredi@xxxxxxxxxx> wrote:
>> I find myself repeating things a lot, Craig. Net neutrality is still 
>> assured, if all bandwidth hogs are playing on a level field. The important 
>> thing is for the ISPs to not be allowed to block certain sites, or to give 
>> unfavorable treatment to certain sites, in favor of other sites.

It sure seems like Comcast is giving favorable treatment to Netflix...

For a price.

Are Amazon, Apple, Google and other OTT providers not disadvantaged by this?

> Have I written this before? More than once. Do I support net neutrality? 
> Obviously.
> There is a really simple way for Netflix to respond to this. They can offer 
> their subscribers a choice of monthly rates, based on the image quality the 
> subscriber wants. That way, Netflix can afford to pay the ISP whatever they 
> are charging. Because as of now, the subscriber gets whatever best image 
> quality his ISP connection allows, with no mechanism to regulate the use of 
> the resource.

Some of the sites I listed above are already paying CDNs to deliver their bits, 
and one would think the cost is baked into their pricing. You talk about iTunes 
being expensive and old technology, but they are doing what is necessary to 
assure good QOS. 

You see no problem with Netflix raising their rates to pay for the bandwidth 
their customers are using, or to pay the ever increasing license fees to the 
content owners are charging. But this is completely fair if everything is even 
handed. Who determines what is fair?

Does the FCC get in the middle of every deal to make sure it is fair? Maybe the 
monitors in the newsrooms can also look at the licensing deals and the tolls 
that the powerful ISP providers decide to impose...

I wrote:
>> P.S. On the streaming media panel there was a discussion about data caps
>> imposed by the ISP. Are you comfortable with the idea that you will pay
>> more if you exceed your wired broadband data cap?
> Were you comfortable with the idea that you had to pay for individual phone 
> calls? Of course. Was that scheme annoying? Sure, but it wasn't unfair. Did 
> competition among the telcos cause those cumbersome schemes to be scrapped, 
> in favor of flat rates? Of course. Will the same happen with wired and 
> wirelesss Internet? Most likely.

The telcos just moved their oligopoly pricing model to the far more relevant 
wireless business, by no surprise, at a time when they started to have 
competition from the cable companies in the landline phone business. And the 
ridiculous cost for long distance went away when the FCC broke up MA Bell 
allowing competition...

From Wiki:

> In some countries (such as Canada and the US) long-distance rates were 
> historically kept artificially high to subsidise unprofitable flat-rate local 
> residential services. Intense competition between long-distance phone 
> companies narrowed these gaps significantly in most developed nations in the 
> late 20th century, although international calls to some countries continue to 
> carry artificially high tolls as governments in those nations use them as a 
> lucrative source of tax revenue.

And the cost for long distance dropped to near zero when VOIP allowed 
interconnections anywhere on the planet via the Internet, to bypass the old 
inter-exchange physical switching of calls.

So now we carry our phones (computers) in our pockets and pay the telco 
oligopoly as much as we ever did for phone service, and we also get to pay for 
metered broadband as well. And most of us still pay for those old land lines, 
which in your case are delivering your wired broadband service as well.

There is a reason that we pay some of the highest rates in the world for 
phones, broadband and TV...

The lack of competitive markets, and government regulation.

> The problems happen when a very small fraction of connected systems take up 
> the lion's share of resources. Those imbalances have to be addressed one way 
> or another. You have to understand how the current system works, Craig. The 
> constant upgrading of ISP networks is paid for by everyone with a broadband 
> connection. When a very tiny fraction of connected systems creates most of 
> the demand for system upgrades, every subscriber pays. The ISPs are exploring 
> ways to make those most responsible pay the freight, in short.

There are many ways to deal with these issues when we are talking about a 
global network of interconnected networks that can route bits anywhere. It 
obviously reduces WAN traffic if you can move the servers out to the the edges 
of the network; CDNs provide this service at a price. I.e. you can pay the WAN 
provider, or you can pay a CDN. Or you can pay the ISP to co-locate. 

So again I ask, who is going to determine what is neutral and fair?


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