Comcast’s deal with Netflix makes network neutrality obsolete

Paraphrasing<p>&gt; the FCC has no good solutions.<p>Yes they do, declare broadband to be a common carrier. Force comcast to sell wholesale access to their retail pipes to other companies who then compete for the end users. We&#x27;ve seen this show before and have good solutions to the problem. It&#x27;s time to treat the Internet as a mature public utility and regulate it as such, i.e. regulate it to maximize social good

My hope is that the timing of this deal was calculated by Netflix to focus regulatory scrutiny on the Comcast&#x2F;Time Warner merger. Netflix can now tell regulators that even though Comcast and TW don&#x27;t compete for the same customers on the consumer side, the sheer size of the combined beast would make settlement-free peering a thing of the past.

Residential broadband is a business model that depends heavily on successful bandwidth utilization speculation. However since Netflix is extremely popular (close to half of all internet traffic in the US), the pattern gets extremely predictable and so there is little advantage to be had in the core business of bandwidth arbitrage, since it&#x27;s being arbitraged &quot;upstream&quot; of residential ISPs and baked into the larger pipe prices.<p>If any service becomes sufficiently popular, the price of providing bandwidth for it to a large subscriber base approaches the characteristics of a dedicated bandwidth circuit for more and more nodes on the network.<p>Of course, Comcast is using it&#x27;s last mile power as leverage, but the core issue the economics of bandwidth speculation.

I just want to mention the opening quip:<p>&quot;For the past two decades, the Internet has operated as an unregulated, competitive free market.&quot;<p>Is just hilarious. Hilariously wrong.

Those goofy diagrams are wonderfully effective at explaining the situation.<p>Worth noting is that Cogent is small potato and basically has no leverage. It barely does $300 mil in revenue. Compared that to most Tier 1 providers which do $10 bil+.

Netflix should pass on the &quot;Comcast tax&quot; to Netflix customers using Comcast. That might encourage Comcast users to switch ISPs (assuming competing broadband services are available to those users).

This may actually backfire on Comcast&#x2F;Cox&#x2F;TimeWarner&#x2F;etc&#x27;s own online streaming services they will be competing with Netflix on. Netflix hopefully realizes other providers will come asking for tier access that is faster. So then taken further, when Cox wants to deliver content beyond just Cox customers they can&#x27;t, they&#x27;ll have to pay. So this will also probably lead to some mergers into even less providers.<p>They have just locked provider based online streaming services into a worse off position in terms of cost to run. Hulu will also be caught in this since Comcast owns it. Netflix or independents that can get big enough and pay all the extortion fees will win. It is a whole new game, lots of toll roads.

And then we all grow up and realize that little Johnny can&#x27;t run his competition on his competition without paying protection money.<p>All joking aside, there isn&#x27;t much you can do. comcast owns the tubes. The world where they have to bend to the masses is a scary world.<p>Is this better? I dunno, only if Netflix goes out of business. This only really shortens comcasts rope long term. They just created a new market with this strong arm.<p>Grab your popcorn folks, this is going to get interesting.

This is some seriously bad precedence. Perhaps it will be good ammunition for Netflix to take to regulators, but it&#x27;s far more likely it&#x27;s better ammunition for Comcast to use against Google, Facebook, etc.<p>I think the best thing that can be done is Netflix giving a complete and full account of the extortion that happened here, perhaps in front of congress.

Timothy B Lee is the Rush Limbaugh of Hacker News. Saying things that could technically happen, in the sense that they wouldn&#x27;t violate the laws of physics, in order to get people good and angry.

If this is just about a peering agreement, then it didn&#x27;t start with the Netflix - Comcast deal. Riot Games signed a peering agreement with some European providers earlier this year:<p><a href="http://www.reddit.com/r/leagueoflegends/comments/1onydr/" rel="nofollow">http:&#x2F;&#x2F;www.reddit.com&#x2F;r&#x2F;leagueoflegends&#x2F;comments&#x2F;1onydr&#x2F;</a>

For people telling this is just peering agreement, this is not. It would be peering agreement if Amazon would be paying, because Amazon is providing the bandwidth to Netflix.<p>What I suppose is that under this agreement, Netflix is not paying Amazon anymore outbound bandwidth to Comcast and as such pays it directly to Comcast.

Have a local common carrier, but make it a coop where customers and employers have 1&#x2F;n voting right. That way you don&#x27;t have a company with the benefit of a monopoly and the growth&#x2F;innovation of the company depends on how much the majority of people want to pay.

If you&#x27;re not a network operator, you probably should not be guessing how the internet works. I do enjoy some of the speculation (mostly because its ridiculous) but in general it really doesn&#x27;t help to guess.

Right, because net neutrality is ONLY about Comcast throttling Netflix. ಠ_ಠ

Just wait until this begins to affect our online gaming sessions.

Article writer - Timothy B. Lee<p>More than a little coincidental.