[andrewescott]

This doesn't appear to be the case in question. Based on my reading of the article, it seems that the network link between Free and YouTube is becoming congested at peak times. Free doesn't want to pay to make it any larger, and neither does Google. Hence the escalation. It's not to do with network links between end customers and Free.

[AnthonyMouse]

>Free doesn't want to pay to make it any larger, and neither does Google.

My understanding is that when these things happen, the content provider is virtually always willing to make the link bigger (because congestion causes lag for their customers, which they don't want).

The problem is that ISPs have started leveraging the hard monopoly they have over the ability to send packets to their own customers. So instead of just paying to upgrade the link between the two networks, they want content providers to pay in effect to upgrade the ISP's own internal network -- which their own customers already paid them to do, but if they double dip then it's pure profit. And the content providers (or their own network provider) will have no choice but to pay whatever is asked or lose access to many thousands of customers.

The real problem with all of this is what it's going to do to the marketplace. Because the only way to push back against that sort of extortion is to have sufficiently compelling content that the ISP can't risk losing it, in effect having your own monopoly to counter the ISP's. So YouTube is fine, Netflix is probably fine (but see spat with Comcast a while back), and what happens to the little guy? Screwed.

Which is why the people saying this is about Google have it totally wrong. Did you catch the "no comment" from the article? You would think they might have something to say if it actually affected them, right? Condemn the ISPs acting unreasonably? But Google is fine. They're the ones with leverage -- they're the ones the ISPs are complaining about because they can't push them around.

The problem is the ISPs can and do push everybody else around. And that has to stop, or we'll be left with the core of the network owned exclusively by a tight cartel of the likes of Google and Amazon because they're the only ones with enough clout to push back against every regional monopoly ISP in the world.

[onetwothreefour]

I've read your other comments, but I'm kind of replying to all of them.

Most companies are already paying a premium to get content directly to users by way of CDNs. This already happens, has happened for years, and will continue to happen.

When someone pays Akamai, it's because Akamai has negotiated directly with every ISP in the world to put some boxes on their network so bits get to the ISPs users faster. I think people who think this doesn't already happen are kind of missing the point.

In the case of Youtube, this is a totally different issue, IMHO, because it's not really about content producers. It's about a shitload of bandwidth that an ISP has to build their network to handle. And that's their job right? Except Google runs ads on Youtube, and makes money from the end user this way. The ISP is just a "dumb pipe" to you and me, but they have serious outlay to provide a lag-free Youtube experience to their customers for which they get nothing back.

Now, I'm sure the smarter ISPs have negotiated some sort of revenue share with Google as part of peering agreements, but maybe the contract terms in this case weren't to Free's liking. How would we know? IMHO there's not enough information in the article to blame either party one way or the other, but I think that most people on HN are treating this more as a net neutrality thing and not as a contract dispute. :)

[AnthonyMouse]

>Most companies are already paying a premium to get content directly to users by way of CDNs. This already happens, has happened for years, and will continue to happen.

I don't recall objecting to that. If ISPs want to run a telco hotel at their central office and rent space for people to run a CDN, that's not a problem.

The problem comes when they subsequently leverage their monopoly over access to their own ISP customers to try to force content distributors to pay them for rack space, by refusing to accept free peering. If you don't actually need a presence at every ISP, the ISP shouldn't be able to force you to buy it from them just because they have a monopoly on those customers and can raise the price of peering so high that paying them for rack space becomes cheaper than buying it from anyone else.

If you're a network provider and you pay to bring your fiber to the demarc at another ISP's facility, that ISP should be required to accept the traffic. Because the alternative is blatant monopoly abuse.

>In the case of Youtube, this is a totally different issue, IMHO, because it's not really about content producers. It's about a shitload of bandwidth that an ISP has to build their network to handle.

How is that not about content producers? Content producers post content on YouTube. It has to get where it's going at a price that makes operating YouTube viable (and operating its smaller competitors viable, lest YouTube become an abusive monopoly too) or they won't be able to do that anymore. And the ISPs have big, bad reasons to try to make YouTube-like services unviable: It requires a lot of bandwidth and it competes for viewer attention with their own TV offerings.

>The ISP is just a "dumb pipe" to you and me, but they have serious outlay to provide a lag-free Youtube experience to their customers for which they get nothing back.

Where does "they get nothing back" come from? They get back the very substantial monthly fees that all of their end customers pay to have access to YouTube. That is what that money is for -- to bring packets from YouTube and all rest of the internet to and from those customers. And every video YouTube serves has been requested by one of those paying customers.

ISPs who expect customers to do nothing more than check their email are quite capable of offering a barebones plan that allows no more than 128kbps sustained download speeds and is incapable of streaming video. But they shouldn't be allowed to charge $60 and $100 a month for multi-megabit residential connections and then be heard to complain about it when the service they advertised is the one their customers want to use.

I should point out that these ISPs are a) massively profitable and b) have been dragging their feet over network upgrades for about as long as they've existed. I have little sympathy for complaints about network upgrades when I go outside and see the same piece of copper coming into my house that has been there for half a century instead of the shiny fiber they've been promising for what seems like decades.

>IMHO there's not enough information in the article to blame either party one way or the other, but I think that most people on HN are treating this more as a net neutrality thing and not as a contract dispute.

I think the mistake you're making is in assuming that those are two different things. What do you think network neutrality is about other than preventing ISPs from leveraging their monopolies into abusive contracts with other parties? Can you see how raising the price of reaching an ISP's customers for all of the entities that compete with the ISP's pay TV content, but not raising the price for the ISP's own content, is bad for everyone including the ISP's customers?

[tonfa]

In that particular case, they're also very good, since the ISP picked a moment where actors like Amazon, Google are getting a lot of heat about their tax rate in France.

It's likely that the government will like that argument (let's help french business over US companies who don't pay much taxes).

[OGinparadise]

they want content providers to pay in effect to upgrade the ISP's own internal network -- which their own customers already paid them to do, but if they double dip then it's pure profit.

Customers paid for what exactly? Buffet prices are low because not everyone eats 14 dishes. I have downloaded over 100GB this past week but I pay a lot of money to my ISP. If I paid the equivalent of USD 10 and enough people did what I did, they'd have two options: increase prices for everyone or eat the extra bandwidth and network upgrades. Maybe someone can look at whether telcos have an extraordinary profit margin or not but I don't think so.

The telcos do not pay, their customers do and price /offering are always being adjusted either by a bandwidth cap, a higher price or both.

[AnthonyMouse]

>Buffet prices are low because not everyone eats 14 dishes.

Buffet prices are low because bits are extraordinarily cheap. Come back the day AT&T posts an annual net loss and we can talk about raising prices.

>Maybe someone can look at whether telcos have an extraordinary profit margin or not but I don't think so.

http://ycharts.com/companies/T/profit_margin

The average looks to be in excess of 10%. That's pretty extraordinary. Certainly well in excess of the market average.

[OGinparadise]

Att is one of the many. At&t and others will increase prices to keep their profit so maybe that's the wrong way to look at it.

The average looks to be in excess of 10%. That's pretty extraordinary. Certainly well in excess of the market average.

Not good enough to be Google though at over 15%. You may also want to compare earnings and debt. T has http://finance.yahoo.com/q/ks?s=T+Key+Statistics over $60 BILLION in debt and relatively low earnings.

[AnthonyMouse]

Can you articulate how any of the numbers you're mentioning have anything to do with their ability to pay for capacity upgrades? Earnings are what's left after they make their capital investments. And after they make all the investments they deem necessary, they're still posting large, stable, recurring profits.

Moreover, when a corporation is simultaneously holding debt and issuing dividends, the reason it continues to hold the debt is not because it needs to remain "in debt" to continue its operations. Barring incompetence, it's almost always either because the rate it's paying on the debt is below the market rate of return and so paying the debt has a negative relative value, or because holding debt has some sort of tax or business advantage for the company.

And bringing in Google is just a complete non-sequitur. AT&T can't afford to pay for upgrades because Google has a lot of money? Nonsense.

[OGinparadise]

Earnings are what's left after they make their capital investments. And after they make all the investments they deem necessary, they're still posting large, stable, recurring profits.

Ah yes, only non-telcos should show a profit for shareholders. My point, that you go out of your way to miss, is that 1. both sides are for profit corps 2. Free.fr and other might have to increase prices to keep up with demand 3. if Free.fr, Verizon or At&t imposed usage caps the same crowd would go after them with as much vigor.

And bringing in Google is just a complete non-sequitur. AT&T can't afford to pay for upgrades because Google has a lot of money? Nonsense.

How about let Google (or Netflix or ...) chip in? They are making a killing relative to telcos.