[rahimnathwani]

The article is conflating the ISP's _costs_ with the _prices_ paid by consumers:

"And I think we can all accept the fact that business service costs are ultimately borne by consumers."

The above statement seems designed to cause confusion. The implication is that the total price consumers pay is determined wholly by the costs incurred in delivering the service. This may be almost true in aggregate, but isn't true at an individual level.

ISPs offer an all-you-can-eat internet service, but aren't happy with the customer-level margins for the most heavy users (including Netflix users). They could raise prices for heavy users (e.g. by applying caps in the same way as mobile providers) but have chosen instead to engage in different tactics to limit usage or get additional revenue from other sources. Throttling P2P traffic (I don't know which ISPs in the US do this) and asking CDN providers to pay for ports are two examples.

This seems to be like they're increasing the maximum speed of the local pipes ('unlimited water up to 100 litres per minutes!') without being willing to increase the size of the pipes into (and capacity within) their own distribution network.

Am I missing something, or is it just that the business model of offering unlimited high speed internet only sustainable at a higher price?

[_Robbie]

Both this blog post and the Netflix blog post it is responding to seem intentionally confusing. The core issue is that the interests of the consumer and provider are misaligned. In a normal market if the consumer wants more or better service, the provider will make more money by providing the service.

In this case the consumer wants more service in the form of more data for streaming video. In a normal market, the additional sales from the extra data would fund the required infrastructure. In reality, however, since the ISP sells a data rate, not data, they do not get extra revenue from heavy usage customers.

Both of these blog posts miss the mark by misinterpreting the probably rational consequences of this misalignment as unreasonable greed or unfairness. I assume that both of the authors know the real issue here and that these posts are meant to manipulate the public regardless of accuracy.