[wdewind]

Thanks a lot for your response (and to the others who responded as well, appreciate it!). What you're saying makes sense, but just to play devils advocate...

Disclaimer: The blog I'm about to post was linked from Comcast's blog. They claim he is independent, I know nothing about him.

"Netflix could use multiple providers to connect to ISPs and could also use third party CDNs like Akamai, EdgeCast and Limelight, who are already connected to ISPs, to deliver their traffic. In fact, this is how Netflix delivered 100% of their traffic for many, many years, using third-party CDNs. Netflix likes to make it sound like there is only one way to deliver videos on the Internet when in fact, there are multiple ways."[1]

It would seem to me that if Comcast is using all the bandwidth they've purchased from Level 3 than it's a simple reality for them that they'll need to increase that bandwidth or they'll see reduced service. I don't see why this is explicitly either side's problem. It seems like it would be great if they could figure out a mutually beneficial situation, but I guess I fail to see the moral hazard. If Comcast doesn't want to upgrade their network who cares? Barring, of course, the monopoly argument, I see no moral hazard here.

I also see no reason that this has anything to do with net neutrality. It seems like Netflix is simply so big they have to act more like an ISP than they used to.

[1] http://blog.streamingmedia.com/2014/03/netflix-level-3-telli...

[cortesoft]

Couple of points: Comcast isn't buying bandwidth from Level 3. "Settlement-free peering" means no money is exchanged. The reason they don't charge each other is because it is mutually beneficial; Comcast gets to charge it's customers for access to content that passes through Level 3 and Level 3 gets to charge it's customers for access to the Comcast subscribers.

The problem is that there is only a market solution for the Level 3 customers' side; if Level 3 can't accept all the traffic that their customers are sending it, they have other options with who to connect to, as there are other backbone providers. It is in their financial interest to maintain their network capacity, or their clients will go elsewhere.

Comcast, on the other hand, has no market pressure. If they can't handle all the data that their customers are trying to access, their customers have no other option. They are stuck with Comcast.

And therein lies the rub; what both Level 3's and Comcast's customers want is access to each other. Neither company can provide that service on their own; Comcast doesn't have a global network that can send data around the world, while Level 3 doesn't have a last-mile network that connects to all the end users. However, only Level 3 has to worry about losing its customers to a competitor. Comcast can essentially hold all parties hostage; they can demand payments from every party: end users, Level 3, and Level 3's customers. Of course, holding everyone hostage hurts everyone, including their own customers; however, since their customers have no other options, they aren't really in danger of losing them. They can hold out longer than Level 3 can, because if Level 3 doesn't agree to pay Comcast's ransom, someone else might, and Level 3 will lose their customers to whoever pays Comcast's ransom.

[usefulcat]

" Of course, holding everyone hostage hurts everyone, including their own customers;"

Everyone except Comcast.

[notdonspaulding]

> "It seems like it would be great if they could figure out a mutually beneficial situation, but I guess I fail to see the moral hazard."

This article in particular is making the argument that at the level that L3, Comcast, AT&T, Netflix and others are operating, it's almost always mutually beneficial to peer. The article also makes the point that the capital expenditure is negligible compared to the benefit to both sides.

The moral hazard here is that Comcast is (shrewdly) taking the bet that their customers won't blame them for what appears to be Netflix's reduced performance. If there was actual competition in the local ISP space, customers would catch on that the performance is only worse on Comcast's network, but that's not the world we live in.

> Barring, of course, the monopoly argument, I see no moral hazard here.

You can't just ignore the monopoly argument. There's nothing inherently unfair about a monopoly, but if you use it to extort money from people then its no surprise that people call you out on it. In the Good Old Days, you'd see monopolies try to squash their competitors. This is more nuanced than that. Monopolistic-extortion-action-at-a-distance, if you will.

[wdewind]

> it's almost always mutually beneficial to peer.

But Netflix might be the exception here right?

> You can't just ignore the monopoly argument.

You're right, I'm just trying to disambiguate it from the net neutrality argument, which doesn't seem to actually be relevant here (as Comcast is treating all traffic through those links poorly, not just Netflix traffic). If it is truly about the monopoly, regulators have different (and thankfully more powerful) tools to change Comcast's behavior, whereas using net neutrality seems like a losing (and misleading) fight.

[AnthonyMouse]

> But Netflix might be the exception here right?

The mutual benefit still exists. Comcast benefits from peering with Netflix because it allows Comcast customers to access Netflix. Comcast is just playing chicken because they know their monopoly position allows them to hold out longer than peers with actual competitors.

> You're right, I'm just trying to disambiguate it from the net neutrality argument, which doesn't seem to actually be relevant here (as Comcast is treating all traffic through those links poorly, not just Netflix traffic).

The network neutrality issue is that Comcast is intentionally causing congestion on all the links that Netflix traffic could possibly use. The traffic for Comcast's own competing video service offerings don't have to traverse the congested links, nor does traffic from anyone who Comcast provides with a separate uncongested link in exchange for a toll or some other business consideration. That's practically the definition of a network neutrality issue.

[3minus1]

> intentionally causing congestion

Not upgrading their connection is not the same thing as intentionally causing congestion. Especially when the connection would be fine if it weren't for the massive share of Netflix traffic.

[designgauge]

The massive Netflix traffic that I, as a Comcast subscriber, is requesting.

If we're all all drawing too much data over the network, upgrade it and charge us more! I have no higher bandwidth options than Comcast's cable internet service. Huge lack of competition in California.

[osi]

Comcast wants to switch people from http://www.comcast.com/peering to http://www.comcast.com/dedicatedinternet/?SCRedirect=true

The former is what Level 3 does, the latter Netflix.

[masklinn]

> But Netflix might be the exception here right?

Netflix is not infrastructure, they're not peers, they're Level 3 clients.

[pdonis]

Actually, that's no longer true under the deal Netflix recently worked out with Comcast:

http://www.washingtonpost.com/blogs/the-switch/wp/2014/02/23...

[DerpDerpDerp]

There's a huge problem with the monopoly status of Comcast in this case: I'd dump an ISP for not quickly (ie, in a 3-4 month span) working something out with Netflix if I could.

Comcast's monopoly status is greatly impacting their negotiating position, and is core to this issue.

I mean, I'm trying to get a deal worked out with Netflix where they send me some information. For various technical reasons, this deal needs to go through a couple middlemen. Literally the only middleman I can hire is refusing to work out a deal with them that doesn't give an unusual benefit to that middleman (while Netflix's middleman is offering the standard package), and is screwing me in the process. I'd take literally any other middleman if I could, but this particular middleman has political connections, and stops that from being possible.

[xhrpost]

If the ISP is letting a connection become saturated in order to place pressure on a third party provider to provide settlement, they are doing so at the cost of any other providers running over those trunks. Since switching to AT&T, I've noticed decreased Netflix performance and sometimes Imgur loads like I'm on dial-up again. I haven't checked the routes but it has me wondering if it's shared congestion. To your point, I'm not sure this is a moral hazard yet but it does seem like one of those things that could be very bad for the customer and the ISP can simply get away with it due to lack of competition.

[danielweber]

I have two net connections, and both are generally reliable, but I've noticed that the DSL connection (over Windstream) is very slow for certain sites like imgur and tumblr and AWS, so I've set those to use the cable modem (Time Warner) connection, where they work great.

Since I have 2 connections I definitely have competition in my area. (Wireless is another option.) So I don't get why if a connection has issues, it's always the DSL one, and always with certain other sites.

[nitrogen]

DSL + cable doesn't really count as competition, unless you can choose from multiple cable and multiple DSL providers.

[wmf]

Why doesn't it count?

[nitrogen]

Because the two have different physical limitations. DSL is strongly limited by distance to a cabinet, and most people can't get any better than 7mbit/s, 20 if you're lucky. Thus, DSL provides no pressure on cable, and the only reasons people use DSL are because they get it bundled with their phone and TV service, or because they got fed up with the cable company and switched to a lesser service out of frustration.

In areas where something actually competitive is available, cable companies rush to improve bandwidth, or offer two-year contract deals at undercut prices to try to outlive the competition, then jack the prices back up when the competition goes bankrupt.

[massysett]

> only reasons people use DSL are because they get it bundled with their phone and TV service

Some people use DSL because they're happy with DSL. DSL can be had for cheaper, and many people do not need the higher speeds of cable. HN readers and other geeks who dominate these online discussions assume that everyone is like them and that they need the fastest speed possible while sneering at any available alternative that is "just" 7 megabits. 7 megabits gets you instant page loads on any website. Sure it't not as good if you want to stream four movies to your house at once...but not everyone needs that.

The fact is that Comcast is right when they point out that they do face competition, not only from DSL but also from other services such as wireless. That you and many other people do not like these alternatives does not mean they do not exist. Many people find them to be perfectly adequate and for them the other services are the best value.

[wmf]

OK, so crappy DSL doesn't count as competition. But U-Verse vs. cable is not "no competition".

[danielweber]

Honestly, I've had one connection or the other completely fail, and (aside from the weird issues above) I sometimes haven't noticed for a few days, despite heavy Netflix streaming on 2 devices. Whatever is going on in my local market, to me it seems to be functioning well.

[josephlord]

> I also see no reason that this has anything to do with net neutrality. It seems like Netflix is simply so big they have to act more like an ISP than they used to.

When Comcast let links to peers get saturated it is a network neutrality issue. Those services they provide will perform and competitors will not. Those who pay for access will also perform better than those who don't pay. It is by definition not neutral.

[josephschmoe]

There's nothing wrong with the action of not delivering traffic, except that it goes against the spirit of their contract with their customers and the obvious damage it will do to capitalism if their customers have no option to leave for a better company.