[msandford]

Yet again, someone fails to understand that this is Comcast abusing their (effective) monopoly to extract additional money via double-paying.

First I pay for internet access. 50Mbps "theoretical max" but it's fairly reasonable to expect to get say 10% of that most of the time.

Then Netflix has to pay again, in order for me to get the internet traffic that I requested. If Netflix doesn't pay, then Comcast schedules upgrades more slowly than they normally would such that my Netflix experience is degraded. They're not reducing capacity, they're just growing capacity in some areas much, much more slowly than in the rest. To get extra cash.

[wmf]

I think Prof. Feamster does understand that (he says "Comcast arguably (and, empirically speaking, as well) has more market leverage: They can afford to ask Netflix to pay for that direct link—a common Internet business relationship called paid peering—because they have more market power.") but he is taking a faux-objective, "teach the controversy" approach. I've seen the same philosophy in papers from his students.

[toast0]

I've never understood the "double pay" argument.

You pay for internet. Netflix has to pay for internet too. To deliver packets to Comcast's network, Netflix can chose to pay any number of transit companies, or they can cut out the middle man and pay Comcast. Why is it ok for Netflix to pay a transit company, but not Comcast?

[msandford]

So Comcast has historically been a consumer ISP, not a transit provider. Consumer ISPs have traditionally had to buy service from transit providers in order to give their customers access to the internet. So in this case your monthly service fee went partially for the last mile and partially for the actual internet connection from the transit provider. Bandwidth is expensive.

As some ISPs got bigger, they were able to negotiate peering agreements instead of paid service since it was in both party's best interest. A could bill B $10k/mo for service and B could bill A $10k/mo for service and in the end it was a wash. This makes sense too. Once this happened your bill largely reflected the cost of the last mile, since the transit was now free. Bandwidth has gotten cheaper.

What we're seeing now is that some ISPs have gotten so big that instead of paying transit providers for access to the greater internet, or simply getting free peering, they're charging others for peering to them. How are they able to do this? They have an effective monopoly on their customers and they're "leveraging" this to get even more money. Now my monthly fee goes to pay for the last mile, and someone else also has to pay for the last mile. Am I getting a discount? No. Bandwidth isn't getting cheaper, but the last mile is getting paid for twice. Is the last mile getting faster? Also no.

So this feels very much like a monopoly abusing their position of power to get extra money.

[ikeboy]

Isn't the last mile getting used much more than previously, without prices going up? Is it valid to look at this as paying for that, and if CDNs can't pay, then end user prices will have to go up?

[msandford]

Where on earth are the prices not going up? I used to get cable internet for $40/mo and now it's more like $60/mo.

I had to buy the DOCSIS 3 modem for my house, so they're not paying for that. I suspect that they had to buy new modems on their end, but my modem was only about $100 so I can't imagine that theirs was more than $100 especially if they're buying millions of them.

They haven't upgraded the coax that runs to my house, or the pulls that run along the telephone poles. Those are all the same. So it's an equipment upgrade? $100 once so that they can charge $20/mo more forever? They made their money back on the last mile well inside of a year.

And they haven't had to put more fiber into the ground either. Fiber transceiver keep getting faster and cheaper every year. As slower ones break you can replace them with faster ones for less money. Even if you upgrade early, it's not as though it's hugely expensive.

Here's a 10gig, 10km transceiver for $400: http://www.newegg.com/Product/Product.aspx?Item=N82E16816523...

And here's a 10gig, 40km transceiver for $4k: http://www.newegg.com/Product/Product.aspx?Item=N82E16816401...

I pay for 50/5 but I suspect that Comcast only allocates 5/0.5 or so for me, since it can't manage to keep up with Netflix all that well. So that means that Comcast can do the last mile for $100 or less of new investment and the last 25 miles for $4 (2000 people per pair, $8k per pair) of incremental investment. This is not a lot of money relative to the $60/mo that I pay.

> Is it valid to look at this as paying for that, and if CDNs can't pay, then end user prices will have to go up?

So first I disagree that the CDN should have to pay anything, again since I'm paying Comcast to connect me to the CDN!!

But even if I admit your point (which again, I emphatically DO NOT!) the amount of money to make an upgrade happen is TRIVIAL relative to yearly revenues. $104 in one-time hardware versus $720 in yearly, recurring revenue.

[ikeboy]

My family's bill has gone down to around $35/mo.

Speedtest gives me around 50/10.

[wmf]

I agree with msandford that Moore's Law is supposed to take care of this. Assuming that it doesn't (e.g. the "exaflood"), we come to the trickiest part of net neutrality.

If extra money has to come from somewhere, I think it's better for the Internet ecosystem for all those costs to be passed on to the customer as price increases, but obviously a lot of customers are more concerned about their own bill than the health of innovation in the Internet.

[ikeboy]

I think Netflix customers should be paying for Netflix data. If an ISP can't charge netflix and instead raises the price to end users, they're basically charging everyone for Netflix users. If I don't use netflix, why should I subsidise those who do?

[msandford]

> I think Netflix customers should be paying for Netflix data.

They are. They're buying 50/5 or 50/10 internet and then asking their ISP to (horror of horrors!) make good on their claim. If the ISP isn't DRAMATICALLY overselling their capacity, things are totally fine. If they can actually deliver on 10% of what they're "promising" (but have cleverly worded the contract to avoid having to actually make good on those claims, a shady practice also), there are no problems with Netflix whatsoever.

Level3 offered to pay for the direct cost of the upgrades, namely a few grand for the fiber transceivers on Comcast's side of the peering point in the carrier hotel. That would mean it's a "free" upgrade, and no end-users are paying for it. But Comcast didn't bite.

That makes your objection COMPLETELY nonsensical.

[pedrocr]

> Why is it ok for Netflix to pay a transit company, but not Comcast?

Because transit providers are actually providing a service to Netflix. They allow them to dump all the traffic in one location and then the transit provider will build out a network to take care of moving the traffic to anywhere in the globe where there's an ISP requesting it. The transit provider will then not pay the ISP to take the traffic and deliver it to their requesting user. When Netflix connects directly to Comcast that's not what's happening, Netflix has to get the content to Comcast's network by itself and the Comcast network is already paid for by the user. So if Netflix pays Comcast then Comcast is getting paid to create the network by both the user and Netflix.

[jdmichal]

> The transit provider will then not pay the ISP to take the traffic and deliver it to their requesting user.

The "not pay" part is, I assume, based on the prevalent use of settlement-free peering in the industry. These agreements were based on a understanding that, over time, the traffic would wash out even between the two, so let's just not keep track and call it even from the start. This is not necessarily a given in all situations. Comcast asserted that the quantity of Netflix traffic was breaking this understanding.

[pedrocr]

>These agreements were based on a understanding that, over time, the traffic would wash out even between the two, so let's just not keep track and call it even from the start.

I don't think that's the case. Transit providers will always tend to deliver more traffic to the ISP than the ISP delivers to them, because users download more than they upload. That's still fine because the transit provider's network is paid for by the content provider and the ISPs network is paid for by the user so the settlement free peering always makes sense. Without it the ISP wouldn't have content so no users and the transit provider wouldn't be able to deliver traffic so would have no clients. The fact that Netflix is now a significant single content provider in the transit network doesn't change this dynamic at all, it just makes it easier for ISPs to squeeze them for money. Compensation for unbalanced peering only makes sense between transit providers since for each connection only one of them is being compensated (the one whose client sent the traffic) so the other one will only accept that peering if it is balanced.

I've explained this more clearly elsewhere in the thread:

https://news.ycombinator.com/item?id=9264734