[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.

[ikeboy]

>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.

The question is whether all consumers' prices should go up, or Netflix prices should go up. In the first case, consumers are subsidising netflix for those that use it.

>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.

This is meaningless. As I said elsewhere, they are not complaining about the cost of the upgrade. They're complaining about the cost of taking the extra data. That cost is what would either be passed on to users, or to Netflix. Talking about the direct cost is missing the point.

[msandford]

ISP makes a promise to deliver data at a certain rate for a certain amount per month.

ISP can't actually deliver said data, and so, can't deliver on their promise.

I can't see how this is Netflix's fault. ISP makes a promise, ISP can't deliver.

Yes it does happen to be coming from Netflix, but Netflix didn't FORCE the ISP's customers to become Netflix customers, did they? Or does Netflix not only have some magical ability to FORCE data upon people, but also mind control to MAKE certain people sign up?

You're arguing that the ISP should be allowed to overstate their capacity as much as they want, and if it causes any problems anywhere, that the counterparty is at fault no matter what. That's completely nonsensical.

> The question is whether all consumers' prices should go up, or Netflix prices should go up.

> They're complaining about the cost of taking the extra data.

Basically they're complaining that they have to make good on the promises that they've made to customers. They were hoping that they could way, way, way oversell their capacity (and charge more for a theoretical peak capacity that you can never use) and get more money from their customers as a result.

Now what's happening is that many of their customers are asking them to make good on 10% of their promises all at the same time. This causes problems for the ISP, so they flail about trying to blame other entities than themselves.

Nobody is asking the ISP to give them a HIGHER data rate than they've already paid for.

They're asking the ISP to give them a mere 10% of what they've already paid for.