back to article Netflix coughs up to cruise on Comcast

Video streaming service Netflix and carrier Comcast have struck a deal to “Provide Customers With Excellent User Experience”. That quote comes from the near-identical canned statement issued by both parties to the deal, who both describe the deal as a “mutually beneficial interconnection agreement that will provide Comcast’s U …


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  1. as2003

    > What, other than a channel Netflix doesn't hugely need, can Comcast offer beyond quality carriage?

    Perhaps it's an exclusive deal. I.e. Netflix signed the contract with the understanding that YouTube and other video streaming services would not be offered similar deals and would continue to be throttled?

    1. d4rkside

      The article stated that netflix would not receive preferential treatment. wouldn't throttling YouTube and others but not netflix count as preferential treatment?

  2. Eugene Crosser

    Do they call it free market?

    Suppose I am a customer of Comcast's rival, let's call it "YMission". And I pay subscription to Netflix. It means that part of my money goes to help the rival of my provider, who does nothing for me. Why is it legal?

    That is not to say, the content providers create the market for the ISPs, making the customers want to have Internet access. If anything, its the ISPs who owe to the Netflixes.

    This does not look like capitalism at all.

    1. Destroy All Monsters Silver badge
      Paris Hilton

      What's wrong now?

      > Why is it legal?

      Why should it be illegal? Are you being forced to do Netflix??

      > If anything, its the ISPs who owe to the Netflixes.

      That would mean subscriptions go up. Cue ISP customer butthurt and moaning.

      > This does not look like capitalism at all.

      Why not?

    2. Jediben

      Re: Do they call it free market?

      Customer provides money. Netflix provides service. Once Netflix has the money you paid them, why do you feel you have any investment in what Netflix does with its money? You don't question any other service provider about why they have X product line, just because you don't partake in X. What's so special about Netflix to you?

      1. beep54

        Re: Do they call it free market?


        Just willfully trying hard not to pay attention, aren't we?

    3. Kay Burley ate my hamster

      Re: Do they call it free market?

      "This does not look like capitalism at all."

      Funny, it smells just like capitalism.

      1. Yet Another Anonymous coward Silver badge

        Re: Do they call it free market?

        >Funny, it smells just like capitalism.

        It smells like monopoly protectionism

        No longer able to get BBC iPlayer on you Murdoch owned cable feed, or el'reg on anything

        1. Tom 13

          Re: It smells like monopoly protectionism

          Technically that would be "oligopoly".

      2. beep54

        Re: Do they call it free market?

        "Funny, it smells." There. Fixed that for ya

  3. disk iops

    It's all about balance of payments

    The tier-1 carriers generally don't charge each other or the 2nd tiers as long as the traffic crossing the interconnect points is roughly equal. Netflix uses L3 as one of their long-haul carriers. For the privilege of using that backbone (aka transport) they pay L3 a pile of money. Now when the traffic hops off L3 and onto the various L3-to-Comcast peering points, all of a sudden there is a gross imbalance between traffic flows. L3 says "pay up", Comcast says "bugger off". Comcast' lawyers call up Netflix and say "WTF, you pony up the money L3 wants us to pay since the gross imbalance if your damn service". Netflix says "but, but but, if we have to pay you, our service fees would have to double or triple! Plus you (comcast) have an unfair advantage since your own video service stays inside your network". Comcast says, "Bite me! For years you've been lying to the public and investors as to what the TRUE cost of offering your service really is. And we're not going to be bullied into subsidizing you! So don't even try playing the Neutrality card, ass**** because this has nothing to do with neutrality. Alternatively, why don't you put video distribution servers in our interconnection points (aka datacenters) and pay us for power/space and top-of-rack bandwidth, then. That will go a long way toward equalizing the traffic flows and L3 will stop sending us nasty emails."

    Netflix says "Fine. here's your money"

    All those stupid enough to assert "but Comcast' customers are paying for their service so Comcast should just deliver." Like hell! The true cost of delivering HD-streaming video from the likes of Netflix isn't REMOTELY included in your bill even if you have the cross-subsidized triple-play packages. What Comcast should do is charge customers who want to use Netflix during 5-10pm a nice $20 extra a month. They can use the money to pay off L3 and upgrade the WDMX equipment and circuits at peering points.

    The whole telecomm industry in the USA is full of fraud. The people who use "no" traffic heavily subsidize those that download all kinds of sh*t including Netflix. You should pay for what you consume. but then you wouldn't be able to advertise "unlimited" Internet. The proper solution is to stop hiding Internet costs in TV packages and telephone. Priced Business Internet service? It's 3x residential because there is no cross-subsidy AND they provision their network such that they EXPECT you to use your level of bandwidth a LOT more than a home-user would.

    Residential Internet should be charged by the Megabyte and congestion charging should also apply. If you use streaming, your MB charges should likewise be higher. It's common practice when resources are scarce to charge REAL costs, and it's the proper, fair, market response. Internet bandwidth isn't free nor is it unlimited, the incessant whining of GenY/Z notwithstanding.

    1. Anonymous Coward
      Anonymous Coward

      Re: It's all about balance of payments

      First of all, it is Level3, not L3. L3 is a security company which sucessfully sued Level3 for the L3 trademark back in 99. L3 are the guys which do the airport scanners and various military kit while Level3 does networks (usually, depends on which debt covenant do they have to comply with).

      The gross imbalance idea would be true if Level3 did a "gross imbalance" peering contract. It usually does not as it is usually the source of gross imbalance in the first place.

      Applying the Henlon razor Comcast simply offered Netflix better conditions than they were getting via the middleman.

      Frankly, people continuously suspect Comcast, VZ, etc of wrongdoing here. We are _PAST_ that point now as far as Netflix is concerned. Having crap Netflix is now sufficient for a customer to complain and change the provider. So it is capitalism at work now - if you can't beat them join them. Plain and simple - comcast has decided to collect that revenue instead of Level3.

    2. Eugene Crosser

      Re: It's all about balance of payments

      That's right, paying per Gb (or having capped tiers, like I have from my provider) is the way. The consumer should pay fair price for the service. That is capitalism.

      By the way, the top tier, 100Mbit symmetric without caps costs under $30/mo where I live. Admittedly, we have multi-story buildings, so providing the last mile is cheaper per user than in the US.

      1. disk iops

        Re: It's all about balance of payments

        > By the way, the top tier, 100Mbit symmetric without caps costs under $30/mo where I live

        And when everyone in your building decides to all do even just 20Mb/sec all at the same time? The PoP equipment will choke. Your building probably only has 1Gb of back-haul if that. They say you can have 100Mb, sure, but they have ample reason to believe there aren't 10 of you in the building at the same time.

    3. Anonymous Coward
      Anonymous Coward

      Re: It's all about balance of payments

      Content pay Tier one's for access, in your Comcast assertion, Level3, But you are wrong with Comcast, the ISP's eyeballs always pay and once they've paid they get to see whatever they want, after all _they've paid_. If Comcast's eyeballs don't pay enough to cover the ISPs costs, in this case Comcast's, that Comcast's problem.

      This is without compounding the issue with ISPs wanting client to double pay by doing their own VoD and other services, where it helps if your competitors "give poor service". Netflix is up aginst a line of brickwalls becuase there are no Net Neutrality laws to protect consumers from being gouged by ISP's who are no longer ISPs but big media companies.

      Now if this is a direct connect/peering between Netfix and Comcast that rule doesn't apply and they have to work something out.

      1. disk iops

        Re: It's all about balance of payments

        > the ISP's eyeballs always pay and once they've paid they get to see whatever they want

        Yes, but there are NO QoS guarantees whatsoever - QED your Netflix stream is crap because every other tom, dick, and harry (your neighbors) is trying to stream Netflix at the same damn time. In order for all of 'you' to enjoy HD streaming and quit yer bitchin' Comcast would have to significantly upgrade their interconnection points with the Tier-1(s) that are carrying the Netflix source. (Netflix doesn't run their own network to enable them to do 'peering'.) Admittedly Level3 has their own CDN business so Netflix could utilize that but that just moves the origin closer to the Inter-Exchange but not to the OTHER SIDE of it.

        There is only one answer and it's Netflix content servers sitting in all key points in Comcast's network. Akamai pays to put their servers in Comcast facilities. Granted, their footprint is tiny compared to a content distribution point, and they don't get charged "screw you" pricing.

        I do agree that last-mile carriers should be prohibited from owning Content assets of any kind. Otherwise, as someone else posted, there is HUGE temptation to screw with their competitors and erect barriers to entry; both real and imagined. The FCC et. al. should enforce complete separation.

    4. Grahame 2

      Re: It's all about balance of payments

      Internet connectivity between participants is done several ways.

      The most costly per megabit is to use a tier-1 transit provider. This method is great for getting access to "the whole internet'. It is relatively expensive because that transit provider has to build and maintain global infrastructure. Tier-1s may offer reductions in charges for a number of reasons, balancing flows that are of interest to their other customers and regional distribution models are typical.

      The second is mutual peering, and is much cheaper. This is where two organizations agree to connect for their mutual benefit. This may be by directly connecting their networks or go via an Internet exchange point, such as the LINX, AMS-IX etc. Bandwidth on exchange points can be orders of magnitude cheaper than global tier-1 transit.

      The third option is co-location, this is where a content provider places equipment in or near the subscriber provider's network.

      Historically ISPs and content providers have worked together to keep their customer's cash flowing in and reduce their infrastructure costs, but as ISPs become content providers they have an interest in throwing up barriers to the competition. This is not a problem if there is a truly competitive market and subscribers can vote with the wallets, but in a monopoly situation consumer choice ends up being restricted.

    5. Tom 13

      Re: It's all about balance of payments

      If I were paying Netflix $200/month and Comcast $10/month you might have a point. Given they are reversed you don't.

    6. Levente Szileszky

      Re: It's all about balance of payments

      "All those stupid enough to assert "but Comcast' customers are paying for their service so Comcast should just deliver." Like hell! The true cost of delivering HD-streaming video from the likes of Netflix isn't REMOTELY included in your bill even if you have the cross-subsidized triple-play packages. What Comcast should do is charge customers who want to use Netflix during 5-10pm a nice $20 extra a month."

      Ohh, PLEAHHHSE, spoken like true scumbag corporate executive, with his twisted, super-money-hungry, greedy, lying mouth... is EASILY COVERED IN YOUR WHOLESALE PRICING, YOU LYING SHILL - you PAY ~1 CENT FOR EVERY DELIVERED GB, just who the hell are you trying to convince with your BS claims, seriously? Anyone access to wholesale pricing can confirm that YOUR AVERAGE PROFIT ON DELIVERED BYTES IS AROUND 1500-2000% as far as bandwidth goes so you better shut it and remain silent.

      It's all about keep pushing up your profit rates and get your bonuses, you snake - but don't worry, WE WILL BLOCK YOUR MERGER, for sure.

      1. disk iops

        Re: It's all about balance of payments

        huh? since when am I an executive/corporate shill? Your Netflix BW is massively subsidized by all the other idiots who pay thru the nose for their Comcast service but don't actually use it. Uni-cast video is the stupidest idea possible.

        If a substantive percentage of Comcast customers could switch in a heartbeat to another last-mile operator because Comcast was a greedy SOB and was deliberately not upgrading the peering points (or paying the likes of Level3 the amount demanded) to handle the severely lop-sided traffic flows, then yes, Comcast would magically discover they could afford to do so. Admittedly they have maximum incentive to screw over their own customers and especially where it concerns services that compete with their own. I fully support regulatory prohibition between last-mile and content ownership.

        Problem with upgrading the peering points for the 4 hours/day that they get slammed to kingdom come, is that it makes no economic sense in the aggregate when it sits effectively 'idle' the other 20 hours a day. No rational CIO would go along with such a proposal on their own corporate circuits (unless the economic activity during the time period covered the costs) so why on earth do people expect Comcast to do it? eg. your steady-state is 100Mb/s burstable to 1Gb and you are on 95% billing. If you exceed the imputed 'cap' you get hit with fees as you should. Does that necessarily mean you can justify an upgrade to 5Gb:20Gb/s because for a couple hours your get a lot of traffic?

        So let's work with the 1cent/GB figure even though you don't cite any evidence in support thereof. Is that what it costs Comcast to deliver from one end of it's network to the other? It is capex, physical plant, power, and people? Or is it gross expenses divided by the number of GB moved in the same time period across all network points?

        So at 2.2GB/hr that means I should be able to get 410 hrs of content/mo which obviously nobody uses. I'd be very surprised if average was more than 30-40GB/mo. For $9/mo Netflix has to pay their people, pay the filthy-greedy content owners, pay all their transit providers, pay to co-lo at strategic network hops, pay for a zillion hard drives and servers, pay legacy CDN services (all gone?), and pay for object storage, etc. all of whom have to make a profit in their own right.

        So while maybe the average Netflix user costs Comcast 30-50 cents a month (from a simplistic viewpoint), and let's suppose that Netflix pays their network provider the same amount, what does it cost Comcast to run a 100Gb/s WDM interconnect and backhaul those same ~20,800 streams of 4.8Mbit/sec (2.2GB/hr) to the customer during prime time? I expect it'll be a whole lot more than 1cent/GB. Is it 10x?

        The US market is anything but. The subsidies are rife and the margins likely obscene. But someone has to pay the piper be it Netflix or the Comcast customer using Netflix. Comcast is under no obligation to eat the costs of "acceptable unicast-HD streaming performance" out of the goodness of their hearts. Did your residential contract come with QoS terms and maximum allowable bandwidth limits during peak times? Hell, did they even provide minimally guaranteed bandwidth figures? Or just "best effort" clauses? That doesn't mean Netflix shouldn't be spending their money with Comcast to get their distribution servers placed appropriately so that the customer experience is not unnecessarily dependent on the quality of interconnection points.

        Netflix is a zero. They need to charge a hell of a lot more to stay in business once they are forced to pay last-mile and other intermediaries what providing their service truly costs. And when they do, their user-base will evaporate like a morning mist. Or they could stop being dumb and drop streaming entirely since nobody lacks the storage needed to spool it to disk ala a DVR, and so what if you can't watch something "right damn now"? Should have planned ahead. It might be interesting if they wrote their client to use Bit-Torrent style cooperation.

  4. Brent Longborough

    Monopolistic Bullying meets Pusillanimous Cowardice

    Nothing else to say. FTW

  5. Phil O'Sophical Silver badge

    And when *every* suplier has a "preferential" contract

    We all go back to square one, but with higher prices all round.

  6. Gene Cash Silver badge

    Is this why Google is doing gigabit ISPing?

    So if Comcast et al try the "you owe us for Youtube" then Google can say "we'll compete directly as ISPs in your biggest markets!" ?

  7. Anonymous Coward
    Anonymous Coward

    I thought netflix were going around installing 100TB CDN devices with all the major ISP to avoid this sort of issue in the first place ?

    1. Grahame 2

      I think Netflix would love to do that, but the major ISPs want Netflix to pay them major coin for the privilege. :(

      1. Anonymous Coward
        Anonymous Coward

        Looking here,

        They seem to have around 150 peering exchange points already which i believe house CDN server

  8. Grahame 2

    Insufficent bandwidth splash page

    I would be monitoring bandwidth by provider, and implement a form of session admission control.

    If a provider gets congested, I would look at my database of alternative carriers in the area and serve up a splash page advising the customer that their provider has insufficient capacity for Netflix that would both protect existing streams and provide adverts for rival ISPs in the customer's area with click through to start the migration process.

    Of course the US market may not have sufficient competition to support this, in which case we have a monopoly / cartel situation, and the network providers have their customers and the OTT providers by the short and curlies.

    1. Kay Burley ate my hamster

      Re: Insufficent bandwidth splash page

      Ahem, kinda like...

      1. Grahame 2

        Re: Insufficent bandwidth splash page

        Indeed, but I was thinking of making it more aggressive. At the point of being denied your viewing due to insufficient bandwidth a pages to say, "Hey your ISP is crap, why not move to one of these..", but I guess that does the trick if people care to look.

  9. AJames

    Old news?

    It may be no more than the continuation of the Open Connect peering initiative:

  10. Tom 13

    Here's what I don't get.

    other carriers have long been irked by “over the top” companies like Netflix that make mountains of cash without giving them a cut.

    I drop $8.95/month (or thereabouts) to Netflix for the streaming part of my subscription. I drop closer to $200 a month to Verizon. How is it that Netflix is alleged to have mountains of cash? For a single month of Verizon I could pre-pay two years of Netflix.

  11. pacman7de

    High-quality non-preferential video treatment network user experience ..

    "high-quality video experience" sounds a lot like "preferential network treatment" to me ..

  12. DerekCurrie

    Comcast Protection Racket

    Now do you understand what Net Neutrality is for, Netflix?

  13. DerekCurrie

    Next Up: The Verizon Protection Racket


    "In an interview with CNBC, Verizon CEO Lowell McAdam noted that he was fairly certain that he would strike a similar deal as Comcast's with Netflix, making the streaming video purveyor pay for bandwidth, at least in part. McAdam called the Netflix deal with Comcast a "good thing," which allows for funding necessary infrastructure maintenance and build-outs."

    1. disk iops

      Re: Next Up: The Verizon Protection Racket

      I'm sure every last-mile operator is salivating at having their cake and eating it too (charging both the provider AND the customer for the same bits). But the telco has to put in faster circuits and more expensive equipment in your neighborhood so those HD streams actually get to you. That costs a LOT more than the gear needed to service the "usual and customary" traffic pattern your neighborhood PoP exhibits the other 20 hours of the day...

      Is there greed in abundance? You bet!

    2. Willy the Jackass

      Re: Next Up: The Verizon Protection Racket

      So...maybe less profits to shareholders and more to infrastructure costs maybe?


  14. James 100

    Private transit/peering

    The big question is how Netflix's fee to Comcast for this arrangement compares with the Level3 fees they were paying to get that transit indirectly - a question none of the parties is likely to answer publicly, of course.

    I'd imagine a lot of Netflix customers are on Comcast - so if this means Netflix can replace a couple of 1 Gbps Level3 transit pipes with 1 Gbps private peering links straight into Comcast for about the same price or less, it's actually quite sensible. That's a big if, of course.

    Settlement-free peering would be better - but since we can be certain Level3 wasn't providing Netflix with settlement-free transit, this may not be such a bad development after all. It also reduces the issue about peak traffic economics: if Comcast would balk at an extra 10 Gbps of peering with Level 3 which would sit idle 18 hours a day, but Netflix can pay a little bit to get a 10 Gbps port on Comcast's core, Netflix customers get better results this way.

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