Netflix Officially Petitions Against Comcast, TWC Merger
Netflix has officially asked the FCC to stop the merger between Comcast and Time Warner Cable.
By now we've all heard of the upcoming merger between Comcast and Time Warner Cable. Many feel that this merger should not happen, and now Netflix has officially filed a petition to the FCC demanding that it not allow Comcast and Time Warner Cable to proceed.
If TWC and Comcast merge, it would create the largest broadband cable provider in the US, controlling about two thirds of the market. Without a doubt, the company would start to look an awful lot like a monopoly, which is against the public's interest, as a company of that size with that much power can be used to abuse its position and its subscribers.
Comcast's defense against this argument is that it doesn't compete with Time Warner Cable anyway, because they do not operate in the same service areas. Of course, that doesn't change the sentiment of a single cable provider controlling two thirds of the cable broadband in the US into a good thing.
Naturally, Netflix likely also has its own reasons for not wanting the merger to go through. In a market where the ISPs are in a position to decide which traffic gets priority network access and which doesn't, the way that a company like Netflix can survive is by having its subscribers spread out over a various number of ISPs throughout the country. Aside from strongly supporting an open Internet via net neutrality, it is therefore certainly not in Netflix's interest to have the majority of its subscribers access its services through a provider that it doesn't get along with very well.
Just a couple of days ago Netflix also agreed to pay Time Warner Cable in order to improve the service to its subscribers over the TWC network. It did the same for AT&T a while back, as well as two other large cable broadband providers.
Netflix does not want to resort to these deals if possible, but for the time being they do appear to be a necessary evil for the time being. If the FCC decides to reclassify broadband access as a telecommunications service, it will disallow ISPs to prioritize certain data packets, which in turn makes it illegal for ISPs to charge content providers like Netflix for equal access to their networks.
So in the public's best interest, there are two decisions that the FCC needs to make: stop the merger, and reclassify broadband access as a telecommunications service. What we're curious about is why it is taking so long for this conclusion to be reached if the majority of the population is wondering why any thought has to be put into this decision at all.
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That makes no difference when individual baby-Bells stay within their respective territories.
Infrastructure is a natural monopoly: any given market can only support two, maybe three economically viable providers. With each provider only raking in 33-50% of possible revenues within an area but each having to eat nearly 100% of the costs regardless of market share, having two physical infrastructures to choose from more than doubles costs.
If you want to drastically lower costs while improving service quality, you need to aim for a fully converged utility model where all service providers go over a shared infrastructure to eliminate massive cost duplication in boilerplate access stuff. Many countries with affordable high-speed broadband use some form of co-owned infrastructure to minimize unnecessary duplication.
Not only this merger should not happen, but major monopolistic companies should be divided.
Not only this merger should not happen, but major monopolistic companies should be divided.
Now please pick your poison. Instead of cash or credit it's Cable or DSL and instead of paper or plastic it's now Charter or AT&T. Welcome to America everyone. Enjoy your sub par internet service.
That makes no difference when individual baby-Bells stay within their respective territories.
Infrastructure is a natural monopoly: any given market can only support two, maybe three economically viable providers. With each provider only raking in 33-50% of possible revenues within an area but each having to eat nearly 100% of the costs regardless of market share, having two physical infrastructures to choose from more than doubles costs.
If you want to drastically lower costs while improving service quality, you need to aim for a fully converged utility model where all service providers go over a shared infrastructure to eliminate massive cost duplication in boilerplate access stuff. Many countries with affordable high-speed broadband use some form of co-owned infrastructure to minimize unnecessary duplication.
That's actually an out and out lie. Comcast is the only ISP operating under the old net neutrality rules due to it's buyout of NBC (the one merger that should have been disallowed) and is monitored by it. That means they did not throttle Netflix.
Netflix has in just a few years gone from a DVD mail service to being responsible for a full third of all internet traffic during prime hours. It's the congestion they caused that have resulted in the slowdown because the peering arrangements can not keep up. Additionally, Netflix isn't being "blackmailed", because they are not paying extra, they merely shifted who they paid to have their content delivered to the ISP from the tier 1 providers. Many also believe this has saved Netflix money and they also can get something from being directly connected to the ISP that they could not get otherwise, a quality of service agreement.
Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.
Niels, the reason the FCC is taking so long to come to such a conclusion is the simple fact that it's against the FCC Chairman's best interest to come to such conclusion. What is good for the cable companies and the cable ISPs, is good for the FCC Chairman. What's good for the consumer, is bad for the FCC Chairman. In the US, it's no longer about doing the right thing, just because it's the right thing to do. It's all about money and unfortunately, he who has the most, wins when it comes to dealing with the government.
Niels, the reason the FCC is taking so long to come to such a conclusion is the simple fact that it's against the FCC Chairman's best interest to come to such conclusion. What is good for the cable companies and the cable ISPs, is good for the FCC Chairman. What's good for the consumer, is bad for the FCC Chairman. In the US, it's no longer about doing the right thing, just because it's the right thing to do. It's all about money and unfortunately, he who has the most, wins when it comes to dealing with the government.
I completely agree that monopolies are a bad thing, however, Comcast buying TWC isn't going to be bad for a single person. TWC wants out. If the merger is not allowed, TWC isn't magically going to decide they want to be in business, they will just let their operations stagnate to the detriment of the consumers they serve until they find a buyer.
There is not one customer that Comcast and TWC has in common. No one can switch from one to the other because they exist in completely different markets. In fact Comcast won't even be able to assume all of TWC customer base because it would go over the 30% cap cable companies have. Some of TWC's areas will go to Charter instead. This also means Comcast can never grow again as they will be at that cap.
The simple truth is, this merger just doesn't matter because local governments never allowed true cable competition to begin with in the late 70's, early 80's when cable was growing. The real merger that should never have been allowed to happen was Comcast's purchase of NBC as that made a content carrier be a content creator as well which put them in a serious conflict of interest.
Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.
How can you blame Netflix for causing the congestion? They provide a service. The consumers are causing the congestion by using the service and I pay my ISP for that access.
You've mentioned that they gain QoS under this deal. QoS can mean so many things, what do you mean by that? What are they now getting that that they weren't getting and more importantly, how is that justified? Who has Netflix circumvented in the new closed door deals and how?
We deal with clients of all of the Big 3 - AT&T (Dallas), ComCast (Philly) and TWC (NYC, other parts of Texas) and sadly, I've had better experiences with TWC and the worst experiences are with ComCast. By far.
Having them - the worst service provider - swallow up the best - it's like HP taking over the superior Compaq Engineering. Gag.
But I have no sympathies for any of these Big 3. I only cheer for the small companies, and conversely, Google Fibre and Verizon FIOS - anything to bring true competition. Or is that true collusion?
The most solid evidence that this is actually not Netflix fault is that they clearly have infrastructure within their servers and LANs to support their content delivery and updating to themselves. Outward of that, Companies like AT&T "swear" they don't throttle Netflix yet, when Netflix PAYS their ransom for "priority" or "fastlane" access... bandwidth availability MAGICALLY increases practically overnight. which also tells you these ISPs have tons of bandwith at the Interconnect and NOC levels and they're just waiting for the Magically correct amount of money being shoved in their face to pull the cork on it. the US is supposed to have masterminded and originally built the backbone of the net yet we're at minimum a 2nd tier country when it comes to bandwidth:cost ratios. If you think that TWC + Comcast does NOT equal a monopoly you need to get your head out of your rear for a change and understand what just because they're not in the same market doesn't mean they don't want those subscribers.
That's actually an out and out lie. Comcast is the only ISP operating under the old net neutrality rules due to it's buyout of NBC (the one merger that should have been disallowed) and is monitored by it. That means they did not throttle Netflix.
Netflix has in just a few years gone from a DVD mail service to being responsible for a full third of all internet traffic during prime hours. It's the congestion they caused that have resulted in the slowdown because the peering arrangements can not keep up. Additionally, Netflix isn't being "blackmailed", because they are not paying extra, they merely shifted who they paid to have their content delivered to the ISP from the tier 1 providers. Many also believe this has saved Netflix money and they also can get something from being directly connected to the ISP that they could not get otherwise, a quality of service agreement.
The service is being paid for, unless you're suggesting TMC and Comcast are non-profit companies and set rates so low as to be unsustainable? Use their profits to expand their network. ISP's has their high profit margins and will not spend capital to give more to customers than minimally acceptable.
Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.
How can you blame Netflix for causing the congestion? They provide a service. The consumers are causing the congestion by using the service and I pay my ISP for that access.
You've mentioned that they gain QoS under this deal. QoS can mean so many things, what do you mean by that? What are they now getting that that they weren't getting and more importantly, how is that justified? Who has Netflix circumvented in the new closed door deals and how?
It may not be Netflix's "fault" per se, however, they don't want to accept any responsibility for the popularity of their service. They want their data carried at no extra charge to them because they are not well off financially. Analysts have already shown how their stock is overvalued and they are already going to have to increase their price because the cost of the content is greater than what they bring in off sub fees.
And yes, you pay your ISP for a level of service, but by saying that you rather show your ignorance about the fact that data from providers runs over SEVERAL networks. When you have a service such as Netflix that is responsible for a full third of internet traffic when just a few years ago they had ZERO internet traffic, that means in a short amount of time their service has added tremendously to the amount of data being accessed at any one time. This is overloading the tier 1 providers such as Cogent and Level 3. Also because only 1 company is responsible for this traffic and that one company, Netflix, isn't in the best of shape financially, it would not be the most intelligent thing for networks to spend hundred of millions, if not billions, in network upgrades in a short amount of time just to benefit Netflix. That's what makes these interconnect deals so good for everyone.
What these interconnect deals mean is that Netflix takes the money they were paying the tier 1's such as Cogent and Level 3 and paying Comcast and AT&T and TWC and Verizon to directly hook up to their data centers. This bypasses the point of congestion that was causing the bad service to begin with and allows it to give you the speeds you pay for. Think of it as a highway bypass. People who are against these deals are essentially saying that they want every network to spend tons of money to upgrade their service just for Netflix's benefit.
And the QoS can be done because by having the ISP directly connected means Netflix can demand that their service be provided to their customers on those ISPs meet a certain level. Say for example that can demand from Comcast that all their 1080p programming be given the bandwidth to all of the Netflix customers on Comcast to be received at that resolution without buffering and such. Netflix can not get this from ISP's they don't have interconnect deals with because an ISP that doesn't have an interconnect deal can not guarantee in what condition that data from Netflix will arrive on the ISP's network in since it has to go over several other networks before it reaches the ISP. Now do you understand?
The most solid evidence that this is actually not Netflix fault is that they clearly have infrastructure within their servers and LANs to support their content delivery and updating to themselves. Outward of that, Companies like AT&T "swear" they don't throttle Netflix yet, when Netflix PAYS their ransom for "priority" or "fastlane" access... bandwidth availability MAGICALLY increases practically overnight. which also tells you these ISPs have tons of bandwith at the Interconnect and NOC levels and they're just waiting for the Magically correct amount of money being shoved in their face to pull the cork on it. the US is supposed to have masterminded and originally built the backbone of the net yet we're at minimum a 2nd tier country when it comes to bandwidth:cost ratios. If you think that TWC + Comcast does NOT equal a monopoly you need to get your head out of your rear for a change and understand what just because they're not in the same market doesn't mean they don't want those subscribers.
It doesn't magically increase overnight. You appear to be one of the ignorant you speak off. When Netflix goes to AT&T and pays them the money they had been paying Cogent of Level 3, AT&T directly connects to Netflix's data centers. This bypasses the bottlenecks that Netflix experiences because of all the traffic they serve out that congests the tier 1 networks.
And for all of Comcast's faults, the simple fact is is that as a result of their merger with NBC they are under all net neutrality rules and are monitored for any throttling. Their agreement with the FCC was outside of the scope of the Supreme Court ruling and is still in force till 2018. If they were actively throttling Netflix, it would be known and they would be in serious trouble.
Your problem is you talk about how good Netflix's network is and how good the ISP's network is, and your right. That is why these interconnect deals fix the problems (except with Verizon as there does seem to be some active throttling go on with Verizon of Netflix). With these interconnect deals Netflix's network is hooked up directly to the ISP's thereby bypassing what was causing the problem. What you don't seem to realize, is when Netflix's data is sent out to an ISP that they don't have an interconnect deal with, that data leaves Netflix's network and travels over several others before getting to the ISP. It is in that "middle" area, typically the tier 1 providers, where the congestion happens. It gets to the ISP in a congested state already and it doesn't matter how good your network is, if the data is coming in slowly to begin with you can't improve it.
And yes, TWC and Comcast are monopolies in their own areas already due to the fact that government made them such. However once this buyout is complete, Comcast can NEVER grow again as they will be at the 30% cap. And for all this monopoly talk, I have never seen one person even offer one example of something specific that would negatively happen with Comcast buying out TWC.
That's actually an out and out lie. Comcast is the only ISP operating under the old net neutrality rules due to it's buyout of NBC (the one merger that should have been disallowed) and is monitored by it. That means they did not throttle Netflix.
Netflix has in just a few years gone from a DVD mail service to being responsible for a full third of all internet traffic during prime hours. It's the congestion they caused that have resulted in the slowdown because the peering arrangements can not keep up. Additionally, Netflix isn't being "blackmailed", because they are not paying extra, they merely shifted who they paid to have their content delivered to the ISP from the tier 1 providers. Many also believe this has saved Netflix money and they also can get something from being directly connected to the ISP that they could not get otherwise, a quality of service agreement.
The service is being paid for, unless you're suggesting TMC and Comcast are non-profit companies and set rates so low as to be unsustainable? Use their profits to expand their network. ISP's has their high profit margins and will not spend capital to give more to customers than minimally acceptable.
Let me ask you this. If you spend the money and buy a brand new AC router which can deliver content wirelessly faster to your wireless devices than an old B router, will that make content that is only delivered to you at 20Mbps come to your router any faster? No, but that is essentially what you are saying that the ISP's can do.
The problem with Netflix isn't at the ISP level. The congestion is happening BEFORE it get's to the ISP's network along the tier 1 providers networks. Nothing Comcast or AT&T or any other ISP can do can fix this. This is why these interconnect deals actually are the fix you are demanding. Netflix is NOT paying any more money than they did before these deals and in fact should very well be SAVING money. All they are doing is changing WHO they are paying. The ISP's are directly connecting to the Netflix data center so it bypasses the areas that cause the problem that is actually out of both Netflix and the ISP's control.
Actualy it is with the ISP. It's been proven again and again that using VPN's or outer means to hide the source of your web traffic from the ISP improves performance of netflix and other services.
ISP's are throttling traffic because they don't want to use there money to buy more tear one bandwidth. They also want people to use there service, that's why they reject the free netflix cache boxes the would improve performance with out buying more bandwidth from a tear one provider.
Actualy it is with the ISP. It's been proven again and again that using VPN's or outer means to hide the source of your web traffic from the ISP improves performance of netflix and other services.
ISP's are throttling traffic because they don't want to use there money to buy more tear one bandwidth. They also want people to use there service, that's why they reject the free netflix cache boxes the would improve performance with out buying more bandwidth from a tear one provider.