Huge ISPs want per-GB payments from Netflix, YouTube
arstechnica.com
arstechnica.com
Why would someone pay for internet from an ISP if not to access these types of services? You think we pay $60/month just to have an IP address? Fundamentally, customers wouldn't pay for broadband if it weren't for these "bandwidth hogging" applications. So who's stealing value here?
If you don't want to peer fine, pay your upstream provider's transit rates. Or better yet cut off service to any webpage that requires more than 100kb to load. I'm sure your customers will be happy to keep paying you for nothing.
"We're trying to have a society over here."
Imagine this for a moment: You just purchased a new microwave and would like to plug it in on your countertop and cook a delicious burrito, but you can't. Why can't you? Because the power company only allows you enough power to run a small coffee maker, or maybe a rice cooker, or maybe a toaster, but none of these things at the same time.
This is the internet, and it is horrible.
Now imagine that General Electric, who makes the microwave, also owns the power company. They have decided that only GE branded appliances will work properly on their power distribution network. You can have a toaster, but if you have a GE microwave, the toaster will only toast things like 10% (because the GE microwave gets priority, you see), and won't work at all for bagels. Now imagine that Westinghouse, who manufactures your toaster, actually pays GE to transmit the power to your house. Would this make you angry?
This is net neutrality.
Howabout this! You purchase 10,000 gallons of water from your city. The city enjoys selling you these gallons, but they decide that you are only allowed to use them in the shower. If you want to use some of those 10,000 gallons in the dishwasher...wellllll, you're going to have to spend an extra $30/mo for the privilege.
This is AT&T, and this is internet on cellphones.
This is insane, and this is stifling innovation.
ISPs and telcos, we're trying to have a society over here, would you please get with the program?
Why is this nonsense tolerated? In the past we've gotten together as a civilization and realized that certain things are important to our continued development. Schools, for instance, were recognized as important because it's important to have an educated population. The interstate system was recognized as a hugely important economic driving force because it allowed people to quickly move around. The rail system was recognized as important because it meant that we could move goods.
Why haven't we gotten together (well, we have, geeks have) and decided that having un-meterd fiber to every home in the United States is an enormously important piece of our future success as an economy?
How awesome would it be if I could build a (albeit crappy [because I don't have generators and flywheels]) datacenter in my house? I want to build $really_cool_app...so I just do it. This is freaking possible. The incremental cost of transmitting bits is almost nothing. Why aren't we making this happen?
By the way, US lawmakers, other countries are making this happen.
Also, the cost of postage does not go down -- their revenues just go up.
Very strange when I got here from South Africa.
For this analogy to make sense, we would all have to pay a fixed amount for electricity and then be entitled to consume as we want. Last time I checked, Comcast (and all other ISPs) offer a range of plans for increasing amounts of money with increasing limits and caps. The ISPs pay gigabyte per gigabyte in their peering arrangements (and yes, some gigabytes cost them more than other gigabytes), why can't they pass that cost onto you?
And, even looking past that, I for one trust monopolistic telecoms such as AT&T, Comcast and Verizon to innovate faster and get better internet into the hands of consumers than the US Government.
I wasn't originally talking about net-neutrality. In my opinion, the bandwidth available to people in the US (as well as the cost) is terrible. My point with the electricity analogy is that I think I should be able to watch streaming HD video in every room in my house and still have enough bandwidth left over for whatever else I can think of.
Simply: data needs to be treated like electricity. It would be absurd if the power company told me I could run a toaster, but not a toaster and a microwave.
ISPs could deliver this sort of thing[1], they just choose not to (because it might not make financial sense).
[1]Could meaning that this is technologically possible.
When we send a package the price consists of 3 things - size, distance, and speed. I think that's a much better way of thinking about bandwidth than electricity is.
Peering agreements can be seen as one UPS taking my package to memphis and then fedex taking it to an area that only they serve. If fedex and UPS have similiar amount of packages going between them then they may decide to not bother charging each other. However, if fedex decides to reduce their territory to only major factories (CDNs) then all of a sudden the amount of packages they're sending over UPS gets out of equilibrium and UPS may decide to charge them for their delivery service.
However, this is not how peering arrangements look between a CDN and an ISP. In that case, the CDN is responsible for the backbone traversal, because the CDN is proxying requests or delivering them from cache, at the local peering point relative to the consumer.
In your example, if you are in boston accessing content with an origin in california, your ISP will receive the data in boston, and will not have to backhaul the traffic from california. The CDN will take care of that.
You're right. You're getting electricity that was produced several million years ago under ground in [probably] West Virginia, then transferred to a station near your house where it was released and made available to you.
But where it is produced is a completely moot point. We're talking about the internet. The difference between sending a .jpg to my neighbor and sending a .jpg to you in Boston is trivial.
This is why we can't have nice things, right here. This is why the internet as we know it is doomed. There has been over the past 50 years a real push where we assume that private industry can solve anything. And now here is an example of someone who would actually go so far as to "trust" an industrial monopoly to continue to act in a competitive fashion. Why would it do that? That's not what monopolies do. They are uncompetitive.
No system is perfect, capitalism included. I know the libertarian brigade around here can have trouble sometimes wrapping their brains around this, but capitalism actually has structural flaws that need to be mitigated. The best way to do that we know of so far is by regulation enforced by a democratically elected government. This is a really simple concept and one that anyone 75 years ago would have intuitively understood. I blame public schooling.
Christ, you would think at least a cursory glance at the history of cable television in the US would convince anyone not to "trust" a monopoly in the communications space, but you can't even count on that. Goodbye, internet.
That gives them power equivalent to levying their own internet taxes on every internet user with almost no accountability.
We've already seen what politicians can do with that and these guys would be even less accountable than them.
Customers pay for a net connection and some amount of bandwidth. What they do with that bandwidth is up to them.
The idea that the servers that customer uses must pay for that bandwidth again is ludicrous.
Netflix / Youtube cost ISPs little compared to BitTorrent.
http://www.neoseeker.com/news/15151-netflix-popularity-excee...
A factor that adds to the impact of the streaming services is their use being more concentrated around the already high traffic peak viewing periods.
It is more than a little absurd that ISPs complain about users actually using what they're paying for. The days of people paying for broadband and using little more than email, chat, and simple web pages are over. And many of those that have consumed video online for some time are now understandably needing more bandwidth for higher quality now.
The situation with mobile is where many will be getting upset. Networks are being billed as fast and offering all sorts of video, but many consumers face plans limiting them to no more data in a month than most could get with low-end home broadband plans in a day. Of course there are good reasons why massive numbers of people can't be heavily consuming video at once on mobile networks, but the providers are not very up front about it.
The majority of immediate BT traffic is downstream too, it just has a very long tail of upstream. It can take months to get a 1:1 ratio on a download that occurred over an hour or less sometimes.
I think providers are just going to have to come to terms with the fact that consumers are demanding good access now instead of the crap they've been getting. We need reasonable speeds up and down, reasonable bandwidth limitations, and reasonably-priced solutions.
Maybe a couple of cities in the US have more than one broadband provider, but most of us only have one choice. If netflix decided to cut off cox communications as well as qwest, I would be SOL.
I count two choices here?
In all honesty, cox was the only choice for me for a long time. I think qwest only started offering DSL in my area very very recently.
Of course, I work seriously weird hours, so....
EDIT: Ouch. My ~4PM-whenever workdays are seriously incompatible with all the public meetings I see on HeatSync's page. Don't they ever have stuff on the weekends?
Companies like: Qwest, Comcast, Cox, Timer-Warner, Verizon, AT&T
In general, all of these big players are playing the same angles. So if the two big players in my area are Qwest and Comcast, and both of them are trying to play hardball with Netflix, then where does the consumer turn when Netflix cuts off access to both of them? Well, both Qwest and Comcast will gladly step up to plate with their own Netflix-like offering that isn't of the same quality, but 'good enough' for most consumers who just can't be bothered to try and seek out a better experience (they would rather just gripe about it, but put up with it). This is the same thing that happened with PVRs and TiVo. Most of the cable companies went to lengths to shut out TiVo and delay things like CableCard 2.0 as much as possible while rolling out their own solutions and pricing them into existing service packages.
So your are really only SOL if you have only one choice. In which case I'd prefer to do without. Except for Netflix, I could do most of my other online activities fairly well over dial-up.
Actually I have a fantasy in which Google becomes an ISP. I'm not sure why it doesn't. It has the cash and the corporate friends, and it certainly could help make its own (YouTube) problems go away by getting into the business of the last mile.
At that point you shop around for the absolute minimum price connection.
At 0.037euros/GB the money involved would be just insane, if i take the numbers from one of the website i manage, at this rate, to serve Italia, France, Germany and Spain, it would cost, at 3.7c/Gb as suggested, 1.3Meuros roughly... Might as well shutdown the site as we would make no money out of it.
Between that, and the Canada CRTC madness, it is really not a good time to be a content provider.
Now, say you're Level 3. You want people to pay you to deliver packets to end-users. In order to convince them to do that, you need to be able to deliver packets to end-users. In order to do that, you need to have a traffic exchange agreement with (say) Comcast, who has the end-users.
That agreement will have some terms. Those terms might be that Level 3 pays Comcast (certainly not), they might be that Comcast pays Level 3 (probably not), or they might be that they exchange traffic for free (most likely). The terms you end up with are determined by the negotiation, which means that it's dependent on who has the most to lose by not exchanging the bits at all. Right now, with those two, either would basically collapse under its own weight without connectivity to the other, so it's probably peering (free traffic exchange).
Now, say you're Comcast. Your end-users are driving a huge relative amount of traffic from (say) Netflix. It's pretty expensive for you to maintain that, and it's eating into your profit margins quite a bit, because it's coming through Level 3 (hence free). You can't convince Level 3 to pay you for it, because if you stopped exchanging traffic, your users wouldn't be able to get to Google, Facebook, Wikipedia, the VPN to the office, and other low-bit, high-value endpoints, and then they would stop paying you. So, how do you make those costs scale?
The simplest solution is just to raise your prices. This would work very well for end-users who want to use Netflix, but your highest margins come from the end-users who basically only use e-mail, a little Facebook, and occasionally look something up on Wikipedia. That is, you get the best margins from people who use the least. They are also the most likely to jump ship (maybe skipping connectivity entirely) when faced with a price increase.
You could adopt metered pricing, where you pay depending on how much you actually use. It's similar to the model back in Ye Olden Days, where you paid per hour of usage, except updated for an always-on world. I think this is where it is ultimately headed, but it is extremely unpalatable to current markets. People like the certainty of a regular monthly bill with a fixed number on it.
Because those options carry severe disadvantages, ISPs are trying to get creative. Fortunately for them, last-mile eyeball ISPs generally don't have the competition that the big networks have. The end user has three choices, if they're lucky: the phone company, the cable company, and Clear. Many only have two, most only have one, and all of them are facing the same choices.
What this means is that they can threaten to cut off (or de-prioritize into the ground) access to Netflix specifically. This is actually a credible threat, because Comcast would keep on going just fine without tying in with Netflix. Their most profitable users don't even use it, and the others would probably lose Netflix anyway if they jumped ship!
This gives them two more options. They can threaten end-users, and ask people who want to use Netflix to pay more. The end-users don't like this, but the most profitable ones weren't using it anyway. This is the last way of drawing on the existing revenue stream.
The other option is to threaten Netflix. This is what they prefer, basically because it's the only way that does not involve upsetting your existing customers. It's also a fairly sensible model: essentially, Netflix is paying (some of the cost of) both ends of the connection and passing the cost on, where previously end-users were paying for their end. This model is sort of like broadcast television: the end-user doesn't actually pay for it; the broadcaster pays for both ends.
The problem is not with the fundamentals of the model, but with the logistics and the precedent. If Netflix is paying at both ends, why not Google? Or Hacker News? Or your blog? What about your VPN to your office? What about when you ssh (or scp a large file) to your computer sitting at home? Who pays if you connect directly to your friend to play a game?
On the logistical side of things, the problem is basically that there are a lot of ISPs. You must verify your bills for all of them, because it would be really easy to commit fraud this way. Netflix might be able to process monthly bills from all of them, but can Bob's video site? Can your blog? You might outsource this processing, but that just pushes the problem up a level, since Level 3 now needs to process (and confirm numbers for) bills for their customers cross all the ISPs in the world.
If you'll forgive me this, the cost of processing bills goes from O(n+m) to O(n*m), where n=number of ISPs and m=number of server-owners. Ask any complexity theorist: that's bad, and in the long run, it will only get worse.
This doesn't sound like double dipping at all. Why should Netflix not be charged more based on how many resources are used? I do at Linode and DreamHost.
I guess the real question is what about other ISPs that Netflix's ISPs connect to? How do they get reimbursed by traffic over their lines, when one of their customers access Netflix? Do peering agreements not accurately work that out?
Their bandwidth charges should be equal to their own costs, plus a little room for profits. A little.
Today, Netflix, tomorrow, everyone.
At the second thought - it is about power and control over Internet. Right now ISPs should accept whatever is dumped into their pipes. They are just common carriers. Given the right to charge content providers for carrying the providers' traffic, they can just pick and choose whose traffic at which price and whether to carry it at all.
Does anyone have a cached version?
Just kidding.
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