As telecom industry evolves, success of Netflix is its biggest threat | Hacker News Reader

As telecom industry evolves, success of Netflix is its biggest threat

washingtonpost.com

14 pointskerben7 comments

"Netflix threatens the telecom industry" is true in more ways than one. It's true in the traditional sense of threatening profits and business models. It's also, unfortunately, true in the sense of indirectly threatening the quality of service telecom customers can expect to receive in the future.

As long as internet providers and content providers are one and the same, they will do everything in their power to control the way content is distributed online. If they can't control it, they would rather cripple their internet service to the point of uselessness instead of allowing it to hurt their content business. It's pretty likely this will end up badly for consumers.

The recent scandal in Canada over usage-based billing [1] is the latest shot in this battle. Luckily telecoms got greedy with talks of 25GB caps, $1/GB, etc., and pissed off enough people to make a lot of noise about it, but I'm not optimistic about where the industry is heading. The article hints that we'll start seeing the same thing in the US. And although it's usually not spelled out in the press coverage, Netflix is very much a central reason for this battle.

[1] http://www.cbc.ca/news/politics/story/2011/03/01/clement-tal...

I went to the link to check that this title was actually the given title of the article.

Really?

Netflix uses at peak, 20% of the bandwidth at certain hours of the day, which is itself an elastic resource (that is, most connections can burst to a much higher level of bandwidth well beyond the average or median Mbps).

What this is really about is that Netflix exposes the liars who have been claiming to sell you "unlimited" bandwidth for a set monthly price - as soon as you start using more than 5% of the DSL or cable capacity, they scream and whine and moan.

If, like Comcast, they also provide content that Netflix competes with, they scream and whine and moan even louder.

"There is no such thing as free TV or a free lunch," said Kyle McSlarrow, president of the National Cable and Telecommunications Association, a cable trade group. "It's expensive to run a broadband network, and I wanted to make sure my companies were able to experiment with new business models."

Running a broadband network is expensive, but telecom's charge subscription fees to pay for that. If they are subsidizing their internet with their cable profits, then that's obviously not long-term sustainable. If they aren't, then this statement is BS.

I'm skeptical that it was Netflix that killed Blockbuster. The Blockbuster a couple of blocks from my house closed about a year ago, depriving the neighborhood of an important outlet of fancy imported foods such as A-1 Steak Sauce and Top Ramen. According to the graffiti, it stiffed its employees on their last paychecks. But as far as I know, Netflix doesn't provide service anywhere in the country.

If you want to watch the kind of videos Blockbuster would carry, though, you can cross the street and walk half a block to the DVD guy and buy a DVD for, I'm guessing, about the same price as a Blockbuster rental. He has a pretty good selection laid out on the sidewalk there.

Basically, Blockbuster's video business (as distinct from its Yanqui snack business) consisted of allocating their scarce shelf space to supply the needs of the local movie-watchers. But hard disks are a much more efficient way to maintain a stock of movies than shelf space.

Article has it exactly backwards.

"In January, Netflix responded by hiring its first Washington lobbyist..." Oh my. Vaya con dios Lone Ranger.

"how's the music business doing these days?" - this aside seems rather ridiculous. the business of music is more vibrant than it has been in decades, precisely thanks to the internet. it just isn't paying a 99% tax to middle men anymore.

seems the nasty entanglement of "content" and "telecom" companies is the problem, not netflix.

The spread of broadband Internet service led to the rise of online movie-watching. And this is where it gets messy.

Some much of the fight here is around how one "languages", how one frames, the fight.

One interpretation is "as competition appears, old monopolies panic and try to put toll booths on the super highway".

But that frame doesn't serve those old monopolies well.

To the Post's sort-of credit their language is sort-of neutral.

I suppose the only problem is I'm not neutral. I want to see the old, parasitic, rent-seeking monopolies go down in flames. The ideal way would be an alternative broadband supplier - maybe the new WiMax suppliers could use a chair and whip to push Comcast and company into the infrastructure supplier niche. Maybe some entirely information distribution technology will appear and really side-line these trolls under the bridge to the future.

Well, I can only hope at this point...

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