Netflix Agrees to Pay Comcast to End Traffic Jam

[shawn703]

Source: Wall Street Journal

Netflix Inc. NFLX -0.63% has agreed to pay Comcast Corp. CMCSA -1.37% to ensure Netflix movies and TV shows stream smoothly to Comcast customers, a landmark agreement that could set a precedent for Netflix's dealings with other broadband providers, people familiar with the situation said.

In exchange for payment, Netflix will get direct access to Comcast's broadband network, the people said. The multiyear deal comes just 10 days after Comcast agreed to buy Time Warner Cable Inc., TWC -0.79% which if approved would establish Comcast as by far the dominant provider of broadband in the U.S., serving 30 million households.

For months Netflix and Comcast have been in a standoff over Netflix's request that Comcast connect to Netflix's video distribution network free of charge. But Comcast wanted to be paid for connecting to Netflix's specialized servers due to the heavy load of traffic Netflix would send into the cable operator's network. Under the deal, Netflix won't be able to place its servers inside Comcast's data centers, which Netflix had wanted. Instead, Comcast will connect to Netflix's servers at data centers operated by other companies.

Netflix Chief Executive Reed Hastings decided to strike the deal after Netflix saw a deterioration in streaming speeds for Comcast subscribers. According to Netflix data published in January, the average speeds of Netflix's prime-time streams to Comcast subscribers had dropped 27% since October. Mr. Hastings didn't want streaming speeds to deteriorate further and become a bigger issue for customers, the people said.

Read more: http://online.wsj.com/news/articles/SB10001424052702304834704579401071892041790

[hlthe2b]

1. Damn... There goes net neutrality.

[awoke_in_2003]

28. Ad Netflix prices will rise. nt

[onenote]

66. Netflix's costs might actually be going down.

They currently pay Cogent as their CDN. Cogent is being overwhelmed by the traffic that Netflix is routing to them. If Cogent expands to meet that need, they're going to up what they charge Netflix. It is widely believed that the reason Netflix made this deal is that in the long run, it actually will save them money.

[okaawhatever]

35. Actually, that's not true in this case. Comcast is under a separate agreement to provide net

neutrality until 2018. That was a concession it made during Comcast's last merger. The contract stated it was valid regardless of the outcome of the court case.

There is one honest issue with internet service providers and companies that provide content like YouTube, Netflix and bitTorrent. In a French legal case w/bitTorrent it was shown that bitTorrent used 50% of available internet capability. YouTube here in the United States was taking up even more. It's difficult for an internet provider to remain neutral when companies are disproportionately using huge sums of their data and creating slowed down service for all their providers. Netflix entered into voluntary agreements to help increase capacity and avoid legal battles.

This is about Netflix having direct access to their servers (I guess to improve streaming ability).

There is a lot to be concerned about with net neutrality, but I don't think what's happening here is the big issue. Like I said, Comcast is locked into their contract with the FCC until 2018. We also have to solve the issues with Netflix & YouTube taking up massive amounts of data without giving the isp's a free pass to ransom the internet.

[Kelvin Mace]

43. Seems to me that the various players

could tap some of the rivers of cash they are paying their CEOs and squirreling away in shady tax havens and IMPROVE their goddamned infrastructure! In South Korea, they pay $20 a month for 100mb/s service, versus $100 a month for 50mb/s service in the US, IF you can find it.

In the US, $20 a month buys you 3mb/s service, unless you are in the sticks where 57kp/s dial up is still the standard.

[okaawhatever]

47. Absolutely. Obama floated the idea of putting up public high speed fiber cable across the United

States. I agree with that. Some cities now have public-private agreements that are similar in nature. What we pay for our crappy service should be criminal. It's time to make some changes, but I doubt wholesale changes will be made until Citizens United is overturned. When the cable companies have billions to buy elections we're at a disadvantage and we pay for it greatly.

[Salviati]

55. That's the thing. It's not their bandwidth. It's mine. I pay comcast every month for it.

The reason Netflix and youtube use massive amounts of data is because people who are paying for internet access are making massive demands of them. But both sides of the transaction are ALREADY paying for their bandwidth. I'm paying for my downloads every month with a check cut to Comcast, and Netflix and Google pay for their uploads, or pay to maintain their own servers with direct access to the internet.

What this is like is if Zipcar was able to monitor wherever people went shopping using their cars which they have rented, and then went to the top destinations and demanded a cut of the money that people spent there. If they won't play ball they'd install devices to mangle the products from said stores when placed in the trunk. It's extortion plain and simple.

[okaawhatever]

56. I agree with you in theory, and am a huge believer in net neutrality, but the issue is a little

different with content providers who use massive amounts of bandwidth vs. those who don't. There have been a few legal cases in other countries but the basic problem was, YouTube was taking up over 50% of all bandwidth for some providers. That forced the ISP's to either start charging customers for their usage, increase their infrastructure to accommodate YouTube and bitTorrent passing along those costs to internet subscribers, or charge those who providers who use much more data than everyone else. I have a problem with limited usage plans because they typically screw people out of money and it's difficult for some consumers to monitor. That leaves allowing YouTube and Netflix to slow everyone's internet down or find a way to charge YouTube and Netflix more.

I don't think it's censorship when allowing someone access causes everyone else problems. I think there needs to be some regulation in how an ISP can charge a provider so there's no profit, only an agreement to keep access equal for everyone else. It's a sticky situation and has to be handled in a way not to maximize profit or allow ISP's the ability to start charging everyone for access, but I think it will be harder for start-ups and non-profits to compete if their service is slow because YouTube and Netflix are combining to take up over 70% of all bandwidth.

Yes, you do pay for bandwidth, and I get that, but why should we all pay more to improve infrastructure so Netflix can get rich and only those who use Netflix benefit? That's the dilemma.

[SwankyXomb]

57. If that's the case then

it appears Comcast is in violation of that agreement. What's our next move, other than to grimace and take it?

[okaawhatever]

58. the FCC investigates claims and I can assure you Netflix will complain. What may be the issue is

lack of bandwidth. There is an honest portion to all this which is that YouTube, Netflix and the like are taking up so much bandwidth that they're slowing down the networks. The key is to deal with that problem honestly without giving up net neutrality.

The real solution is a government project to lay down nationwide fiber networks that Americans can use for free or at low-cost. Unfortunately that will probably never happen. The last time Obama mentioned it the right and their corporate backers were apoplectic. They went so far as to upgrade their usual complaint of socialism to communism.

[onenote]

67. Netflix isn't going to complain

They probably benefit from this agreement in the long run.

[OregonBlue]

2. Netflix Chief Executive Reed Hastings decided to strike the deal after Netflix saw a deterioration

in streaming speeds for Comcast subscribers.

And so it begins.

[SolutionisSolidarity]

3. If Obama's just going to allow this precedent to be set,

then he has totally sold out net neutrality. Not that I'm surprised.

[kristopher]

8. How is that Obama's fault?

Diagnosis: OBS.

[SolutionisSolidarity]

12. His administration is more than capable of having ISPs reclassified as common carriers.

Obama claimed he would be net neutrality's biggest defender. If this deal takes effect, net neutrality is dead. Diagnosis: partisan hack syndrome.

[okaawhatever]

36. You are so quick to jump on Obama you didn't bother to learn anything about net neutrality. Comcast

is under contract with the FCC to provide net neutrality until 2018. This issue isn't about net neutrality. Also, the FCC is currently rewriting net neutrality rules. It's not as simple as reclassifying them as common carriers. Not only have the companies vowed to fight that in court, it opens up too many other issues.

[prairierose]

40. The issue is net neutrality....if the FCC reclassifies ISPs as..

common carriers as they were before that was changed , I think under Powell as FCC chair, they would not be allowed to even threaten to charge someone more for higher traffic like this. And they certainly would not have been allowed to choke Netflix's traffic for the last few months.

This is about the big guys, comcast especially, who want to raise rates and create a tiered internet where businesses have to pay more for bigger websites that get a lot of traffic and customers will have to pay more to access websites. This is the beginning of that.

And again, we will be the idiot clowns of the world. Out internet services are the slowest and ost expensive in the developed world.

But what really bothers me is the incredible ramifications of this. Everyone who has a small business online will be hurt. Every school that is teaching online classes, at whatever level, both public and private, will be hurt. Alternative media online will be hurt by this. If you start thinking about how many areas and people could be harmed by this the list gets very long.

[okaawhatever]

45. Clearly you're unfamiliar with Michael Powell. A bit about him:

The LA Times points out something worth repeating: net neutrality was really killed back in 2002, when the FCC Chairman Michael Powell reclassified cable modem services as “information services” rather than “telecommunications services.” This effectively moved Internet service providers beyond FCC regulation and led to Tuesday’s controversial decision. It created a time bomb that was bound to explode sooner or later. And now it has. Net neutrality is dead and soon ISPs will start deciding what services they will allow to run fast and what they opt to slow down — and how much sites might have to pay to move from the latter category to the former.

And Michael Powell? He is now the President and CEO of NCTA, the top cable industry lobbying organization. The man who handed the cable industry a gift worth potentially tens of billions of dollars as a regulator pivoted into a lucrative industry gig.

And K. Dane Snowden, the Chief of Staff of NCTA? He used to be Chief of the FCC’s Consumer & Governmental Affairs Bureau (CGB) from 2001 – 2005. You know — during the very period when net neutrality was effectively gutted by FCC’s leadership. According to the NCTA website, Snowden used to be “responsible for development and execution of the vision, strategic direction, telecommunications policy, and management of the Bureau’s activities and 300 employees.”

________________________

First of all, Comcast has a net neutrality agreement in place until 2018 so the court ruling hasn't affected it at all. Second, there is a real issue with companies who offer products that take up large amounts of bandwidth. Netflix has voluntarily paid several isp's to improve bandwidth so their service could be used without slowing down all traffic.

Net Neutrality is a real issue. Reclassifying internet providers as common carriers won't solve all the problems and will be fought in court. That would in a court where the scotus hasn't ruled against business profit in a long time. The current FCC chair is rewriting net neutrality rules. Not only is the current FCC chair a net neutrality advocate, he's for decriminalizing the unlocking of cell phones.

To claim that this wouldn't be happening under Powell is a joke. Powell is behind it, and for all we know when he handed the gift that is de-regulation to the ISP's he imagined this happening.

[prairierose]

64. My premise was that Powell was...

responsible for what we are seeing now.

[villager]

48. Exactly. And *this* FCC -- not the previous one -- is allowing it

No sense apologizing for it, though many will try.

[Veilex]

10. Stop... just stop.

Obama is NOT personally responsible for every negative thing that happens within the country. There are copious agencies and groups that deal with the various facets of running the government for a reason: its way too much for one person (or even a handful of people) to handle. This is an FCC issue... if you want to blame anyone, blame the FCC chairman... and before you do that consider that he has already declared he would change the rules surrounding cable to bring back net neutrality. Even the court that struck down the former provisions went out of its way to specify steps that were within the FCC's power to re-establish net neutrality.

This isn't an attack on you... just frustration over the frequent knee-jerk reaction of blaming the president for everything.
He does deserve some blame for some things, but not the overwhelming bulk of what's been attributed to him.
Blame needs to be placed where it belongs. In this case, like I said before, it belongs on the FCC.

[SolutionisSolidarity]

15. Was the FCC chairman not appointed by Obama?

I thought presidents were responsible for their cabinet members. The buck, apparently, doesn't stop anywhere.

[Veilex]

19. So Obama is responsible for every decision the Chairman makes?

The buck stops with the FCC chairman.

The president has other things on his plate.

[Android3.14]

34. Oh the irony

It's not Obama's responsibility because, ...how did you put it?..."The buck stops with the FCC chairman."

[Veilex]

50. Ironic though it may be...

Its no less true.

[NYC Liberal]

22. Wrong. The FCC is not a cabinet department; it is an independent agency.

Its commissioners are appointed by the president and confirmed by the Senate, but the president has no authority to remove a commissioner of an independent agency without very good cause (ie, not because of political disagreements).

[leftyohiolib]

37. preventing the rape of the internet is a good cause

[NYC Liberal]

42. It is. And it's the FCC's job to do that.

[Orrex]

14. Why is Obama delaying the Netflix release of Breaking Bad's final season?

[SolutionisSolidarity]

16. Que?

[Orrex]

17. Queue, actually.

DAMN THAT OBAMA!

[awoke_in_2003]

29. Because he can

[Major Nikon]

53. Obviously because you should be watching House of Cards season 2

[mwooldri]

61. *yawn* ... seen series 3 too.

The BBC version that is. So when House of Cards (US) ends, how will Frank Underwood die?

[Ed Suspicious]

4. extortion

[SoapBox]

7. Super Duper Ditto.

[agent46]

5. Comcast took a page

Comcast took a page right out of the Chris Christie playbook.

[chelsea0011]

6. It was obvious to me that Comcast was slowing down Netflix

I could see the difference in mbs speeds between Amazon and Netflix.

[kristopher]

9. The FCC is preparing to rewrite the net neutrality rules...

...that the courts struck down. The Chair of the Commission affirmed they are committed to the principle and that they definitely have the authority under current legislation.

[Veilex]

11. And the sooner, the better!

[JCMach1]

31. Amazon has always worked better at lower speeds...

probably software related... Comcast is probably targeting both...

[Zorra]

13. Democratic Underground To Shut Down Due To Comcast Refusal To Stream.

Other liberal websites shutting down soon.

Ownership has it's privileges, and that's why we need to regulate ownership of media very strictly.

Is it time for a mass internet blackout protest?

Two day blackout boycott of the internet?

[2naSalit]

27. Heh

I don't have the $$ to pay for my service for March so I guess it won't be impacting me in the same way...



But it will inhibit my ability to look for a job. Catch 22...

[onehandle]

18. So Netflix is preparing to raise rates thanks to the actions of a monopoly.

Time for the Feds to break up Comcast.

[CrispyQ]

20. Who didn't see this coming?

[wilsonbooks]

21. Why would Netflix agree to this before the FCC rules on this?

Do they know something we don't? Is the fix in?

[awoke_in_2003]

30. To try to stay in business...

how long will it take the FCC to actually do something about this, if they even do. Corporations have infiltrated most departments of the government, so I wouldn't bet money on the FCC ruling the way we want them to.

[okaawhatever]

39. This really isn't about net neutrality. Comcast signed an agreement with the FCC to keep net

neutrality until 2018 regardless of the outcome of the court case. There is a genuine issue with providing equal access when companies like Netflix use massive amounts of data. Netflix has voluntarily entered into agreements with other providers to pay for increased infrastructure to keep Netflix streaming at appropriate speeds. In this case, Netflix paid Comcast to provide better service. As the story mentions, Netflix wanted direct access to servers, that isn't about net neutrality but rather about Netflix paying Comcast to keep it's service running smoothly.

There are still issues with net neutrality and the FCC is rewriting the rules, but in this case Comcast is under agreement to keep net neutrality so it didn't affect this agreement.

[pa28]

23. I thought the FCC was planning to re-write the rules to restore net neutrality.

Huh?

[cstanleytech]

44. Last I heard they are going to still try but they cant just say "hey you need to be neutral" as

any rules they pass have to be strong enough to withstand another potential court challenge or its just a waste of time and money.

[progrocktv]

24. Re-write rules, HA that's FUNNY!!!

More like throw out vague "suggestions" for the telcos to play nice, only to turn around and sue the FCC and win, again! Okay Netflix is paying, how about the other streaming services, especially the upstarts?

Welcome to the "You can't pay, you can't play" internet.

[RKP5637]

25. So now Verizon is next? From what I understand Verizon is pulling the same bull shit! n/t

[dipsydoodle]

26. Buy the DVDs or Blu-rays

Problem solved.

[ForgoTheConsequence]

65. Not really.....

Let me pay 20 dollars for a movie I might watch once......


I already pay 80 a month for internet and 15 for netflix.

[AAO]

32. Held hostage again. I'm afraid I'll eventually develop Stockholm syndrome.

[Mustellus]

33. Lets be careful here.... paying for bandwidth is ok.

Political censorship is not.

My landline and cell phones charge for bandwidth. They don't censor what I say and who I say it to.

And thats what we need from ISP's. Charge for your service? Fine. Censor it. No!

[alp227]

38. extortion nt

[Kelvin Mace]

41. Netflix price increase in 3...2...1...

[father founding]

46. Stick them up

The real Americans are being mugged by the foreigners again. You all know what I mean.

[Earth_First]

49. SEE! Less competition in the free market *IS* good for consumers! nt

[d_r]

51. I don't have comcast

And will end paying more for Netflix. Great.

[Cal Carpenter]

52. Yay capitalism

Bye bye net neutrality. Higher profits must be generated one way or another. It's inevitable in capitalism. 'Increased Productivity'. 'Progress'. Ain't it grand?

[cthulu2016]

54. A reasonable resolution to a situation involving complex competing equities

[Matariki]

59. How do other nations handle this? Much better than we do.

http://www.huffingtonpost.com/2013/07/24/us-internet-speed_n_3645927.html

Compared with other tech-savvy nations, Internet service in the U.S. is overpriced and slow. According to a "State of the Internet" report recently put out by content delivery network Akamai, U.S. service is becoming even slower -- relative to that of other countries, at least.

The U.S. now has the ninth-fastest average Internet connection speed in the world, behind South Korea, Japan, Hong Kong, Switzerland, the Netherlands, Latvia, the Czech Republic and Sweden. That's a slip in the rankings: In the last Akamai report, the U.S. was eighth, with faster average connection speeds than Sweden.

[Matariki]

60. FUCK Comcast

[cprise]

62. So WHAT are Comcast subscribers paying for??!

Internet/cable providers are already some of the most profitable businesses in the US. They were scarcely even affected by the economic crisis.

[unhappycamper]

63. ..

http://corporate.comcast.com/news-information/leadership-overview/brian-l-roberts




http://corporate.comcast.com/news-information/leadership-overview/ralph-j-roberts




http://corporate.comcast.com/news-information/leadership-overview/michael-j-angelakis




http://corporate.comcast.com/news-information/leadership-overview/stephen-b-burke




http://corporate.comcast.com/news-information/leadership-overview/david-l-cohen




The rest of the heavy hitters are in this link: http://corporate.comcast.com/news-information/leadership-overview#corporate_executives