Comcast and Netflix continue to clash over the idea of an open Internet. Netflix published a blog post accusing Comcast of double-dipping by charging both companies and consumers for the networks that deliver online content. Now Comcast is arguing that Netflix hasn’t been honest about its own practices and is accusing the company of slowing its own video streams.
Here’s how Netflix’s vice president of content delivery, Ken Florance, explains the issue:
Comcast does not carry Netflix traffic over long distances. Netflix is itself shouldering the costs and performing the transport function for which it used to pay transit providers. Netflix connects to Comcast in locations all over the U.S., and has offered to connect in as many locations as Comcast desires. So Netflix is moving Netflix content long distances, not Comcast.
In sum, Comcast is not charging Netflix for transit service. It is charging Netflix for access to its subscribers. Comcast also charges its subscribers for access to Internet content providers like Netflix. In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other.
That argument is straightforward. Netflix is saying that consumers pay for Comcast service (true) and that it is now paying Comcast too (also true) and equating that to double-dipping. That’s an argument that most consumers can understand without too much effort.
Comcast’s argument is much stranger. The company effectively argues that Netflix slowed its own video streams before striking the deal announced earlier this year. It also accuses Netflix of trying to make all Internet users shoulder its costs of doing business right before it claims that “no ISP in the country has been a stronger supporter of the Open Internet than Comcast.”
The claim that Netflix deliberately slowed its own video streams is the most controversial. But the argument isn’t that Netflix flipped a switch and made its videos load slower for Comcast’s customers, it’s that the interconnection agreement Netflix had with another company couldn’t handle the company’s high demands. Comcast is equating deliberate sabotage with an attempt to work within the current infrastructure by dealing with a smaller company instead of an ISP.
Comcast then argues that Netflix is simply trying to make all Internet users pay for the cost of improving Internet infrastructure instead of simply passing those costs along to its customers. The company cites an argument made by AT&T to make its case. As AT&T wrote on Monday:
Mr. Hastings blog post then really comes down to which consumers should pay for the additional bandwidth being delivered to Netflix’s customers. In the current structure, the increased cost of building that capacity is ultimately borne by Netflix subscribers. It is a cost of doing business that gets incorporated into Netflix’s subscription rate. In Netflix’s view, that’s unfair. In its view, those additional costs, caused by Netflix’s increasing subscriber counts and service usage, should be borne by all broadband subscribers – not just those who sign up for and use Netflix service.
AT&T then notes that the cost of delivering DVDs through the mail is included in Netflix’s fees. But that metaphor is tenuous, because online delivery is nothing like the postal system. It’s not about making a delivery between two parties; it’s about using a digital network to deliver information from a wide variety of people and companies using shared resources. And mail delivery companies aren’t responsible for the roads on which their trucks make deliveries.
So the comparison doesn’t make sense in the context of how the Internet is supposed to work. The problem isn’t improving Internet infrastructure for Netflix customers — it’s improving the infrastructure for everyone, regardless of whether they use Netflix or not. It just so happens that Netflix’s service shows the need for better Internet connections more than other sites.
Then there’s this gem from the AT&T blog post:
As we all know, there is no free lunch, and there’s also no cost-free delivery of streaming movies. Someone has to pay that cost. Mr. Hastings’ arrogant proposition is that everyone else should pay but Netflix. That may be a nice deal if he can get it. But it’s not how the Internet, or telecommunication for that matter, has ever worked.
It’s interesting that AT&T doesn’t think that there’s such thing as a free lunch, because according to Netflix, that’s exactly what it’s providing through its deal with Comcast. It’s shouldering the costs for delivering its content directly to Comcast’s network, it’s paying for the privilege to do so, and it’s getting a speed increase that makes Comcast look better. I’m no expert in trading the idea of the free Internet for revenues (or free meals) but it seems to me that Netflix is giving Comcast exactly the thing that AT&T is arguing it shouldn’t have itself.
So Comcast’s argument is that Netflix was deliberately slowing its own video deliveries by using an interconnection company that couldn’t handle all of the traffic. Then it says that Netflix should have to pay for the costs of improving Internet infrastructure… even though Comcast itself isn’t changing anything but the way Netflix accesses its network.
And then it argues that deals like the one it made with Netflix “have not harmed consumers or increased costs for content providers – if anything, they have decreased the costs those providers would have paid to others.” Note the language there: it isn’t saying that those deals lowered costs for content providers, just that it lowered the costs they “would have paid to others.” That’s a nifty little trick that makes Comcast’s greediness seem like altruism.
But hey, at least Comcast was nice enough to end its post with a joke:
No ISP in the country has been a stronger supporter of the Open Internet than Comcast – and we remain committed both to providing our customers with a free and open Internet and to supporting appropriate FCC rules to ensure that consumers’ access to the Internet is protected in a legally enforceable way.