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Cooper10 12/5/2012 | 4:54:20 PM
re: How Much Is Netflix's Traffic Worth?

Doubtful that there will be explicit charges from an ISP to Netflix or other OTT providers.&nbsp; Eventually, metered usage will effectively create the transfer payment - heavy users of OTT video will pay more to their ISP for consuming a disproportionate amount of network resources, which will factor into the overall consumer value of OTT services.

paolo.franzoi 12/5/2012 | 4:54:20 PM
re: How Much Is Netflix's Traffic Worth?

&nbsp;


Yep - Light Reading uses resources of all the ISPs that it terminates on.


The fundamental challenge is that there is no business relationship.&nbsp; There is a business relationship with the peering partner.&nbsp; That is why I suggest that this become the mechanism for compensation.


Imagine the following:&nbsp; Comcast goes out and asks Netflix for money but not Google.&nbsp; How the heck would it justify that?&nbsp; Cuz Netflix is a paid for service?&nbsp; Well what about iTunes?&nbsp; Amazon?&nbsp; Any retail site? World of Warcraft?&nbsp; Steam?&nbsp; Porn sites?


The peering thing should get to the heart of the issue which is the cost of bandwidth past the first mile.&nbsp; Consumers are already paying for ISP access and then this is being throttled (sort of) via bandwidth caps.&nbsp; I think one can either start charging them for usage - which leads to its own issues or charge people to terminate on the ISPs network.&nbsp; It makes sense to me that this is based around the deltas in the peering arrangement.&nbsp; If you are source x at me and I am sourcing 2x at you then you get money from me.&nbsp; You are getting this money because I am getting paid by the sources of my traffic.


seven


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paolo.franzoi 12/5/2012 | 4:54:19 PM
re: How Much Is Netflix's Traffic Worth?

Cooper1,


I can make an argument that the lack of use of all the bandwidth for HSI is a violation of net neutrality in an extreme sense.&nbsp; I do not agree with the argument but in fact U-verse and cable DOES restrict access to content because it is using viable bandwidth for non-internet services.


seven


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paolo.franzoi 12/5/2012 | 4:54:19 PM
re: How Much Is Netflix's Traffic Worth?

&nbsp;


By the way, I agree that the carriers will try to charge the content providers.&nbsp; I just think this effort will fail.


The baseline of your argument is:


The content providers make money thus they should pay the service providers - BUT only when this is a big cost to the service provider.&nbsp; If it is a small cost it should be ignored.&nbsp; If it is a service that competes with the carrier's service then they should doubly get benefit from charging folks.


I think this path will end up with either structural separation or common carrier regulation.&nbsp; Comcast, AT&amp;T and Verizon all offer Broadband Internet services.&nbsp; If they stop competing services, they first have to go after the VoIP carriers like Vonage and Skype (well heck like Microsoft and Sony as well).&nbsp; If they are going to go after bandwidth intensive services, then they need to go after all video providers not just Netflix.&nbsp; When they do this, they will have to charge themselves the same costs for their competing services that they charge others.&nbsp; If not, they will lose that lawsuit faster than spit (AND that has happened before).


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stelecom1 12/5/2012 | 4:54:18 PM
re: How Much Is Netflix's Traffic Worth?

"large-scale business in which Company A makes its money by using Company B's resources at no cost. Any examples? "

maybe these examples,

consumer electronics manufacturers, appliance makers ---&gt; electric generating and distribution companies
computer hw and sw manuf --&gt; ISP's: telcos, MSO's
pharmaceutical manuf ---&gt; health care providers
auto and truck manufacturers ---&gt; oil and gas industry

the phrase "at no cost" is a bit simple: at no contractually obligated or metered cost might clarify some of the commercial relationship details

shygye75 12/5/2012 | 4:54:18 PM
re: How Much Is Netflix's Traffic Worth?

I think we've just entered The Twilight Zone.

grunt 12/5/2012 | 4:54:17 PM
re: How Much Is Netflix's Traffic Worth?

What about&nbsp;retail (company B). The goods companies (company A) makes money by selling&nbsp;goods using&nbsp;company B&nbsp;"resources", but doesnt pay anything. The&nbsp;retailer pays the&nbsp;goods company - and the consumer pays the retialer. In that analogy the ISPs should pay for access to the sought after content - not the other way around. This is similar to cable TV contracts - Comcast pays for access to content and thus makes their content offering more desirable and thus more likely that consumers will pay the high prices for TV.


In the case of broadband Those "resources" are already paid for by the consumers. I pay $60 a month for those "resources" to work and deliver me unspecified content which is available on the "internet".


Comcast should be happy netflix is on their network, because if it wasn&rsquo;t Id move to DSL.


I concur that a peering arrangement makes good sense. In fact it seems pretty clear a tiered QOS along with a bandwidth exchange (I send you 1x and you send me 2x - add on top of that you sent me 2x high priority high QOS bandwidth etc..)


Id like to see the ISPs stay more focused on making their networks run well for the apps and content we want rather than figuring out how they can make their own apps and content have an advantage over OTT.&nbsp; I understand why they do what they do (simplistically), but I wish we could have clean ISPs and competition for that.


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grunt 12/5/2012 | 4:54:17 PM
re: How Much Is Netflix's Traffic Worth?

What about&nbsp;retail (company B). The goods companies (company A) makes money by selling&nbsp;goods using&nbsp;company B&nbsp;"resources", but doesnt pay anything. The&nbsp;retailer pays the&nbsp;goods company - and the consumer pays the retialer. In that analogy the ISPs should pay for access to the sought after content - not the other way around. This is similar to cable TV contracts - Comcast pays for access to content and thus makes their content offering more desirable and thus more likely that consumers will pay the high prices for TV.


In the case of broadband Those "resources" are already paid for by the consumers. I pay $60 a month for those "resources" to work and deliver me unspecified content which is available on the "internet".


Comcast should be happy netflix is on their network, because if it wasn&rsquo;t Id move to DSL.


I concur that a peering arrangement makes good sense. In fact it seems pretty clear a tiered QOS along with a bandwidth exchange (I send you 1x and you send me 2x - add on top of that you sent me 2x high priority high QOS bandwidth etc..)


Id like to see the ISPs stay more focused on making their networks run well for the apps and content we want rather than figuring out how they can make their own apps and content have an advantage over OTT.&nbsp; I understand why they do what they do (simplistically), but I wish we could have clean ISPs and competition for that.


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paolo.franzoi 12/5/2012 | 4:54:17 PM
re: How Much Is Netflix's Traffic Worth?

Let me preview the conversation....


Cable Co - "So, we have been monitoring the traffic to our subs from your service...."


Netflix - "Cool!&nbsp; I would love to get your view of those demographics."


Cable Co - "Yeah...and it seems you are running a boatload of traffic over our network.&nbsp; We have an offer here to start charging you for this delivery."


Netflix - "Well, I knew this was going to come up someday..."


Cable Co - "Yeah - well sorry but that is what we think we need to do."


Netflix - "So, we built streaming monitors into every element that we support.&nbsp; This allows us to detect if we are being blocked or degraded."


Cable Co - "What?"


Netflix - "Now here I have five documents I have prepared.&nbsp; First, is a notice to the FCC of your net neutrality violation.&nbsp; Second, is a TRO to have you stop the violation.&nbsp; Third, is a full restraining order.&nbsp; Fourth, is a lawsuit for say (and I am spitballing here - smirks) $100B.&nbsp; Fifth, is a petition to the DoJ for your violation of Taft-Hartley.&nbsp; You do recall Standard Oil and the Railroads right?"


Cable Co - "Bu...bu...but!!!!????!!!"


Netflix - "So, just remember we are watching you.&nbsp; Just like you have been watching us.&nbsp; We really don't want to have to get the lawyers involved.&nbsp; I am sure that you don't either.&nbsp; I mean seriously.....$4.99 per MOVIE to rent?&nbsp; Why did you think that this would stand?&nbsp; Why do you think your VoD service never took off while ours did?&nbsp; Anyway, have a nice day you guys!&nbsp; Do you validate parking?"


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unbearable 12/5/2012 | 4:54:16 PM
re: How Much Is Netflix's Traffic Worth?

Nice try.


Cable operators and ISPs will simply cap usage and throttle, universally, while offering up their own local, off-net cache servers for Netflix-like services and telephony, exempt from any Network Neutrality nonsense.


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The sooner we allow Netflix to negotiate delivery rights for its customers, the sooner OTT will take off.&nbsp; The more you try to regulate your way to happiness, the sadder you will become.


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