Huge ISPs want per-GB payments from Netflix, YouTube

http://arstechnica.com/tech-policy/news/2011/01/huge-isps-want-per-gb-payments-from-netflix-youtube.ars

by abraham • 15 years ago

85 61 15 years ago

arstechnica.com

aspir• 15 years ago

The page is down. Ironic :)

Does anyone have a cached version?

mrkurt• 15 years ago

I sure hope it's not down! Otherwise the Hacker News monitoring system is doing a better job than all of our existing ones.

benologist• 15 years ago

Down for me too.

Just kidding.

bobo99• 15 years ago

This webpage is not available.

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sjs382• 15 years ago

if it's still down for you: http://www.pastie.org/1516308

floppydisk• 15 years ago

It's up now.

fleitz2• 15 years ago

It's a lame argument. Since the advent of Netflix and YouTube most ISPs have increased their connection speed. If it's costing them too much money simply stop increasing the connection speeds. YouTube didn't decide to give everyone 10 Mbps connections, why are the ISPs surprised that now that customers have that speed that their using it.

Netflix / Youtube cost ISPs little compared to BitTorrent.

Dbug• 15 years ago

There have been several studies showing that Netflix bandwidth use has exceeded that of torrent traffic.

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.

cookiecaper2• 15 years ago

As I stated in a comment on another thread yesterday, and in support of a sibling comment, my experience is that Netflix is often twice as much traffic as running BitTorrent all day.

fleitz2• 15 years ago

Netflix doesn't tend to use upstream bandwidth. If you look at bandwidth contention in the last mile it's all upstream. Thankfully, with SYN/ACK prioritization it's become less of an issue.

blhack6• 15 years ago

Copy/pasting this from thingist, but:

"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.

mayank• 15 years ago

If we're on analogies, this is like the USPS deciding in the early 2000s that you have to pay to receive mail as well as to send it. eBay and Amazon have just made it big and resulted in a massive increase in package deliveries, so USPS decides to double-dip and get a slice of the Internet pie.

Also, the cost of postage does not go down -- their revenues just go up.

protomyth• 15 years ago

Yep, except you have to add FedEx, UPS, etc. won't carry your packages because they don't serve your area.

quag• 15 years ago

Before stamps, there were two options: pay someone to deliver the letter or pay when you receive the letter.

tertius• 15 years ago

Sounds like text messages in the U.S.

Very strange when I got here from South Africa.

rottencupcakes• 15 years ago

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.

blhack6• 15 years ago

Read the rest of the post.

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.

count• 15 years ago

Because all of those companies are already paying their ISPs as well (or are big enough to be their own ISP, ala Google). Bandwidth is already paid for in both directions - nobody gets a 'free' pipe as it is today. This is letting one side charge double for no good reason.

bluedanieru• 15 years ago

>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.

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.

absconditus• 15 years ago

Imagine this for a moment: companies producing electricity charge for actual usage.

Natsu4• 15 years ago

I'm not against metered billing. I'm against them charging depending on what I power with that electricity, as it were. Also, everyone already pays for their internet access. They're charging people who aren't even their customers.

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.

VladRussian• 15 years ago

at first thought the fight seems to be about about greedy ISPs wanting to be double-payed.

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.

rfugger• 15 years ago

ISPs will lose this argument, and not because governments will necessarily ban them from charging content providers, but because if they try, the content providers will just cut them off. Users care more about Netflix and Youtube than they do about who provides the pipe to their home, and they'll switch in droves once they can't access Youtube anymore. Content providers are in the position of power here.

blhack6• 15 years ago

This is impossible, I'm sorry.

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.

borism• 15 years ago

most of us only have one choice... decided to cut off cox communications as well as qwest

I count two choices here?

w1ntermute• 15 years ago

This study referenced in the article was commissioned by European ISPs, who face more competition.

sabat• 15 years ago

Me too. Hope: Google's dark fiber, Verizon's fios, WiMax providers.

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.

jhancock• 15 years ago

In many places, there are only 1, sometimes 2 choices for internet. If AT&T or Charter (my 2 choices) wanted to make it hard or more expensive for me to receive Netflix, there would be little as a consumer I could.

wmf2• 15 years ago

Note that Akamai and Level 3 have already given in and paid Comcast. The precedent has been set.

tsotha• 15 years ago

If the ISPs end up losing here it'll be because their customers will decide there's no point in getting a fast connection. Every use you'd put it to is throttled, blocked, or costs too much.

At that point you shop around for the absolute minimum price connection.

Mikushi• 15 years ago

What those European ISP suggest is simply outrageous, those service already pay an insane amount of money to serve their traffic, i don't see a valid reason to double bill them.

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.

zacharycohn• 15 years ago

I would go along with this if there was some provision that required the companies to use the extra $/gigabyte for expanding their infrastructure.

cletus• 15 years ago

Frankly this double-dipping whining coming from ISPs--which is nothing new--annoys the hell out of me.

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.

johngalt• 15 years ago

"freeriding" is a ridiculous concept. How about we call what the ISPs do "middlemanning".

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.

sagarm• 15 years ago

How about "rent-seeking"?

aeontech• 15 years ago

Aren't there laws in place against what amounts to collusion for price-fixing? I thought that the laws of free market should make services cheaper over time, as infrastructure capacity and competition grows... instead, it seems like the competition is shrinking and there is a bare-faced money grab happening.

exit• 15 years ago

so how about data as a public utility? there's no competition up there anyway. why not let the cartel we ostensibly empower handle it instead?

philwelch• 15 years ago

After what happened in Egypt, I wouldn't want to entrust the government (even the city government!) with the responsibility of keeping the internet on; that only enables them to more easily turn it off.

JoachimSchipper• 15 years ago

It's not like Egypt had trouble shutting down its ISPs.

ecounysis• 15 years ago

This sounds reasonable to me.

jschuur2• 15 years ago

What I don't understand is why ISPs are giving their content providing customers fixed rate access. From the article: "In both cases these charges are generally flat fees, not linked with usage..."

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?

wmf2• 15 years ago

The article is confusingly worded: "Most Online Service Providers pay their Connectivity Provider(s) to be connected to the Internet, which is generally based on the bandwidth they require... In both cases these charges are generally flat fees, not linked with usage..." So a content company may pay a "flat fee" per 10 Gbps port, but of course the number of ports they use is proportional to their peak hour traffic, so essentially they are paying per Gbps.

jschuur2• 15 years ago

Well in that case, I find it hard to have sympathy for the ISPs wanting to make even more money.

Their bandwidth charges should be equal to their own costs, plus a little room for profits. A little.

amalcon• 15 years ago

Say you run a server in a datacenter. You pay (for example) Level 3 for connectivity. What you're actually paying Level 3 for is the service of delivering packets to your end-users. If they don't do that, you'll buy your connectivity from someone else. There are plenty of players in the "connectivity to datacenters" market. Well, they're dominated by a dozen or so, and it's a bit of an old boys' club, but at least you have options.

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.

shaggy• 15 years ago

Until the companies that are providing and delivering the content grow spines and tell the big ISPs to shove it, the big ISPs will get their way. Combine that with consumers taking action and canceling their internet service and maybe the poor multi-billion dollar per QUARTER companies will listen.

Natsu4• 15 years ago

This is the exact issue that Net Neutrality was formed to fight (though lobbyists have intervened since then). Nobody except for the people who will profit from it want this.

Today, Netflix, tomorrow, everyone.

Huge ISPs want per-GB payments from Netflix, YouTube

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