When Everyone Wants To Watch 'House Of Cards,' Who Pays?

http://www.npr.org/blogs/money/2014/03/27/295144689/who-pays-when-everyone-wants-to-watch-house-of-cards?utm_medium=facebook&utm_source=npr&utm_campaign=nprnews&utm_content=03272014

by marwei • 12 years ago

31 45 12 years ago

npr.org

collint• 12 years ago

Yikes this article is painfully light on analysis.

kashkhan2• 12 years ago

why should time warner own the last mile? It should be owned by the homeowners.

azurelogic4• 12 years ago

If the homeowner owns the last mile, then they become responsible for maintenance, ensuring they comply with FCC and other regulations, and negotiating terms of interconnection. Obviously, that's out of reach of most of the population, so homeowners don't own the last mile.

supercanuck• 12 years ago

I'm sure there are companies who would provide that service without requiring ownership

nknighthb2• 12 years ago

Homeowners are responsible for maintenance of many things, including things subject to assorted laws and regulations. Indeed, they can be subjected to FCC enforcement action simply for turning on an common store-bought electrical device, such as a fan or TV.

kashkhan2• 12 years ago

how often is the last mile maintained? Once established there's usually not much need fro maintenance until it is replaced. Coax cables and fibers have little use for maintenance.

Homeowners can comply with the FCC just as easily as the corporations. We won't make the stuff, only install it.

It's not out of reach. In many poor countries the last mile is done by small companies that string coax wires on existing utility poles (also paid for by the homeowners through the electricity installation charges) which are often just 1-2 guys. Coax cable or fibre costs less than $1 per foot in bulk.

eck• 12 years ago

This concept is often referred to as "homes with tails". The idea is that if everyone controlled a line from their house to a central facility (kind of like a small meet-me room) then at those facilities there could be significant competition that would drive down prices.

http://googlepublicpolicy.blogspot.com/2008/11/homes-with-ta...

Lockyy• 12 years ago

I had always assumed that when I paid an ISP for an internet connection that payment was so that I could send and receive packets across their network. Clearly I was wrong.

kapitalx• 12 years ago

I guess I can now stop paying my ISP since netflix will be footing the bill.

azurelogic4• 12 years ago

This is exactly why I agree that this whole mess is a load of crap. Net neutrality should be a given. If I'm paying for a service, then it should be up to me how I use it, and the entity that I am paying should not have the right to arbitrarily alter my traffic. I mean, if you send a letter to someone popular, that doesn't give the USPS the right to delay your letter. The same should go for ISPs.

waps2• 12 years ago

And what happens if everyone wants to use the same pipe ? Who pays for expanding that pipe ? Because that's the real question.

I mean, if you send a letter to someone popular, that doesn't give the USPS the right to delay your letter. The same should go for ISPs.

Of course the question is the reverse. If someone wants a letter to be sent to virtually everyone in America, that person certainly pays by the letter. Currently that's not what's happening in ISPs, currently sending is free, provided you "deliver it to the post office" (carrier hotel). The companies make their profit by charging rent for having a mailbox and delivering mail for free to those mailboxes. They want to change that.

ShabbyDoo• 12 years ago

I've always seen local governments as the root cause of "last mile" providers' ability to turn their customers into the product. Why haven't elected officials made more stringent demands upon the companies given monopoly (or at best duopoly) rights to convey bits to and from my home?

I have a condo in Chicago and was delighted to learn that a company was offering our building last mile connectivity via microwave along with SLAs for not only bandwidth but latency as well (to which point I don't recall)! Sadly, the condo board didn't seem so enthralled. Unlike the suburbs, city folk have more options apparently.

jedbrown• 12 years ago

A friend of mine lives in a large apartment building next to the Loop in Chicago. The building was unable to negotiate a competitive plan so they went with satellite. Clearly the local market has failed when satellite offers a better package.

knodi123• 12 years ago

With regards to netflix, it's not always the last mile that's the problem.

Specifically, Netflix's ISP has an agreement with your ISP, which says essentially "You know what? We send and receive a lot of data. How about I won't charge you for your data travelling across my network, and you don't charge me for my data on your network." But then Netflix's ISP transmits enormous amounts of bandwidth, and your ISP doesn't really get to take an equal advantage of that reciprocal deal.

It's actually about peering agreements between ISPs. Your ISP wants Netflix's ISP to foot the bill for the fact that their reciprocal agreement is statistically just one-sided.

dm2• 12 years ago

The customers of the ISPs are the ones who obtain value and demand fast delivery of Netflix. The bandwidth from Netflix is something that can't really be avoided so it is advantageous for both the ISP and Netflix for the ISPs for cache the content and use Netflix's Open Connect CDN or whatever it's called.

The the ISPs don't deliver and throttle Netflix's bandwidth and it's noticeable to the customer then hopefully the customer has the option of going to another ISP.

techsupporter• 12 years ago

In my experience, nothing stops a facilities provider from serving whomever they like. Video franchises--which don't apply to data service in most states--are almost always non-exclusive. For example, in Seattle, the dominant provider (Comcast) has a franchise that specifically says it is not the sole property of Comcast. Another company, Wave Broadband, also has a franchise to serve the city but only serves specific portions of it. Meanwhile, companies like Condo Internet are free to provide gigabit service to whomever they like, so they serve only the buildings that are the most profitable.

The biggest problem is that last-mile is a very, very, very expensive proposition. Ask Verizon. Their former CEO, Ivan Seidenberg, learned that the hard way. Digging up streets, attaching to poles, and plopping down equipment all costs a lot of money. It also, in the case of cabinet-sized telco equipment, can really irk the neighbors.

Ultimately, if we want real competition for more than just high-end condominiums, we need to start treating physical plant connections like roads, power lines, and water pipes: a central, neutral authority builds them for the benefit of a specific geographical area and then all comers are allowed to use them. (No, HOAs, building your own coax network and then having some cut-rate third-tier ISP become the exclusive owner of those wires doesn't count. That's not competition, either.)

LanceH• 12 years ago

I would like to see someone do a traceroute and explain the hops, who is paying at each step, which steps are in dispute, etc...

doesnt_know• 12 years ago

Ugh, is this even a question anywhere except in the US? The ISP should be paying for it because that is literally the service they are suppose to be providing, it's the reason consumers are giving them money.

In what other industry can you accept payment for a service and then try to make a legitimate claim that you then don't have to provide that service or maintain the infrastructure you are selling? It's fucking nuts.

When the so called "free market" fails and you have monopolies in place that are so anti-competitive and anti-consumer, then maybe it's time to go looking for another solution.

Perhaps this is the situation when it's time to look for some sort of state or government regulation. Or maybe it's the exact opposite. Perhaps these companies are in control of tight regulatory procedures that it prevents competition. I'm not overly familiar with the current system in place in the US, but whatever the current situation is, you really need to start demanding the exact opposite.

danjayh• 12 years ago

It's really even worse than that - not just the consumer is paying, but netflex, etc. also buy bandwidth from their ISP. Comcast is refusing to allow an adequate interconnection between the the content providers' ISPs to the comcast network unless they pay a ransom.

adamnemecek2• 12 years ago

Not to mention the fact that the ISPs got $200 billion from the gov't in order to provide said infrastructure.

http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_0026...

baddox2• 12 years ago

When the so called "free market" fails

Anyone who blames US Internet issues (or pretty much any other issue in the US) should just go and try to start a competing business and see what happens. I think you'd find that "free" is one of the last words you'd use to describe the industry.

chrisyeah• 12 years ago

Presently there is also a huge debate (with political discussions and petitions) about net neutrality in Germany and other European countries (mainly EU).

In 2013 there was a petition [1] to try to bind the internet providers to net neutrality.

[1] https://epetitionen.bundestag.de/petitionen/_2013/_04/_23/Pe... (German)

NautilusWave3• 12 years ago

If Netflix is using Amazon Web Services to run its streaming operations, then how did Netflix even get involved in this bandwidth issue? Isn't that included in the bill they pay to Amazon?

pktgen• 12 years ago

They don't use Amazon for streaming videos.

NautilusWave3• 12 years ago

I think they do: http://aws.amazon.com/solutions/case-studies/netflix/

drawkbox2• 12 years ago

"This is why there are fights right now between Netflix and Internet service providers. The fight comes down to this: Who's going to pay to keep the videos running smoothly? Will it be Netflix, which is sending all the data? Or companies like Time Warner, whose customers, like Rachel, are demanding it?"

Rachel pays Time Warner for her broadband connection to get her data from anywhere on the internet, as was sold to her by Time Warner which is the current day technology that is expected of broadband network access. Time Warner built their network upon receiving many tax breaks for their prime market position.

Rachel pays Netflix for the content that comes through the network.

The system is correctly setup except one minor flaw, if Time Warner doesn't want to pay for it then a competitor can't offer the same service or get the same funding and breaks they did to compete.

The broadband companies are lethargic dinosaurs, hopefully network access will go right over their heads (even if by Zuckerberg drones), when wires aren't needed we can release them.

houseofshards• 12 years ago

WTF ?? This argument is so ridiculous. "ISP" stands for Internet Service Provider as in, an entity that provides an internet service (and maintains the necessary infrastructure). That is why people pay them.

al2o3cr• 12 years ago

Who pays? The same person who pays for the food to go the "last mile" from the restaurant kitchen to the table - THE CUSTOMER...

The ISPs appear to be confused about who it is that's paying them for a pipe. I'll offer them a hint: it's the people you send those rate increase notices to every 12 months.

johnvschmitt• 12 years ago

This is just ridiculous on so many levels.

So, should we start debating whether UPS should pay for roads directly in each city?

Are our roads going to start being "content aware" & extorting delivery service vendors?

jeffdavis• 12 years ago

I wonder what would happen if netflix called their bluff?

People all of a sudden start to notice that House Of Cards plays more smoothly over their 4G cell connection than their expensive cable connection, and how does Time Warner explain that?

simoncion• 12 years ago

People all of a sudden start to notice that House Of Cards plays more smoothly over their 4G cell connection...

That's not too likely. Most folks (unless their vaguely-savvy 4G-connection-having not-afraid-to-tether friends clue them in) will decide that Netflix sucks and stop right there.

As a datapoint, look at Obamacare. Alabama rejected any and all Federal premium assistance subsidies. This means that in Alabama, regardless of your ability to pay, or employment status, you pay full price. In California, low-income folks get reduced or totally subsidized premiums. The talk in Alabama is not about the insurance is gobs cheaper for poor people in California, it's about how Obamacare has made insurance so goddamn expensive for everyone.

People are soulcrushingly incurious.

EpicEng• 12 years ago

Who's going to pay to keep the videos running smoothly?

...Me? Do I not pay for my internet service? Are ISP's not subsidized to build infrastructure by my tax dollars? Is my ISP running at a deficit? Yes, yes, and no, I don't believe so. I pay Netflix for the content, I pay my ISP to deliver it.

qq66• 12 years ago

The problem here is that a framework built in one environment (settlement-free peering) has a lot of problems as the underlying environment has changed.

Let's say everyone in the United States had a second mailbox, and each mailbox is owned by FedEx, UPS, or DHL. To ship a package, you leave it in your box, it's picked up by your carrier, transferred to the recipient's carrier, who then delivers it to their box. Only the sender is billed, and this shipment fee includes whatever your carrier will have to pay to your recipient's carrier to complete delivery.

When these mailboxes are built, most people in the country are shipping as many boxes as they receive, and the number of packages sent by and received by customers of each carrier are roughly the same (let's say a total of 15,000 per day). So FedEx, UPS, and DHL, to avoid having to track every single package, just decide to "call it a wash" and deliver each other's boxes for free, under the assumption that nobody's really getting the upper hand.

Fast forward twenty years, and Jeff Bezos has built Amazon.com at his house. His house is a UPS house, so UPS picks up 15 million boxes from him every morning, and hands over 10 million of them to FedEx and DHL for delivery. FedEx and DHL are billing their customers for 15,000 boxes but also have to deliver Bezos' 10 million boxes.

You can imagine that they'd want to revisit their original agreement to "call it a wash" and start billing by the actual package.

ASneakyFox• 12 years ago

I thought this was covered in my internet bill. You know network communication... if that was supposed to be free all this time some one let me know because then Ive got to call the police because some one has been scamming me out of 50 bux every month for the past 2 decades. I suspect there are more victims.

When Everyone Wants To Watch 'House Of Cards,' Who Pays?

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