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Prepare for Ultimate Screwage

02 Dec
Picture of a Comcast service vehicle taken in ...

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Recently an entry was posted on The Consumerist in regards to Comcast double-dipping in regards to charging for the bandwidth used by its customers. This wouldn’t be the first time hearing about Comcast doing things like this, and it certainly won’t be the last. Additionally, Comcast isn’t the only provider you’ll hear about. But I’ve heard enough regarding Comcast to convince me to pick on them today.

I don’t have cable, never have, and most likely never will. I feel Comcast (and the handful of other content providers) charge entirely too much for the crappy content they provide. But I do have internet running into my home, and hearing about things like this disturbs me.

Allow me to summarize The Consumerist’s post.

As many of you may know, Netflix offers an instant viewing service. As part of your monthly subscription you get unlimited access to hundreds of thousands of movies and television shows which you can watch anytime you wish. It’s a great service that offers a great deal of additional choices when it comes to finding something to watch. This instant service relies on the internet to get the content to your home. Recently Netflix changed the provider that hosts and serves up their instant watch service to a company called Level 3. This provider also controls a major backbone of the internet and is responsible for the transmission of a great deal of bandwidth. Prior to Level 3 taking on the Netflix service, their agreement with Comcast was symbiotic. Since Comcast controls a rather large network of internet users it was assumed that the bandwidth traversing either provider’s networks would be balanced, they agreed then, that they would both allow this traffic in either direction without charging the other.
Fast forward to Level 3 acquiring the contract to host Netflix’s instant service. Comcast claims that the traffic entering their networks from Level 3, due to the Netflix service, has nearly doubled. Due to this they are now “forced” to charge Level 3 a fee to offset this increased bandwidth and the costs associated with building up their infrastructure to support it. Level 3 is upset, understandably, as they were attempting to compete with Netflix’s previous instant provider and this increases their costs. Shortly before this news broke Netflix had notified its customers that they were increasing their subscription prices, only marginally, as little as a dollar more per month. Whether or not these two events are related remains to be seen.

If you happened to read the Consumerist version of the story you noticed that the tone was from a consumer’s point of view. If you read the version from CNN, you’ll see its a little more unbiased and tells it from the point of view of both companies.

Now I understand that the bandwidth usage caused by Netflix’s streaming service has gone up, I’m not even going to argue with that. But if Comcast is charging Level 3  a higher (as in more than zero) fee because of it, what are its internet service customers paying for. It was my understanding that by paying for their internet service (which isn’t cheap to begin with) you were not just paying for them to get the signal to your door but also for the bandwidth that you would be using. This becomes more of a WTF moment when you take into account that they impose a bandwidth cap, per month, of 250GB. Now this seems like a lot, and it is, and I’m sure very few every hit or exceed that cap. But by imposing this cap it also implies that you’re paying for a monthly allowance of bandwidth. Well if I’m paying for this bandwidth and Netflix is streaming this content to me, why the heck do you need to double-dip by charging the network that provides it as well. If that’s the way it’s going to work give me your internet service for free.

This isn’t the first time this has happened either. In fact, at one point in the past, Level 3 was in Comcast’s shoes and up against another backbone provider Cogent Communications. Cogent was pushing far more data to Level 3 than Level 3 was pushing to Cogent. Level 3 brought up the same complaints that Comcast is making today. At one point Level 3 even resorted to cutting off Cogent’s network. In doing so they made portions of the internet completely inaccessible to some users. How about that, the consumer, getting screwed over because of some petty argument between companies. So Comcast isn’t alone and Level 3 is a little hypocritical as it’s been in the same situation. Regardless, this ultimately ends up harming the consumer.

Think about this, Comcast not only provides internet services to millions of customers but also cable television. On that cable television service they provide much of the same content that can be acquired, for much cheaper I might add, using Netflix’s service. Now you’ve got a situation where a customer’s money isn’t all coming to you, some of it is going to a provider offering much of the same content that you provide. And to top it all of they’re feeding that content to your customers using your network. All Comcast has to do at this point, seeing that a large number of cable subscribers are jumping ship and just using their internet service to get the content they want, is say, “Hey, you’re bogging down our network with your content. This will cost us more to upgrade our infrastructure to support it, pay up or we’ll cut you off.” The provider then has to either pay up or risk losing a large chunk of its customer base. This all comes back to the consumer as an increased price for the content or internet service or both.

Couple this with the increased usage of Hulu and the numerous other sites that now offer free or very inexpensive streaming of ala carte content. And you can see where this becomes a conflict of interest. Comcast, and the handful of other cable/internet providers, have two main revenue streams, they make a great deal of money on both. Unfortunately, many consumers feel as they are being taken advantage of with their television costs (and I would agree with them) and see the internet options as the more economical choice. Suddenly you’ve got a great deal of one of your revenue streams being diminished by services that utilize your other revenue stream. What do you do? And where do you draw the line of punishing your customers by cutting off access to these services.

This is where Net Neutrality becomes very important. Net neutrality needs to be taken very seriously and implemented as soon as possible to prevent situations like this. If networks want to fight about fees, they can, but they cannot punish their customers or the opposing company’s customers in the process. By implementing a Net neutrality policy, fines could be assessed for companies that engage in this type of behavior. I’m don’t necessarily agree or disagree with Level 3 or Comcast in this manner. However, something needs to be done to prevent these disagreements from spilling over and becoming the consumer’s burden. Furthermore, someone needs to be taking a closer look at the service providers and making sure they are treating their customers and their peers fairly.

Unless you’ve been living under a rock this past year you may have heard that Comcast and NBC/Universal were looking at a possible merger. I won’t go into details about it or what it could mean for the internet and content providers. But let’s just say that it’s a whole bushel of bad news for the consumers. This article on NPR sums it up pretty nicely.

Something will need to be done, I don’t know specifically what it is, but I hope its done before it’s too late.


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6 Comments

Posted by on December 2, 2010 in General

 

6 responses to “Prepare for Ultimate Screwage

  1. Eileen

    December 3, 2010 at 1:51 PM

    I’m so pleased that Nick and Pat finally have a forum for their many opinions!
    😉

     
    • nick2600

      December 3, 2010 at 2:24 PM

      Although, if it ends up just being Pat and I it’ll end up looking like the old goats hanging out at Hardee’s near Georgetown (Rest In Peace Hardee’s) rambling about politics…all…day…long!

       
  2. Pat Reagin

    December 2, 2010 at 10:45 PM

    You make a few good points here. It’s too bad you had to mention net neutrality.

    The internet is not free. Telecom companies have invested billions in the internet infrastructure and they have a right to profit from it. As you demonstrate in the way you live your life, the same right you have to buy a service is the right you have to not buy the service. If you don’t need it or can’t afford it, don’t buy it. It’s not like health insurance, noone is telling you that you have to buy it.

    In short, we need some regulation to keep corporations from becoming too big and powerful and to keep them from doing harm to the public. BUT too much regulation hurts everyone. And, yes we can have it both ways. We can have it both ways because we live in a society governed by a Constitution.

    This article http://oneminute.rationalmind.net/net-neutrality/ quickly summarizes the argument against net neutrality and it links to some other good info as well.

     
    • nick2600

      December 3, 2010 at 8:39 AM

      I never said that they didn’t have a right to profit, just the opposite. I fully realize the investment and commitment required from these various providers to provide us all with fast and reliable internet connections. Furthermore, I fully expect to pay for it to, like you said, it’s a service and one that I don’t have to have to survive.

      However, I do have a problem with a provider taking advantage of their position. As a paying customer I expect to be able to access any and all services that are officially considered, part of the internet (since that’s what I’m paying for). If a provider decides to cut off a competing network or a particular service that competes with one of their revenue streams that’s a problem. I do agree with you, too much regulation is not good and just stifles innovation. But, like you said, something needs to be done as the consumers are ultimately the ones that either are inconvenienced or pay more because of fights just like this.

      I read the article you linked to about net neutrality and while it was very interesting and provided a lot of information it’s extremely outdated, it was written in July of 2007. What the article covers may have been what the FCC was considering at that time. But on December 1st the FCC Chairman gave a speech that outlined the FCC’s current standing on net neutrality and what they’ll be voting on near the end of the month. The regulation they are seeking aims to prevent stand-offs just like this one while at the same time giving providers permission to alter the way they charge for their services. I’m writing a blog post regarding this speech and should be publishing that tonight.

       

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