Netflix Says It'll Be Fine Without Net Neutrality Rules; But What About The Next Netflix?

from the different-scenarios dept

Thu, Jan 23rd 2014 2:47pm — Mike Masnick

A few folks are covering the news that Netflix has talked about the recent ruling tossing out the FCC's net neutrality rules, saying in a letter to investors that it's really no big deal. The key message is, basically, that Netflix will be watching closely to see if anyone violates net neutrality, either by seeking payment for preferential treatment or degrading other traffic, and will then alert its millions of members to scream loudly about how so-and-so broadband provider is a jerk:

Unfortunately, Verizon successfully challenged the U.S. net neutrality rules. In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide. The motivation could be to get Netflix to pay fees to stop this degradation. Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.

The most likely case, however, is that ISPs will avoid this consumer-unfriendly path of discrimination. ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize government action.

There is, in fact, something to this. And it's part of the reason why we were nervous about the FCC's rules in the first place. We still think the real answer is more competition.

Still, there are some issues with Netflix's claims. First, if certain providers feel confident that there isn't significant and credible competition, it may decide to weather the storm of user anger. It's not like broadband providers are currently particularly well-liked. In fact, they're not. They're almost universally hated. If there's no real competition, they might not care enough to stop.

But, really, the bigger issue is that if there is a real net neutrality violation, it's not going to impact the big internet companies so much. Netflx, Google, Amazon -- those guys are fine. The issue is the new upstarts and innovators. The companies who can't unleash tens of millions of angry customers to scream out about how ridiculous a new block or degraded traffic is. Worst case, Netflix can pay up. The next guy? Might not be so easy. Even worse... that next guy might not even try, because the "cost of entry" will be too high.

Netflix has always been a good player on this issue, and hopefully they do stick to their word and promise to protest and alert others to protest. But the real concern needs to be not just about how Netflix deals with this issue, but what it means for the next Netflix.

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Filed Under: innovation, net neutrality, public awareness
Companies: netflix

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DannyB (profile), 23 Jan 2014 @ 3:00pm

Netflix Fiber? Amazon Fiber?
Hey guys, how about doing like Google does with Google Fiber?

If your business is dependent upon consumers having acceptable internet access, then find substandard ISP markets and build something great there. Even if it is a small market.

Even though this may only improve service for small numbers, it does something else. It sends a loud message.
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out_of_the_blue, 23 Jan 2014 @ 3:01pm

WELL, what's your ANSWER? Did you even think on one?
Or just get a notion for a bit of fluff filler? You don't even speculate.
Mike claims to have a college degree in economics, can't ya tell?

11:00:40[m-1-4]
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Mason Wheeler (profile), 23 Jan 2014 @ 3:17pm

Re: WELL, what's your ANSWER? Did you even think on one?
Did you even read the article? Or even simply searching the page for the word "answer"? Because if you had, you might have found:

We still think the real answer is

You've got some very good ideas, but unless you become less hostile and better at presenting them in a persuasive fashion, all anyone's going to see you as is an annoying troll who needs to be tuned out and blocked. If I were you I'd work on that. Posts like this are not helping your case any.
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Mason Wheeler (profile), 23 Jan 2014 @ 3:19pm

Re: Re: WELL, what's your ANSWER? Did you even think on one?
Argh. "We still think the real answer is more competition." For some reason, Techdirt ate the link I tried to add to reproduce the original snippet.

Hey, if anyone from Techdirt is reading, could we please please please get an Edit function? I think StackOverflow has spoiled me a little on this point, but they're incredibly useful...
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Anonymous Coward, 23 Jan 2014 @ 3:20pm

Re: Netflix Fiber? Amazon Fiber?
Various communities have tried to build their own broadband and you know what ends up happening? The big incumbent providers lobby hard to kill the program and it works.
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Anonymous Coward, 23 Jan 2014 @ 3:21pm

Re: Netflix Fiber? Amazon Fiber?
Providing last mile infrastructure to the entire US - or even just one city is prohibitively expensive for them to do. Not only would you need the infrastructure to do so, you'd need land permits, and you'd need to fight against political or legal action from the incumbent ISPs. The recent case with fiber internet in the Seattle area is a good example of this.

Failing to stop the ISPs from teabagging them, Netflix would probably sooner emphasize their DVD/Blu-Ray shipping model.
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Anonymous Coward, 23 Jan 2014 @ 3:33pm

let's be honest here, nothing is done in America to encourage competition in the slightest. every company is interested only in keeping a monopoly over whatever the product or service is and Congress does whatever it possibly can to help the situation remain like that. if, for example, Congress were to make drm illegal and force the entertainment industries to actually compete for customers instead of what they do atm, go running to Congress to get another law added or an old one ramped up to help keep that monopoly in place, maybe there would be a lot more innovation and a lot more services. instead what we have is shit services (broadband wise) late release of movies and music and only in a particular format which means it has to be bought over and over again. no thought is ever given to the company that has developed software that allows in home copying or format shifting. all Congress ever thinks about are the friends they have in Hollywood! what sort of competition is that when there is one side dictating rules that breaking means customers get bankrupted of jailed and the other side means it never gets 'up and running' for fear of having a better service or a better product that would actually make the legacy industries think for a change what it needs to do to keep customers happy and coming back for more. it isn't competition when there is only one source for goods. how the hell would a countries economy get on if there were only one industry and no one was allowed to compete against it? bloody ridiculous and totally short sighted outlook!!
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Anonymous Coward, 23 Jan 2014 @ 3:34pm

Re: Re: Re: WELL, what's your ANSWER? Did you even think on one?
With multiple people posting to a thread this would be problematical. A reply to a post need to link to the original post, and not the corrected post. A minor edit, such as adding no could make a reply look stupid. Just post corrections as replies.
PS. preview allows you to check that links are OK, and correct your post.
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Alien Rebel (profile), 23 Jan 2014 @ 3:43pm

Consumers Lose
I'm sure Netflix will be fine, since without enough competition in the market they can pass at least some of the costs on to the consumer without killing off too much demand.

I doubt there will be any sudden catastrophic loss of net neutrality that wrecks civilization. Verizon's win is only a moderate-to-small disaster, as I imagine providers will just slowly turn up the heat so as to keep all us frogs from jumping out of the pot, and simply make a handsome profit for providing crap service in whatever time it takes for the FCC to redo its rules.
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Zacqary Adam Green (profile), 23 Jan 2014 @ 3:45pm

Re: Netflix Fiber? Amazon Fiber?
So they're going to fight the integration of telecommunications and entertainment providers by integrating their entertainment providing business with telecommunications?
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Anonymous Coward, 23 Jan 2014 @ 4:04pm

In other words, nice knowing you Crunchyroll.
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iCleverUserName (profile), 23 Jan 2014 @ 4:43pm

The pricing is already getting out of control and anyone who thinks Verizon, AT&T and others won't offer certain sites with good speeds....for extra $$$...is crazy, imo.

I am close to cutting the cord and I am as big of a TV fanatic as there is.
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Anonymous Coward, 23 Jan 2014 @ 5:02pm

If your ISP starts blocking Netflix, becuase they don't want to pay, you can simply use a VPN to circumvent that. Just make sure to use a VPN with a US servers, since Netflix cannot serve IP addresses outside the USA.
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Anonymous Coward, 23 Jan 2014 @ 5:07pm

I could see Comcast trying to shape traffic. There are some places where Comcast is the ONLY option.

The apartment building I live in is an example. It is not wired for landlines. A previoous owner removed all the landlines, so the only option is Comcast/Xfinity internet.
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artp (profile), 23 Jan 2014 @ 7:45pm

The net neutrality issue never mentioned is...
The net neutrality issue that has concerned me - since dynamic IP addresses came out - is that you have a larger speed downloading than you do uploading. Because the ISPs have determined that that is what we want.. without asking us. They have relegated us to being consumers, instead of being a peer node. Bits is bits, it doesn't matter which way they are going.

Granted, much of the Internet wouldn't know what to do as a peer node, but just try to get access to the Internet as a peer node without paying business rates. And one household isn't going to skew the traffic patterns of the fibers, especially given that most of the household is gone during "normal" business hours. Averaging out traffic loads has been a network load balancing strategy since 9600 bit control networks - for that matter, the same strategy was used for incoming modem pools.

If I'm going to buy access to the Internet, then I want to be PART of the Internet, not just a voyeur looking in at what the big kids can do.
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Casey, 23 Jan 2014 @ 8:40pm

Re: The net neutrality issue never mentioned is...
They don't have to ask us. Your average internet user simply uses significantly more download than upload. As a result ADSL2 and DOCSIS were designed around that ideology. No need to waste capacity on upload that will end up going unused most of the time and end up sacrificing downstream capacity for nothing. Even GPON used in FiOS is not symmetrical.

Granted times are changing and with technologies like VDSL2 and Active Ethernet, upload is no longer limited by technology requirements. That is being done by the ISP.
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Anonymous Coward, 23 Jan 2014 @ 8:51pm

Re:
And your answer is? Blame pirates? Retroactively fuck over your legally purchased media? Headpat from the RIAA?

Fuck you and fuck your answers.
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Anonymous Coward, 23 Jan 2014 @ 10:23pm

If anything incumbent players, like netflix, that are more capable of ensuring their market position may see this as a way to keep potentially new competitors out of the market.
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artp (profile), 23 Jan 2014 @ 10:56pm

Re: Re: The net neutrality issue never mentioned is...
So you believe what they are telling you. So tell me, how does the wire/cable/fibre tell which direction the packet is going, and whether the packet was pushed by one end or requested by the other? Broadcast means that the packet goes all directions until a router tells it what its next path is. Then it repeats. So which direction is the packet going? All of them. Capacity on a cable has no meaning except as an aggregate. You can shape it on a router, but that doesn't change the physics of the cable. It just lets marketing lie to you.

No, this is just one more way that the ISPs have segregated us into second-class Internet citizens. Dynamic IPs, download caps, differentials between download and upload, limitations on running servers... I believe that the upload/download differential has more to do with discouraging servers than anything else. I have had helpdesk staff tell me as much.

And anyway, the Internet is a network composed of peers, as originally designed, and there was no reason to change that from the end-user perspective. If I want to access my computer remotely, run my own email server, file server, social network server, Web page or mailing list manager, then I shouldn't have to say "Mother, may I?" before doing so.
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Johnny5k (profile), 23 Jan 2014 @ 11:27pm

What if it's not "degradation"
Look at what AT&T is trying to do right now with wireless. They're "allowing" companies like Netflix to pay for the amount of data that their customers use, with a new "sponsored data" option. AT&T can argue that there's no "degradation" or "prioritization" of data - they're just shifting who pays for the data from the consumer to the website owner / content provider. Of course we know this is BS because data caps are BS, but they've been able to convince a lot of people that they're necessary (including government), so they're just making the next logical step by shifting who pays off the consumer.

The companies that buy (literally) into this scheme would have a clear advantage over those that don't, because users would have "free" access to their site, without needing to worry about approaching their monthly data cap. This is especially an issue with streaming video. Someone with a more expensive data plan might be able to downgrade & save some money, which seems like a good deal for the consumer (and of course, that's how AT&T is pushing it).

Now imagine the same thing on landlines. Comcast has suspended their data caps for the time being, but there's nothing stopping them from reinstating them - and if they were to introduce the same kind of "sponsored data" option as AT&T, they could argue that customers don't need such a high data cap, because companies can pay for their data. So maybe their new plans only allow 20GB/month, and higher caps are much more expensive. We've already seen Comcast try to do something similar with their Netflix clone "Streampix" - they initially exempted the service from contributing to customers' data cap "bucket" but they got too much backlash because it was obviously anti-competitive for companies like Netflix, and that's when they suspended data caps all together. Well now there's nothing stopping a new Netflix clone, let's call them "Streamflix," from signing up for Comcast's "sponsored data" program. And maybe they have some kind of agreement whereby they get all their content from Comcast, but they're an "independent" company, so, you know, no issues there. But since they have this agreement, they get their content cheaper than, say, Netflix. So while they have to "pay" for their customers' data, they're getting the content for cheaper, so they can still charge the same price as Netflix but their data won't go against your cap. Once again Netflix is the loser, but there was no "degradation" or "prioritization" of data.

The other advantage this gives the internet providers is driving up the cost of streaming video. The company that pays for your data would have to start charging more for their video offerings to make up for it - but this is exactly what AT&T, along with the rest of the internet providers, want - all the sudden, streaming video costs almost the same as cable, so we're stuck right back where we have been.

And all of this without "degradation" or "prioritization" of data, so they can still claim it's an "open" internet. We can only hope that companies don't buy into these new "sponsored data" plans, because once a few big ones do, the rest will all have to fall into place just to compete, and then there's no going back.

And now we finally see the end-game for data caps. Hopefully Netflix has enough in its coffers to fight the good fight.
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Ninja (profile), 24 Jan 2014 @ 1:20am

The only issue here as seen in the copyright monopoly is that once they get the hand they'll go for the entire arm. And so on. It's wiser to fight now.
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Anonymous Coward, 24 Jan 2014 @ 3:57am

I have a netflix account, and i am quite willing to close it netflix, should you end up on the wrong side of this, friendly warning.......i "donate" to support what it is your trying to create, not WHO you are, if your goal changes, or you take up goals that are counter-clockwise to your original intent, then say goodby to that donation, from an individual, one of many
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Anonymous Coward, 24 Jan 2014 @ 4:13am

Re: Re: Netflix Fiber? Amazon Fiber?
Alternatively, they collaborate with others who the Telcos want to squeeze out with exorbitant 'priority fees'. Such as Youtube, Blip and Twitch.tv. A small number of specialised teams can accomplish what armies cannot, after all - this is the very basis behind guerilla warfare.
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Anonymous Coward, 24 Jan 2014 @ 5:52am

Hopefully the FCC steps up and creates a more solid set of rules , we'll see how this plays out I'm sure the lords of bandwidth won't sit on their hands for to long, Considering the greed they've portrayed in the not so distant past.
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John Fenderson (profile), 24 Jan 2014 @ 9:53am

Re:
Yeah, until your ISP starts slowing down VPN providers that aren't kicking them some bucks.
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John Fenderson (profile), 24 Jan 2014 @ 9:54am

Re:
It's really easy to see Comcast "shaping" traffic like this -- because they've been caught doing exactly that.
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John Fenderson (profile), 24 Jan 2014 @ 10:04am

Re: Re: Re: The net neutrality issue never mentioned is...
So which direction is the packet going? All of them. Capacity on a cable has no meaning except as an aggregate.

This is simply not true. Cable/DSL/your old-fashioned modem are not, actually, very analogous to pipes. Traffic in each direction is dedicated to certain frequencies/phase encodings (think of them like "channels" within the "pipe".) Each of these channels only goes one-way. The more of them you devote to traffic in one direction, the fewer of them you can devote to traffic in the other direction.

Also, with some exceptions that don't apply to consumer traffic, nobody is "broadcasting" on the internet in the way you are talking about. Your traffic has already gone through a router before it even left your house, and incoming traffic has already gone through a router before it left it's point of origin. Actual broadcasting is supported by TCP/IP, but not over the internet at large -- it can only be done within the confines of a private network (such as a corporate LAN/WAN, the backbone, etc.) If you send a broadcast packet yourself, for instance, that packet will be dropped as soon as your ISP sees it.
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John Fenderson (profile), 24 Jan 2014 @ 10:10am

Re:
Netflix is a pretty mixed bag on internet issues. They're one of the (if not the) main forces pushing for including DRM in HTML5, for example.
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artp (profile), 24 Jan 2014 @ 10:39am

Re: Re: Re: Re: The net neutrality issue never mentioned is...
Remember Ungerman-Bass and their broadband network? Not broadband cable. Everything went up to the head-end and was retransmitted to the nodes. Have you ever had to track down a station with a loose cable on one of those, or on a coax network?

Anyway, I am talking about transmission in the wire, you are talking about traffic in the router. That is a design decision, and it isn't the only design decision. It is not necessary to restrict upload and download traffic. Same thing applies to routers filtering out certain types of traffic. It's a decision that someone made, not a limitation of the physics. You could route Appletalk through a router, it would just be a very bad idea because it is so chatty.

Also, their is no ISP router in my home. It is located a little over a quarter mile down the road in the box that retransmits the fibre signals. I have fiber to the home here. And the gateway for my static IP is in the CO about 7 miles away.

In the end, you are talking about the network as you are used to seeing - as the ISPs see it. And that is my point - it doesn't have to be that way. Do you think that a corporate network (LAN or WAN) has any limitations on speed based on direction? I haven't seen one, and I have worked in a lot of companies, from small verging on medium to Fortune #27, as well as a few telecoms.

Times are changing. Let's not let the ISPs continue to trap us in a restricted Internet when it isn't necessary.
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John Fenderson (profile), 24 Jan 2014 @ 1:22pm

Re: Re: Re: Re: Re: The net neutrality issue never mentioned is...
I only brought the router into the picture because you mentioned it. What I said is technically accurate.

Do you think that a corporate network (LAN or WAN) has any limitations on speed based on direction?

Absolutely, yes. It's just that LAN hardware is set up to allocate the available channels equally in each direction. There does exist special-purpose LAN hardware that does asymmetric allocation to allow much greater speeds in one direction than the other.
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artp (profile), 24 Jan 2014 @ 9:23pm

Re: Re: Re: Re: Re: Re: The net neutrality issue never mentioned is...
What you said is more administratively accurate than technically accurate. Asymmetric allocation is not particularly hard software to write. It has been done in many fields before this. You could swap blocks of channels in order to reduce the overhead. 20 years ago CPU horsepower was a problem that made this difficult, but that doesn't prevent it being done now. In fact, dynamic asymmetric allocation could be the default so that you don't have to worry about what the balance is between upload and download. But that would work against the ISPs benefit.

You say that asymmetric allocation hardware is special purpose. This means that ISPs go out of their way to make home Internet users second class citizens.

Again, you are speaking from your particular experience, not from first principles. It doesn't have to be that way.
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ryuugami, 26 Jan 2014 @ 9:29am

Re: Re: Re: Re: WELL, what's your ANSWER? Did you even think on one?
With multiple people posting to a thread this would be problematical. A reply to a post need to link to the original post, and not the corrected post. A minor edit, such as adding no could make a reply look stupid. Just post corrections as replies.

That's what quoting is for (eg: see above, or alternatively, pretty much any forum on the Internet). A reply to a post should quote the relevant parts. Corrections as replies work only if you're quick enough to notice your mistake before someone else replies. If you're too slow, your correction may get buried deep down (in the threaded view), or isn't obviously connected to the original post (in the chronological view).
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