Utterly Incoherent Wall Street Journal Missive Blames Netflix For, Well, Everything

from the sockpuppets-and-bogeymen dept

Wed, Sep 9th 2015 6:12am — Karl Bode

For years now, the broadband industry has worked tirelessly to villainize Netflix, painting the company as a bandwidth glutton, hungrily eating "more than its fair share" of Internet traffic resources. A growing assortment of fauxademics, editorial writers, consultants, revolving door regulators and other telecom sector PR tendrils have relentlessly tried to argue that Netflix is a dirty freeloader and a nasty company that is really the one to blame for most of the Internet's problems.

There are several reasons for this. One, Netflix is a threat to traditional cable television revenues, and therefore is already seen as the enemy by telecom executives. Two, Netflix has replaced (now absent) Google as the leader of the corporate pro-net-neutrality movement, arguing against things like punitive usage caps. And three, telecom companies quite simply want companies like Netflix to pay them a fealty "troll toll" for doing absolutely nothing, which is the exact kind of pampered, duopolist bullshit that started the net neutrality kerfuffle in the first place.

Usually, telecom-driven missives against Netflix make at least a fleeting effort at coherent sense. But a new article by Holman W. Jenkins Jr. at the Wall Street Journal deserves a little attention for setting a new low in barely-comprehensible telecom industry puffery. As with any good Netflix attack piece, Jenkins has to begin by highlighting just how much traffic Netflix users consume:

"More than one-third of today’s expensively rolled-out bandwidth already is consumed in peak hours by a single company, whose customers represent a tiny minority—about 1.2%—of Internet users. Richard Bennett of High Tech Forum calculates: “If 12 percent of the Internet user population is streaming at prime time, the traffic load goes up to 340% of today’s level; and if it rises to 60%, the load goes up to 1700%.” And suppose users want super-high resolution 4k TV, which requires four times as much bandwidth as today’s hi-def?"

Generally Netflix traffic stats are trotted out to imply that Netflix is somehow consuming too much of the overall pipe, or isn't paying its fair share to deliver this traffic, which as we've pointed out for years is total nonsense. It's quite simple: users who pay their ISP for bandwidth are requesting this data, which Netflix (who also pays for bandwidth) then sends to them. Insatiable mega-ISPs honestly believe a bigger cut of this revenue is their god-given right; as such, they work tirelessly to get it, whether it's via usage caps or interconnection fees.

And to be fair, trying to argue that massive, hugely unpopular telecom giants should be able to freely nickel and dime consumers and small companies can't be easy. Making an argument that stupid usually requires some rhetorical sleight of hand that sometimes wanders into the realm of the magical. Unfortunately for Jenkins, the best he can do is an utterly confusing screed involving backpackers and grandmothers:

"Make no mistake: The bandwidth used by Netflix is paid for. But it’s paid for inefficiently, by spreading the cost over all broadband subscribers. In the airline industry, if backpackers and grannies had to pay for the frequent connections, last-minute seat availability and other features demanded by business travelers, there would be fewer planes, fewer flights, less connectivity, less travel for everyone—which is a fair model of the future that utility regulation will now create for broadband users."

It's impossible to even deconstruct that argument because it actually makes no coherent sense. One, as we've explained at length, ISPs are not now facing "utility regulation" under the new neutrality rules. Two, under the current Netflix model, ISPs are paid for the bandwidth (sometimes several times over), and customers pay for the content they want. Is it actually possible to get any more efficient than that without involving telepathy? Jenkins, however, is clearly annoyed that the government has stepped in with rules preventing the Comcasts of the world from erecting totally unnecessary tolls on the Internet:

"Unfortunately the entire confused and inane thrust of federal Internet policy lately has been to sustain the Netflix distortion. Even collecting token amounts, as Comcast did, for expanding direct peering to receive the Netflix deluge apparently now will be verboten. And forget about the elegant fix of usage-based pricing, i.e., charging each customer according to his demand on the infrastructure. It’s clearly a nonstarter with regulators and activists."

Poor fellow! How does Jenkins sleep at night knowing that the government won't allow Comcast to impose completely arbitrary and anti-competitive new fees on content companies? What kind of a world are we building where we don't let companies like Comcast impose draconian, unnecessary and hugely unpopular usage caps to fatten revenues? Won't you think of the children? Why can't you people understand that Netflix is the root of all evil?

"So what does this mean? The oomph behind a regulated Internet isn’t coming from the net-neutrality philosophes. It’s coming from Netflix and its attachment to a particular pricing model for broadband...By the way, we are not stating a Netflix conspiracy theory...the fact is, regulators are trying like crazy to make the necessary broadband seem like a free lunch to Netflix customers—a short-termism that necessarily undermines the incentive of others to compete with cable’s already-paid-for infrastructure."

From there, Jenkins throws around a lot of terms like it's pretty clear he doesn't actually understand "overbuilders!", makes a few bizarre, unsubstantiated claims that Netflix supports last mile broadband monopolies, and even tries to vaguely blame Netflix for AT&T and Verizon's plan to hang up on millions of DSL users (something that's long been in the works and is totally unrelated to net neutrality or the FCC's Title II push).

So Jenkins' logic is painfully murky, but I think he's trying to argue that Netflix is to blame for helpful rules that protect consumers from aggressive broadband monopolists in uncompetitive markets. He's partially right, but he's forgetting one little thing: consumers. Consumers drive the net neutrality movement. Consumers drive the refusal to accept usage caps on already-expensive broadband services. Consumers and innovators are the ones pushing for healthy markets free of gatekeeper manipulation. If Jenkins had any real courage, he'd stop attacking Netflix and attack the thing it's clear he finds truly despicable: consumer power.

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Filed Under: blame netflix, broadband, holman jenkins, net neutrality, title ii
Companies: netflix

76 Comments

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Anonymous Coward, 9 Sep 2015 @ 6:19am

"In the airline industry, if backpackers and grannies had to pay for the frequent connections, last-minute seat availability and other features demanded by business travelers, there would be fewer planes, fewer flights, less connectivity, less travel for everyone—which is a fair model of the future that utility regulation will now create for broadband users."

This is literally exactly how the airline industry actually works, what exactly is this idiot trying to claim?
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Violynne (profile), 9 Sep 2015 @ 6:36am

The WSJ story is behind a paywall.

Dictionaries, please redefine "irony", because it doesn't get any better than this.
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PaulT (profile), 9 Sep 2015 @ 6:45am

"In the airline industry, if backpackers and grannies had to pay for the frequent connections, last-minute seat availability and other features demanded by business travelers"

Erm... what? Is he saying that non-business travellers don't need last minute seats, don't need connections and/or don't pay fees for doing so? Or, is he simply whining that standard class is usually cheaper than business class (because they get less)? On top of that, is he honestly saying that the entire airline industry consists of backpackers, grannies and business travellers - or is there a massive number of travellers he had to leave out to create his "point"? Don't worry, I already know the answer...

I pretty much stopped reading there. If you're going to use a flawed physical analogy, at least have a basic understanding of how the thing you're referencing works. Or don't torture it so badly that it's unrecognisable.
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Anonymous Coward, 9 Sep 2015 @ 6:47am

More like his logic is painfully non-existent. Wonder how much the telecom lobby paid to have that editorial published because no editor in their right mind would ever publish that without some money changing hands. It's just too bare faced and horribly written!
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Thrudd, 9 Sep 2015 @ 6:54am

logic learning and intelligence
Can we forward this to his grade school teachers and have his diploma revoked and all other credentials predicated on that?
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icarusthecow (profile), 9 Sep 2015 @ 6:58am

"Make no mistake: The bandwidth used by Netflix is paid for."

Could have just stopped there and prevented himself from sounding like a toddler complaining that other kids get cookies too.
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Anonymous Coward, 9 Sep 2015 @ 7:03am

"Netflix has replaced (now absent) Google as the leader of the corporate pro-net-neutrality movement, arguing against things like punitive usage caps."

Best joke of the year. I still can't stop laughing. Netflix are perhaps the leaders in Net Neutrality Hypocrisy, but that is all.
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Glenn, 9 Sep 2015 @ 7:04am

If we customers paid ISPs what our usage cost them, then we'd be paying them $20 or so for a year or two (to cover the cost of the infrastructure needed to provide connectivity) and then a dollar per month (mostly because it makes no sense to charge the pennies per month it actually costs) after that. Well, let's give 'em a fair profit: make that $2 per month.
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Anonymous Coward, 9 Sep 2015 @ 7:06am

Re:
If I understand it correctly, he is trying to compare the airline industry to the broadband in the following way...

If you buy a plane ticket, you only pay for what you use. The business traveler pays more because he demands more.

For broadband, he's trying to imply that the granny would have to help cover the costs of the infrastructure build-out to accommodate Netflix's (the business traveler)bandwidth requirements, similar to how a utility pushes it's expenses off on it's entire consumer base.

I don't agree with it, but I sorta, almost, kinda get the point he is feebly and inaccurately trying to make, I think :)

It's still nonsense.
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Anonymous Coward, 9 Sep 2015 @ 7:09am

I wonder how much stock Holman W. Jenkins, Jr. has in the cable industry or is being paid to write that misinformation/propaganda piece seems to be a shill.. I'll keep my opinion in check about his lack of fact checking and lazy journalism until I find out about the latter.
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David, 9 Sep 2015 @ 7:17am

Inefficient?
"The bandwidth used by Netflix is paid for. But it’s paid for inefficiently, by spreading the cost over all broadband subscribers."

But, as it's the broadband subscribers that's requesting the stream from Netflix, that's EXACTLY the most efficient way to pay for it! And of course, they conveniently neglect that NetFlix does pay for it's end of the connection already, too.
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Tracy Hall, 9 Sep 2015 @ 7:18am

Rent, and extra rent...
Even easier analogy - what if your labdolors, in addition to the rent, demands extra payments for "certain" friends to visit? Exactly the same situation....
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Anonymous Coward, 9 Sep 2015 @ 7:19am

Re:
please explain
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Anonymous Coward, 9 Sep 2015 @ 7:23am

they sound like they want extra money in protection fees to make sure everything goes the way its supposed to.

I wonder if they have considered a career change to work in organized crime
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Teamchaos (profile), 9 Sep 2015 @ 7:36am

Re:
Anonymous Coward, Sep 9th, 2015 @ 6:19am This is literally exactly how the airline industry actually works, what exactly is this idiot trying to claim?

Really? So granny buys her ticket 3 weeks in advance and pays more than the business flyer who buys his ticket at the last minute? Who knew? Business flyers pay for convenience, granny buys the cheapest ticket she can find.
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Teamchaos (profile), 9 Sep 2015 @ 7:41am

So the person who uses .5GB per month should pay the same as the person who uses 50GB per month. That's fair, err, at least it's neutral.
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PaulT (profile), 9 Sep 2015 @ 7:41am

Re:
...but of course you won't bother trying to explain your position, why that is so laughable or what is hypocritical.

No, you spout nonsense and pretend you've won an argument. Shocking...
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Karl Bode (profile), 9 Sep 2015 @ 7:41am

Re:
Citation needed.
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Karl Bode (profile), 9 Sep 2015 @ 7:45am

Re:
If there are any inefficiencies in pricing its the fault of the ISPs. Find one that actually is interested in letting your grandmother pay $5 a month for the actual bandwidth she uses (checking The Weather Channel thrice weekly and e-mail). Contrary to what they claim, nobody is stopping them from offering real value pricing.
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Anonymous Coward, 9 Sep 2015 @ 7:50am

Re:
The fixed costs for a broadband connection are the same, whether it is used to transfer 1 byte a month or 50Gbyte a day. The transit costs for data are insignificant compared with the fixed costs. Further the fixed costs of metering connections is also a cost that can be avoided, if all connections are unlimited.
What is significant is that for all these companies arguing for the ability to charge Netflix, and not its users, is that Netflix competes with the cable TV part of their business.
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John Fenderson (profile), 9 Sep 2015 @ 7:55am

Usage based pricing
And forget about the elegant fix of usage-based pricing, i.e., charging each customer according to his demand on the infrastructure. It’s clearly a nonstarter with regulators and activists.

No, it's not. I've not seen any regulators or activists opposing usage-based pricing on principle, as long as it's done fairly and honestly.

The people who object to usage-based pricing are the consumers.
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Anonymous Coward, 9 Sep 2015 @ 7:55am

Let me put this straight right now!
If I had to pay more to use the internet I would rather pay all that money to the shitty 90's site that plays Rick Astley all day than to the greedy asshats that is supposed to provide us with internet of a reasonable quality. Compared to those people, I would actually rather prefer to pay a guy holding me up with a knife... at least he is honest about robbing me.
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Anonymous Coward, 9 Sep 2015 @ 7:55am

Re: Re:
Agreed, citation definitely needed. Unfortunately being terminally stupid and a hypocritical liar is not actually against the law in and of itself, so I'm not sure what he can be cited for.

There definitely needs to be something, but I fear the law currently fails us in this regard.
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PaulT (profile), 9 Sep 2015 @ 7:56am

Re: Re:
"So granny buys her ticket 3 weeks in advance and pays more than the business flyer who buys his ticket at the last minute?"

Sometimes. What's so surprising about that? Sure, that might be a rare case, but grannies and businessmen are far from the only sets of air travellers. Businessmen might travel more regularly, but in the analogy, the businessman might also be using more bandwidth than granny as well.

"Business flyers pay for convenience, granny buys the cheapest ticket she can find."

Unless granny wants the upgrade to business class, or the business flyer needs to downgrade to coach for whatever reason (including price, many people I've known - especially in startups - do this regularly).

If people want more service and features, they pay for it. But, the speed at which they get to their destination doesn't depend on the fee they paid to their airline. If people want more bandwidth and services from their ISP, they can pay for it, but their connection to their destination website should not depend on the fee their destination paid compared to its competitors.

This is shocking to you, or is the analogy so bad it's confusing us all?
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Michael, 9 Sep 2015 @ 8:06am

Re:
I think he is trying to argue that the airline industry - which is clearly failing, hated by most of it's customers, being propped up by the government, and showing little or no signs of change is a shining example of a good way to run a business.

Oh, I guess that's what the cable industry actually DOES think.
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Karl Bode (profile), 9 Sep 2015 @ 8:10am

Re: Usage based pricing
And consumers aren't necessarily opposed to usage-based pricing. They're opposed to what the broadband industry is currently doing: which is taking already expensive existing flat-rate pricing and layering it with entirely new caps and overages.

Or in Comcast's case charging these users an additional $30 to avoid these overages.

Nobody would oppose real value-driven usage-based pricing, since most people would probably pay $10 a month for broadband. But the industry won't offer that kind of pricing for obvious reasons.
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Thomas (profile), 9 Sep 2015 @ 8:20am

Re: Glenn
I actually work for a small ISP, it's more complicated than that.

Infrastructure is actually quite expensive. We're rolling out fiber and we charge a $150 install up front that doesn't cover all our costs.

There is also significant maintenance and supports costs.

Not that cable companies aren't ripping you off. We're able to deliver gigabit for $30/month.
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jupiterkansas (profile), 9 Sep 2015 @ 8:23am

Re:
Well, Google is doing it for $25/month for one year, and free for seven years - so even cheaper than that.
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Anonymous Coward, 9 Sep 2015 @ 8:24am

Re: Re: Re:
The analogy is about as sensible as a unicorn dual-wielding clowns whilst driving a dog-made boat.
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Anonymous Coward, 9 Sep 2015 @ 8:26am

Re:
arguing against things like punitive usage caps."

'Punitive', thats perfect. I'm glad other companies to 'punish' me for using their product according to the terms for which I agreed and paid.
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tqk (profile), 9 Sep 2015 @ 8:28am

Re:
"Make no mistake: The bandwidth used by Netflix is paid for."

"But ..."

This's "Moocher Capitalism." If you can get away with the big lie slandering the honest players, you can weasel out an unearned cut of their profits with hardly any work at all on your part. Greed and laziness for hookers and blow. It's arrogant, cynical, and typical Wall St. behavior, enriching yourself while creating nothing for anyone but yourself.
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Baron von Robber, 9 Sep 2015 @ 8:29am

Re:
And what cost is there between the two? The equipment is already in place as it's in use.
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JustMe (profile), 9 Sep 2015 @ 8:31am

This, a thousand times this
"users who pay their ISP for bandwidth are requesting this data, which Netflix (who also pays for bandwidth) then sends to them"
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Bruce E (profile), 9 Sep 2015 @ 8:35am

Analogy
Blaming Netflix like this is like blaming the invention of containerized cargo in the 50s for the sad state of there being no tiny over-staffed non-containerized cargo ships that take 2 weeks to load and unload using hundreds of full-time dock workers.

Oh the humanity!
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limbodog (profile), 9 Sep 2015 @ 8:36am

What the hell?
When we sold you internet access, you weren't supposed to use it!
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Anonymous Coward, 9 Sep 2015 @ 8:37am

Re: Re: Glenn
I notice that you do not mention bandwidth costs, which are the claimed basis for caps and related charges.
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Ninja (profile), 9 Sep 2015 @ 8:49am

Re:
Hmmm I like my current ISP. No usage caps and I use it. A lot. A whole freaking lot. My average must be hovering around the terabytes per month (with a T) due, among other reasons, to Netflix/streaming, torrenting, Steam and others. You know what my provider did? Nothing. They actually did not increase the cost of my connection even though it's been almost an year new users have been paying 10% more. No trying to force higher speeds, no arbitrary usage caps. And you know what, this is great.
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Ninja (profile), 9 Sep 2015 @ 8:52am

Re: Re: Usage based pricing
I would agree with usage-based pricing if we weren't bombard with tons of unnecessary data at every page we load (ie: auto-playing videos, advertisement etc). My water doesn't come with it.
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Baron von Robber, 9 Sep 2015 @ 9:01am

Re: Re:
And if they hooked up power meters to all the devices hooked up to your connection to their edge and calculated the power consumption delta of you vs not you using the equipment, it would be probably around a dollar.

Which is why data caps is so mind boggling greedy.
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Anonymous Coward, 9 Sep 2015 @ 9:07am

all i heard when I read this story....
Techdirt: Wall Street is reduced to literally saying "Rabble Rabble Rabble."
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Anonymous Coward, 9 Sep 2015 @ 9:25am

Response to: Anonymous Coward on Sep 9th, 2015 @ 7:03am
[citation needed]
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Anonymous Coward, 9 Sep 2015 @ 9:52am

It's only a deluge because suddenly everyone actually started using their connection and the ISP's oversold connections
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Anonymous Coward, 9 Sep 2015 @ 10:00am

Re: What the hell?
> When we sold you internet access, you weren't supposed to use it!

Why am I reminded of the complaints about the mega-users of unlimited bandwidth on cell phones ... that even Techdirt agreed with, for the more extreme users.
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DannyB (profile), 9 Sep 2015 @ 10:20am

ISPs should blame THEIR OWN CUSTOMERS
It isn't Netflix that is a bandwidth glutton. It is the ISPs customers.

If the ISPs don't like it. Then they should charge their customers a fair amount to recover the true cost to build and maintain the infrastructure to deliver that bandwidth.

Now wasn't that simple?

And if there were ever to be competition among ISPs then these prices might have some remote possibility of being fair, even if price increases were necessary.
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Anonymous Coward, 9 Sep 2015 @ 10:27am

Takes Me Back
Wall Street Journal, I remember when I used to read that. Articles like this are why today I read here instead.
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Anonymous Coward, 9 Sep 2015 @ 11:29am

Re: Re: Re:
Hey, he tortured some analogies. But let's not get sanctimonious: the broadband industry is enormously greedy, and Jenkins and the WSJ are true shills.
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Anonymous Coward, 9 Sep 2015 @ 11:33am

Re:
Someone pointed out a few months ago that it's really weird to hide FUD and disinformation behind a paywall: the only people reading it are already true believers.
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Anonymous Coward, 9 Sep 2015 @ 11:42am

Re:
It's the WSJ. This is already paid for under the telecom industry's regular monthly Platinum Shill Package fee.
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Anonymous Coward, 9 Sep 2015 @ 11:50am

Re: Re:
Is "My Ass, Pulled Out Of" APA compliant?
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Tim R (profile), 9 Sep 2015 @ 12:21pm

Haven't We Heard This Before
Hey, Mr. Jenkins, you left out the comparison to the Boston Strangler.

Glad I could help.
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Anonymous Coward, 9 Sep 2015 @ 12:22pm

Re: Re:
Except the analogy completely falls down when you factor in the fact that most ISPs already have tiered packages. So in his example the grannies and backpackers subscribe to the cheapest broadband package with slow speeds and limited usage.

Meanwhile the business users subscribe to unlimited fibre packages. So, again, what's his point?

The heavy usage users already pay for their heavy usage. I'm one of them in the UK and I pay 5x what a "granny" would pay so I'll use whatever I want, whenever I want and on whatever I want.
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Groaker (profile), 9 Sep 2015 @ 12:27pm

The Wall Street whiners ignore the fact that the enduser pays for bandwidth, and Netflix pays for bandwidth. How many times should the bandwidth be paid for?
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Anonymous Coward, 9 Sep 2015 @ 12:27pm

Re: Re: Re: Glenn
Because bandwidth costs pennies, if that.

And that's the point. Once the cost of the infrastructure has been re-cooped, which in the case of big companies was decades ago, it's a license to print money.
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Anonymous Coward, 9 Sep 2015 @ 12:36pm

Re:
http://www.uswitch.com/broadband/compare/cheap_broadband/?gclid=CMz-lL3Z6scCFUbkwgod3j0AgA

Broadband is free whether you use 0.5GB or 50GB per month.

Get the fuck over yourself you twat.
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Karl Bode (profile), 9 Sep 2015 @ 1:05pm

Re: Re: Re: Re: Glenn
And clearly there's not all that much money going to support, since it's ranked the worst in ANY INDUSTRY.
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Almost Anonymous (profile), 9 Sep 2015 @ 1:05pm

A bigger problem with his statement
More than one-third of today’s expensively rolled-out bandwidth already is consumed in peak hours by a single company, whose customers represent a tiny minority—about 1.2%—of Internet users.
Who is he implying paid for that "expensively rolled-out bandwidth"? Is he truly trying to suggest it was Comcast or AT&T, instead of the massive government subsidies that actually paid for the infrastructure?

By the way, we are not stating a Netflix conspiracy theory...the fact is, regulators are trying like crazy to make the necessary broadband seem like a free lunch to Netflix customers—a short-termism that necessarily undermines the incentive of others to compete with cable’s already-paid-for infrastructure.
Also paid for by massive government subsidies!
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Karl Bode (profile), 9 Sep 2015 @ 1:07pm

Re: A bigger problem with his statement
Yeah rule 101 of telecom sockpuppetry, ignore the fact that a ton of this infrastructure was paid for fifty times over by taxpayers.
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Teamchaos (profile), 9 Sep 2015 @ 1:17pm

Re: Re:
So the link you posted, cleverly offers 'broadband' for FREE as long as you pay a 'line fee of 17.70 pounds' which is only a bit less than what I pay for broadband here in the US except I'm getting 100Mbs speed instead of a lame 17Mbs - which isn't even considered broadband in the US. You've really got it good in the UK!

http://www.theverge.com/2015/1/29/7932653/fcc-changed-definition-broadband-25mbps

FTFY
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Will Armstrong, 9 Sep 2015 @ 2:47pm

"Usage-Based Pricing"
"And forget about the elegant fix of usage-based pricing, i.e., charging each customer according to his demand on the infrastructure."

I'm sick and tired of this claim. That user demand on the infrastructure is at a gigabyte level. The constraints on the network aren't in the total AMOUNT of data it can convey, but in how FAST it can convey that. If I buy a switch with 10 1Gb/s ports on it, and 10 1Gb/s internet connections, I'm perfectly capable of delivering INFINITE gigabytes as long as I deliver those gigabytes at under 10Gb/s aggregate at any one time.

So, the demand put on the infrastructure, and therefore what we should base pricing on in "usage-based pricing" the ISPs want so badly is BITS PER SECOND, not TOTAL BITS TRANSFERRED.

They really need to stop lying all over the place.
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tqk (profile), 9 Sep 2015 @ 3:08pm

Re: Re: A bigger problem with his statement
Yeah rule 101 of telecom sockpuppetry, ignore the fact that a ton of this infrastructure was paid for fifty times over by taxpayers.

Meanwhile, New York (is it?) is still waiting for them to roll it out, and when called on the outright theft they lie and scream and bitch and moan, "It's not our fault!"

Robbed via taxation to pay politicos pals for vast sums in subsidies, lax to non-existent oversight, caps on "unlimited", 3/4 of a million bucks to the likes of Sunnunu for paywalled propaganda lies preaching to the converted, and still they have the gall to accuse us and Netflix of taking advantage of them! The cable TV business must be in serious trouble. Ha, ha. Suck on it!

It beggars the imagination that they can get away with this in the USA. This is the sort of story you'd expect to read about from banana republics or the likes of Kazachstan, not the USA.
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Zonker, 9 Sep 2015 @ 5:08pm

Re:
It's absolutely fair as long as they both paid for and receive the same bandwidth. How much of that bandwidth they actually use is irrelevant. They paid for a maximum data speed, not a maximum data amount.
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Anonymous Coward, 9 Sep 2015 @ 5:11pm

How would it differ if somebody started demanding Amazon pay additional fees because they are using more than their fair share of the UPS trucks. Even though they have already paid the shipping fees per package and weight like all other e-retailors.

That would be the opposite of fair, a completly unfair burden Amazon tax, just as the proposals about Netflix are.
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Zonker, 9 Sep 2015 @ 5:33pm

Re: "Usage-Based Pricing"
1 Giga times this. If your network has congestion requiring additional infrastructure then you oversold your capacity at some choke point in your network and just need to upgrade capacity at the bottleneck (or stop promising more bandwidth than your network can support at full capacity). This is a one time purchase and install of relatively inexpensive equipment compared to expansion of coverage costs. The rates charged for the bandwidth should already more than cover maintenance and support or you're pricing it wrong.
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tqk (profile), 9 Sep 2015 @ 6:10pm

Re: Re: "Usage-Based Pricing"
Not to mention, the cost of wages to the competent person to maintain it generally blows the doors off the price of the equipment itself. Hardware's cheap, amortized over time, and a tax deductable business expense. That competent person is not cheap, was expensive to train, is difficult to find and hire, has to be negotiated with for compensation or even to get them to reside where you want them to work, plus add healthcare and taxes and yada yada, ...

Complaining about the cost of hardware is idiocy. "Morans!" [sic]
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Anonymous Coward, 9 Sep 2015 @ 6:58pm

Look back at DialUp
Remember when EVERYONE wanted a second/third line for their modems and fax machines? Did the Bell Systems cry that these would overload their systems every night when people logged onto AOL or Compu$erve? I think that they just built out the needed infrastructure and let it roll... until... Cable Internet came through with their faster connections. I don't feel sorry to the cable co's for overselling their bandwidth and thinking that they have a RIGHT to charge more when people actually use what they ARE ALREADY PAYING FOR.
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nasch (profile), 9 Sep 2015 @ 8:21pm

Competition
And forget about the elegant fix of usage-based pricing, i.e., charging each customer according to his demand on the infrastructure.

As with almost every broadband problem, this would be solved with strong competition. Any ISP can offer whatever pricing model they want, and if customers like it they'll sign up. If they don't, they'll go elsewhere. Prices will naturally go where they need to in order to satisfy demand, and the customers can all be happy. Only problem is the ISPs would no longer have a source of obscene profit margins.
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Anonymous Coward, 9 Sep 2015 @ 9:35pm

Re: A bigger problem with his statement
Regarding the statement
"More than one-third of today’s expensively rolled-out bandwidth already is consumed in peak hours by a single company, whose customers represent a tiny minority—about 1.2%—of Internet users."
Note that the "more than one-third" bandwidth statistic is for North America while the "tiny minority" value of 1.2% is obtained by contrasting Netflix (North American) customers against the total global number of internet users.

A more honestly stated observation would be that 14% of N. American users* are using 35% of the peak hours bandwidth.

* 36 million American Netflix subscribers out of 260 million American internet users (or 39 out 290 if Canada is considered).
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Anonymous Coward, 9 Sep 2015 @ 10:38pm

Re:
"Erm... what? Is he saying that non-business travellers don't need last minute seats, don't need connections and/or don't pay fees for doing so?"

I'm not defending the idiot, but there is such a thing as unrestricted versus restricted fares, and that is what he's referring too. Unrestricted fares are requested by business travelers to support last minute changes and cancellations, so they cost more. If restricted fares were not an option, then less people would fly because unrestricted fares are ridiculously expensive.
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DerekCurrie (profile), 10 Sep 2015 @ 2:58am

News Corp, Our Information Overlords
I personally consider Wall Street Journal to be entirely worthless, thanks to it being merely a tentacle of News Corp.

As a victim of Time Warner Cable, I might as well have been reading nonsense with that hated company as the by-line instead of Holman W. Jenkins. It's corporatocracy at work. Lie to the customer. Gouge the customer. Screw the customer.

Neo-Feudalism in action.

Cable TV is over. Customer retribution for decades of abuse is here. We get what we want. Deal with it or sell off your crap companies to someone who considers the customer to be a collaborator, not an enemy.
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Anonymous Coward, 10 Sep 2015 @ 5:18am

This guy is basically arguing that Netflix "ruined" Blockbuster & cable the same way Amazon "killed" Macy's and other retailers.

Consumers chose to spend their money elsewhere.

In the same vein I've seen an increasing number of articles in the past 3 years essentially saying the same thing: Internet "killed" the economy basically it's more efficient.
They're arguing that Netflix did with ~2.1K employees what Comcast couldn't do with ~139K. And that those jobs aren't coming back...
As if somehow Comcast wouldn't fire the other 118K people if it could have done what Netflix did.

It all leaves a bad taste in my mouth; either that or the tuna & pickle sandwich I just had... :P
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Anonymous Coward, 10 Sep 2015 @ 5:25am

Re: Re: "Usage-Based Pricing"
But why would they do this if they have little legal & financial incentive to do so? It's simply far better for them to simply gouge the consumer/subscriber at every opportunity and deal with the occasional bump on a case-by-case basis.
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Anonymous Coward, 10 Sep 2015 @ 5:26am

Re: Re: Re:
Uh... he wants more money? I mean, duh... :P
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Anonymous Coward, 10 Sep 2015 @ 6:48am

Re: Re: Re: "Usage-Based Pricing"
"That competent person is not cheap, was expensive to train, is difficult to find and hire, has to be negotiated with for compensation or even to get them to reside where you want them to work, plus add healthcare and taxes and yada yada"

Also tax deductible.
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tqk (profile), 10 Sep 2015 @ 7:52am

Re: Re: A bigger problem with his statement
It should also be mentioned this is "last mile" traffic, direct from the users' ISP to their location, since Netflix installs servers inside ISPs to serve the data. This doesn't step on anyone else's bandwidth and certainly shouldn't enter into any discussions about rolling out faster or bigger pipes. They're already there when the customer's signed up.
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Zonker, 10 Sep 2015 @ 11:28am

Re: Re: Re: "Usage-Based Pricing"
I'd also say that upgrading your own existing infrastructure to deliver your promised bandwidth at full capacity costs a heck of a lot less than a $45-55 billion dollar purchase of another cable/media/ISP company (and their existing under-performing infrastructure).
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tqk (profile), 10 Sep 2015 @ 1:47pm

Re: Re: Re: Re: "Usage-Based Pricing"
That's revenue vs. expenditure. Revenue pays stockholder dividends now. Expenditure on infrastructure pays stockholder dividends more and reliably, but later. This being the age of the Quick Buck, it's an easy choice to make.

Thank the MBAs for gaining us this insight. We're in a race to the bottom, didn't you know? They learned all their insights from playing musical chairs in kindergarten. When the music stops, you need to have already grabbed onto your chair.
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