Yes, Verizon Is At Fault In Netflix Dispute; It's Not Delivering What It Sold Customers

from the a-dose-of-reality dept

We wrote about the latest Netflix/Verizon dispute over who's to blame for poor quality movie streaming. Netflix has chosen to pin the blame on the ISPs when there's network congestion, while Verizon angrily hit back at this "PR stunt," claiming that it was actually Netflix's fault for not doing a better job routing its traffic. Except... that's not true. As we've been pointing out for the better part of a decade, this is all about the broadband companies trying to double charge. Tim Lee, over at Vox, summarizes the point nicely:

Verizon's customers have paid Verizon for the service of delivering content to them. But rather than simply performing the service Verizon's customers have paid it to perform, Verizon sees an opportunity to get paid twice: in addition to charging its own customers for connectivity, Verizon hopes to also charge Netflix to deliver its content to those customers.

Verizon is effectively using its own customers' poor experience as leverage. Verizon has been threatening Netflix that if they don't pay up, Netflix customers (who are also Verizon customers) will get frustrated and cancel their Netflix service. Of course, that threat is a lot more powerful because most customers don't have many alternatives to Verizon service.

And yes, I know that some big broadband defenders will immediately trot out the usual defense: that Verizon sold its network in a way that it never actually expected subscribers to use -- but it's difficult to see how that's everyone else's fault. If anything, it raises some questions about whether or not the FTC might want to step in and look at whether or not Verizon, AT&T and Comcast totally misrepresented what they were selling consumers.

As for the bullshit claim that Netflix is to blame because it sends Verizon more traffic and thus the "traffic ratios are unbalanced," well, Lee points out that this is actually Verizon's fault as well.

But this argument doesn't make sense. Verizon customers aren't just paying Verizon to send traffic to Netflix, they're also paying Verizon to deliver Netflix (and other) traffic to them. And there's no reason to think that carrying traffic from Netflix to Verizon customers is more expensive than carrying traffic in the other direction.

Indeed, there's a simple reason that Verizon's network receives more traffic than it transmits: that's how Verizon set it up. All of Verizon's standard FiOS packages provide dramatically more bandwidth for downloading than uploading. The entry-level service, for example, is 15 Mbps downstream and 5 Mbps upstream. The fastest package is even more lopsided: 500 Mbps downstream and 100 Mbps upstream. If Verizon builds a network that's optimized for downloading, it can't complain that its customers use it to download stuff.

And, of course, Verizon can squawk all it wants about this, but it's not going to change the fact that it's the problem here. Yes, Netflix delivers a lot of data. But if Verizon can't handle it, it shouldn't have sold it to consumers.

Filed Under: broadband, disputes, double charging, interconnection, net neutrality, peering, streaming
Companies: netflix, verizon

The Net Neutrality Strawman: No One Is Stopping Broadband Providers From Charging More

from the understanding-net-neutrality dept

While I don't think that passing laws in favor of net neutrality is necessarily the right way to go about things, it really is amazing to watch anti-net neutrality types completely make up bogus arguments in favor of their position. We pointed this out exactly two years ago, when lobbyist Mike McCurry wrote a blatantly bogus editorial, claiming that Google didn't pay a cent for its broadband bills, and that it was arguing in favor of net neutrality to avoid having to pay for broadband. This was an outright lie -- and I challenged McCurry to agree to pay Google's bandwidth bill. Not surprisingly, McCurry declined -- though, the organization he represents, Hands Off The Internet, has shown that it reads Techdirt and doesn't mind quoting us out of context when it furthers its telco-funded argument.

Yet, here we are again, with anti-net neutrality supporters are making completely bogus claims about how net neutrality somehow prevents them from charging more. The Wall Street Journal is running an anti-Kevin Martin editorial, claiming that his decision to sanction Comcast for traffic shaping is a victory for net neutrality supporters, and then stating:

Net neutrality proponents.... would prohibit Internet service providers from using price to address the ever-growing popularity of streaming video and other bandwidth-intensive programs that cause bottlenecks.

That's simply untrue. No one is saying they can't charge more for bandwidth. Again, does anyone really believe that Google isn't paying a ridiculously large bandwidth bill? Instead, as Tim Lee describes, net neutrality has absolutely nothing to do with price. What the telcos are really trying to do is get you to pay twice for the same bandwidth. That's because internet connectivity has always been about paying for the connection from your home to the "cloud." We each pay for that connectivity from the ends, to the middle of the network. So, note, all of those connections are fully paid for.

What the telcos are trying to do with breaking net neutrality is also get companies providing services to pay again for connectivity from that middle out to users. As you'll recall, those users have already paid for that bandwidth themselves. So, the telcos are, in effect, looking to double charge for bandwidth already charged for.

This has huge implications when you think about it. After all, if everyone providing content and services to the middle also has to pay to deliver that to the ends, then it makes the initial connection that much less valuable. Telcos may be shooting themselves in the foot by trying to do this. In double charging companies for the bandwidth consumers are already paying for, they may make it such that consumers are a lot less willing to pay for it, since it will be a lot less useful. Note that none of this says that the telcos can't charge what they want for the initial bandwidth -- from the customer to the middle. Net neutrality advocates are simply saying it doesn't make sense to then charge again to send content from the middle outward. After all, it's already paid for, and who pays for "half a connection" anyway? The reason you pay for a connection is to get on the net. Not to get to the middle where the next tollbooth exists.

Filed Under: double charging, net neutrality, prices