[discuss] [ISOC_KE] Fwd: Who should Pay for Netflix? - For and Against Neutrality

Wed Mar 26 11:12:32 UTC 2014

FYI, Luigi represents European incumbent telcos as Chair of ETNO : European
Telecommunications Network Operators.  He was the proponent of the "sender
pays" model during the run up to WCIT.

In other words, the Internet should be like the telephone billing system.
 His "free lunch" idea disregards the fact that you already pay for
Internet access AND the fact that Netflix already pays for their access.

Acknowledging the fact that fiber needs to be deployed to consumer is
perhaps the first step in reaching agreement.   Fiber deployment would
certainly be in the public interest and is necessary in building the
information Society.

Google (and now others) can make profits at gigabit speeds.  Luigi clearly
doesn't want this as it would eat into his members profit margins (97% in
the USA, probably similar in the EU):

http://www.technologyreview.com/news/514176/google-fibers-ripple-effect/

In general, there is plenty that the dominant Internet providers can do to
provide better deals without much effort, she says. Cable companies like
Time Warner Cable and Comcast have the technical capacity to speed up
service, and also plenty of room to lower prices, given the estimate from
one analyst--Craig Moffet of the Wall Street firm Bernstein Research--that
they typically make 97 percent profit margins on Internet services.

-- 
Cheers,

McTim
"A name indicates what we seek. An address indicates where it is. A route
indicates how we get there."  Jon Postel

On Sat, Mar 22, 2014 at 11:17 PM, Ali Hussein <ali at 3mice.com> wrote:

> Listers
>
> Apologies for cross posting.
>
> I find the blog by Reed Hastings pretty interesting especially after his
> recent deal with Comcast.
>
> *Ali Hussein*
>
> +254 0770 906375 / 0713 601113
>
> Twitter: @AliHKassim
>
> Skype: abu-jomo
>
> LinkedIn: http://ke.linkedin.com/in/alihkassim<http://ke.linkedin.com/in/alihkassim>
>
> Blog: www.alyhussein.com
>
> "I fear the day technology will surpass human interaction. The world will
> have a generation of idiots".  ~ Albert Einstein
>
> Sent from my iPad
>
> Begin forwarded message:
>
> *From:* "Luigi Gambardella" <luigi.gambardella at gmail.com>
> *Date:* March 22, 2014 at 7:53:10 PM GMT+3
> *To:* "ali at 3mice.com" <ali at 3mice.com>
> *Subject:* *Who should Pay for Netflix?*
> *Reply-To:* luigi.gambardella at gmail.com
>
>
> <http://feaf.espsrv.com/f/rnl.aspx/?khc=stztw1a9ij=uxci&=u_w/5c6-:=6b-&x=pp&q/ub98043ecNCLM>
>
> <http://feaf.espsrv.com/f/rnl.aspx/?khc=stztw1a9ij=uxci&=u_w/5c6-:=6b-&x=pp&q/ub98043ecNCLM> Se
> non legge correttamente questo messaggio, cliccare qui<http://feaf.espsrv.com/f/rnl.aspx/?khc=stztw1a9ij=uxci&=u_w/5c6-:=6b-&x=pp&q/ub98043ecNCLM>
>
> *Who should Pay for Netflix? *
>
> Dear friends,
>
> I'd like to share with you a great blog post by Jim Cicconi, in response
> to Reed Hasting's recent blog.
>
> I share the view that there is a fundamental misunderstanding in the net
> neutrality debate. While sharing the principle of Open Internet, we cannot
> accept an interpretation of this principle as "free Internet, free lunch".
>
> I believe that also in Europe we should avoid implementing any measure
> going against innovation, better services and that at the end would
> restrict the freedom of the users.
>
> Luigi Gambardella
>
>
>
> *Who should Pay for Netflix? *
>
>  *Posted by: Jim Cicconi
> <http://feaf.espsrv.com/f/tr.aspx/?&x=pv&8Ud0h=ro_yvx&x=pv&9c:=z_vxkha=8jjeyrrlhm55ejfj2b&x=pv&7aeb-3o57.cr1cQS$26je-eg=pNCLM>
> on March 21, 2014 at 4:08 pm*
>
> I saw Reed Hasting's blog<http://feaf.espsrv.com/f/tr.aspx/?&x=pv&8Ud0h=ro_yvx&x=pv&9c:=z_vxkha=8jjeyrr6:e:4&x=pv&0j0:&x=pv&n43ecqo/sum/uq9dj9cd0izjea:i35&x=pv&9371i026eh2djhd&x=pv&:3c5j5:ecbNCLM>
>  <
> http://blog.netflix.com/2014/03/internet-tolls-and-case-for-strong-net.html<http://feaf.espsrv.com/f/tr.aspx/?&x=pv&8Ud0h=ro_yvx&x=pv&9c:=z_vxkha=8jjeyrr6:e:4&x=pv&0j0:&x=pv&n43ecqo/sum/uq9dj9cd0izjea:i35&x=pv&9371i026eh2djhd&x=pv&:3c5j5:ecbNCLM>>
> yesterday from Netflix asserting in rather dramatic fashion (with
> diagrams) that ISPs should build facilities (he said provide, but those
> facilities have to be built) to accept all of Netflix's content - indeed
> all of the content on the Internet - without charge.  Failure to do so,
> according to Mr. Hastings, was a violation of "strong net neutrality rules"
> and bad public policy.  I thought it might be helpful to unpack those
> assertions so we could get right down to the core of Netflix's rather
> radical proposition -- that people who don't subscribe to Netflix should
> nonetheless pay for Netflix. Here are some undisputed facts upon which
> everyone should agree.
>
> First, let's all accept the fact that the advent of streaming video is
> driving bandwidth consumption by consumers to record levels.  Increased
> bandwidth consumption and faster broadband networks like our Gigapower<http://feaf.espsrv.com/f/tr.aspx/?&x=pv&8Ud0h=ro_yvx&x=pv&9c:=z_vxkha=8jjeyrrlhm55ej57.cr&5drec0ihzhed-2hQS$1a&x=pv&9=srsw_yhQS*274ld=c5mi1cQS*2d9hi6ge&x=pv&8a5&x=pv&9=ttuuu&x=pp&o/NCLM>service in Austin, Texas (and soon Dallas) are requiring all service
> providers to drive more fiber into their networks to create the capacity
> necessary to deliver those services to consumers, whether the service
> providers are delivering a wireless or a wireline product.  This phenomenon
> was at the heart of our Project VIP<http://feaf.espsrv.com/f/tr.aspx/?&x=pv&8Ud0h=ro_yvx&x=pv&9c:=z_vxkha=8jjeyrrlhm59h00./8ebmce69b0q1jjhzfhd008izl&x=pv&ezje29dl9dj3rq37-:b&x=pv&d&x=pv&3&x=pv&czu3n56hhz&x=pv&d2&0o21h05drNCLM>investment announcement in November 2012 and it is true of companies like
> Cogent, Level 3 and CDNs like Netflix as well.
>
> Second, we should accept that companies must build additional capacity to
> handle this traffic.  If Netflix was delivering, for example, 10 Terabytes
> of data in 2012 and increased demand causes them to deliver 20 Terabytes of
> data in 2013, they will have to build, or hire someone to build, the
> capacity necessary to handle that increased volume of traffic.  That
> increase in traffic from Netflix is, by the way, not only the result of a
> likely increase in online viewing by existing subscribers, but also due to
> an increase in Netflix's customer base (it announced a 33% increase in
> subscribers from 2012 to 2013 - good for Netflix).
>
> Third, if Netflix is delivering that increased volume of traffic to, say,
> AT&T, we should accept the fact that AT&T must be ready to build additional
> ports and transport capacity to accept the new volume of capacity as a
> consequence of Netflix's good business fortune.  And I think we can all
> accept the fact that business service costs are ultimately borne by
> consumers.
>
> Mr. Hastings blog post then really comes down to which consumers should
> pay for the additional bandwidth being delivered to Netflix's customers.
> In the current structure, the increased cost of building that capacity is
> ultimately borne by Netflix subscribers.  It is a cost of doing business
> that gets incorporated into Netflix's subscription rate.   In Netflix's
> view, that's unfair.  In its view, those additional costs, caused by
> Netflix's increasing subscriber counts and service usage, should be borne
> by all broadband subscribers - not just those who sign up for and use
> Netflix service.
>
> When Netflix delivered its movies by mail, the cost of delivery was
> included in the price their customer paid.  It would've been neither right
> nor legal for Netflix to demand a customer's neighbors pay the cost of
> delivering his movie.  Yet that's effectively what Mr. Hastings is
> demanding here, and in rather self-righteous fashion.  Netflix may now be
> using an Internet connection instead of the Postal Service, but the same
> principle applies.  If there's a cost of delivering Mr. Hastings's movies
> at the quality level he desires - and there is - then it should be borne by
> Netflix and recovered in the price of its service.  That's how every other
> form of commerce works in our country.  It's simply not fair for Mr.
> Hastings to demand that ISPs provide him with zero delivery costs - at the
> high quality he demands - for free.  Nor is it fair that other Internet
> users, who couldn't care less about Netflix, be forced to subsidize the
> high costs and stresses its service places on all broadband networks.
>
> As we all know, there is no free lunch, and there's also no cost-free
> delivery of streaming movies.  Someone has to pay that cost.  Mr. Hastings'
> arrogant proposition is that everyone else should pay but Netflix.  That
> may be a nice deal if he can get it.  But it's not how the Internet, or
> telecommunication for that matter, has ever worked.
>
> http://www.attpublicpolicy.com/
>
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