> 2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"
I agree with your first point, but your second point doesn't follow. If anything, Comcast will price gouge Netflix out of business, and we'll be back to being stuck watching their awful "On Demand" instead.
They can do this, because Comcast owns the content (NBC), the delivery mechanism for said content (cable TV), and the only delivery mechanism (broadband Internet) for their competitor (Netflix/Amazon Prime).
On the other hand, the (failed) merger attempt between AT&T and T-Mobile was the best thing to happen to consumers in a long time, due to the breakup fee that AT&T had o pay T-Mobile($1+ billion worth of spectrum).
I'm trying to imagine a similar silver lining that could happen here, though I can't think of any.
And how would this 'FU ComcastWarner' work in America? Anywhere you live you only have the choice of paying your cable provider, your telephone carrier or your wireless carrier for internet.
- DSL infrastructure hasn't evolved in a decade or more. You're lucky to get mid-single digit megabits/sec. I had 0.7 mpbs offered to me in Mountain View by at&t.
- Cable is the only speedy one, but they can price gouge you, limit the amount of traffic (see Comcast) and decide who to prioritize
- Wireless is getting faster, but is severely limited in transfer packages. You'd be paying an arm and leg just to get a few Gigabytes in total per month.
So tell me - how does this 'FU ComcastWarner' gonna work? Move to the one or two towns that have alternative internet (e.g. Fibre)?
Internet providers need to quit playing these shenanigans all the time.
What they do is they build public roads. You wouldn't allow a company to build a public road, and then go:
"Safeway trucks get a free pass, cause we have a deal with them; everyone else, $5 per vehicle. Except for you, Best Buy, you pay $25 - except Saturday and Sunday, when you may not pass at all."
I also see police on the roads, that prevent random lunatics from driving while tripping balls and ramming into my ass at 150 km/h during my morning commute. I think that's also a function of government.
Secondly, if you think the "no trucks over 3 tons" signs impinge on your "liberty", then go ahead and drive a 25 ton truck down that road, see what happens. I'm having this discussion about "liberty" versus common sense with my 3rd grade son all the time.
I certainly never said "no trucks over 3 tons" impinges anyone's liberty. I was implying that "no trucks over 3 tons" is equivalent to saying "no one is allowed to consume more than X amount of bandwidth" on my public pipe, which is exactly how the network providers are going to couch their arguments when trying to strangle Netflix.
There is probably a good technical reason as to why there is a 3 ton limit, i.e. the road (or bridge this road crosses) can't support >3 tons and will probably collapse under the weight of a heavier vehicle. There are also good safety reasons such as not wanting 25ton 18 wheelers using the road past your local primary school as a rat run. That's where your analogy fails.
Well a long time ago I would have been all for public roads, but alas do you really trust the Federal government to dictate what does go down the pipe and who is allowed?
Do you trust the Federal government to dictate what goes down the road and who is allowed to drive?
I recommend blind trust in nobody, as a rule. But with the government, at least there's the option of voting against the current office holders. Whereas when a Comcast-TimeWarner super-juggernaut takes over the whole market, what are my options? My lawyers versus theirs? Yeah, that would end up "well".
With the government, at election time, you have the option to vote between one corrupt asshole or the other. With corporations, you can just choose to not buy from them (therefore starving them of money).
So, in the case we're discussing here (and directly applicable to my own situation BTW, but that's anecdotal), people will have the "choice" between, let's see... Comcast-TimeWarner and... Comcast-TimeWarner. Great choice, I'll take seven!
Or I could choose to not buy, therefore starving myself of the resources they provide. That's even better!
So you really, really have to have Internet/cable, and they must give it to you cheaply and at high quality? If you're not even considering the option of walking away from them, you're giving them enormous leverage over you.
EDIT: This is the behavior of "rational economic actors", IMHO. If the benefit you get from the expensive Internet they offer is bigger than the cost, it's rational to take it. If it isn't, then it's rational to pass on it. If enough people do this, then the corporation realizes they get more customers by lowering prices (if they also act as "rational actors").
Many people really, in a practical sense, do have to have the Internet, and at reasonably high quality. Work and school being two common cases.
The 'rational actor' model is to economics what spherical cows [1] are to dairy farms. It is a simplifying assumption that is useful for certain general cases, but if you ever find yourself depending upon it in an argument, you're working at too shallow a level.
In this case, though, even if the rational-actor model were valid, you'd be wrong. In the case of monopolies and oligopolies, the rational-actor approach is to, basically, let yourself be screwed by the monopolist.
For example, in my case I'm in an area where I pay more money for worse broadband (ADSL) because I hate monopolists like Comcast. From an economics perspective, I'm an irrational actor, because I'm not optimizing for my own interests.
> Many people really, in a practical sense, do have to have the Internet, and at reasonably high quality. Work and school being two common cases.
Work and school are economic investments with concrete returns; financially, you get more out of Internet access than you pay. If you didn't need Internet for either of these, and just used it for Netflix or World of Warcraft (or any kind of recreation), would you reconsider paying for it?
Sorry, I'm not interested in jumping through your theoretical hoops. As a non-Comcast user who does need the internet, that doesn't seem like an interesting game to me.
Then do the constituents of your city, county, state, and country a service and either stand for election, volunteer time for a candidate that's not an asshole, or donate money to the campaign of a candidate that's not an asshole so they get on the ballot. Otherwise you get what you deserve.
Keep in mind that in some cases the municipals are sued by the companies that can't be bothered to implement quality broadband for trying to implement quality broadband.
Makes me wonder if it'll have to get to the point that a municipality says fuck you to both the broadband provider suing them and the county/state courts that allow such nonsense to implement their broadband anyway.
I've played many games of Starcraft on a Verizon LTE connection. Many (most?) online games have 250ms of latency "built in" to even the playing field for users with ping times below 250ms. LTE latency is usually closer to 50ms
250 ms for SC2 is a huge handicap and is definitely not added to the game. I can't imagine marine splitting(or really playing BW at all) with that kind of penalty.
That being said, Targa is famous for playing for a while via a 4g connection in Australia. So playing the game well is certainly possible.
It's pretty easy to do lag compensation on RTSs. You have the server run a copy of the game locally and just sync with the clients. Typically, RTSs have a lot of actions, but timing isn't as crucial. So, if things get out of sync, you just buffer until you everything catches back up again. You can even do things like vary the speed of the game (FPS) without the players noticing much. With games that rely on precise timing as a core mechanics (e.g. a shooter, fighting, or rhythm), the player is going to notice that an action took 10ms and then the next time they did it, it took 20, because they'll actually miss their target.
When municipalities offer cable they roll out with a competitive package but often fall behind in technology over time because they are slow to upgrade and have no leverage with content providers. I imagine it would be the same for internet.
Why would they need leverage with content providers? I don't want content from my municipal, I want access to the content of my choosing. Let me deal with content providers on my own terms.
Sure. But how many 'municipal' providers are there in places where a lot of the HN activity lies (i.e. SF/Silicon Valley) in say Mountain View, Palo Alto, Santa Clara, Redwood City, Menlo Park, San Mateo, Cupertino, Los Altos etc?
It's a small patchwork all over the country.
Netflix partnering with, or potentially acquired by, Amazon to take on other platforms makes sense. There needs to be consolidation and I think Bezos could do a better job bringing in bigger licensing deals.
A duopoly might help in America but for the rest of us (at least where I'm from) competition is working fine. I can choose between around 5 different providers for internet and/or TV with prices starting at as little as $35 per month for unlimited internet at around 20mbps download speed. I can also choose online between Netflix, Amazon/LoveFilm, free demand services such as BBC iPlayer, ITV Player, 4OD, and paid on demand services that come with certain TV packages (SKY on demand). In the UK competition in this space has never looked better in my opinion. It always amazes me that America, the champion of the free market, has such a fucked up telecoms (and by extension TV) industry.
If you're in the UK, Zen Internet now offer £25/month truly unlimited fibre broadband. ~80mbps down, ~20mbps up, no traffic shaping / AUP or anything. I am so happy with my internet right now.
The best way I can explain it is that it's putting the accent more on "free" than on "market", and it's a 14-year-old's definition of free: "You can't make me do anything! YOU'RE NOT MY DAD!"
However, I worry that the more accurate explanation is that it is a neofeudal structure cloaked in free-market terms.
The $35 includes most calls (all local and ten most-called/chosen national and mobile numbers are free on my package from the last three providers) and line rental. Add another $15 for TV licence.
The competition here is from Local Loop Unbundling [1], where the non-ISP part of BT, BT Openreach, works on the exchanges and cabinets. Rollout stats [2], compare Scotland and London for the rural/city development. There's up to 9 choices in London, I would expect iPlayer would work on all of them.
> They can do this, because Comcast owns the content (NBC)
You forgot Universal, which together still amounts to only a fraction of Netflix's content. There's a reason that Netflix doesn't carry many titles in their streaming service: it's already too costly to acquire the rights to stream them all. If Comcast were to raise the price on that content, Comcast could simply stop streaming those movies/shows. Given the size of their library at this point, I doubt any of this would be missed. The "content" you mention is no longer as critical to Netflix's business strategy as it used to be, especially as they move to more original content.
Netflix's original content only amounts to a fraction of the content available on Netflix. They do and will continue to be dependent on licensing this content.
They might want Netflix to survive in some form so as to avoid awaking the sleeping antitrust dogs. Same way as Microsoft found the Mac a useful argument against the "desktop monopoly" argument in the 90s.
What happened to MS in the alternate universe where MS openly vowed to crush Netscape and were as good as their word, after Apple went bankrupt in the early 90s?
They lost their antitrust case, which most of the harshest judgements were reduced or overturned later in appeal. In the end it was determined that they were a monopoly, the results of which include the things you mentioned, and some of their long held business practices had to be changed. After that Netscape eventually came back, and better, as Firefox and Apple doesn't seem to be doing so badly these days.
I'm not understanding your point about an alternate universe in your statement. I must be missing something.
To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry. iApps running on iOS running on an iPhone using an Apple A7 offers the ability to optimize the user experience and integrate the layers that vendors doing things piecemeal can't match.
If Netflix et al want to survive, they have to evolve from being mere middlemen, funneling someone else's content through someone else's pipes.
> To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry.
That is devil's idiot. I can choose between 4 different cell carriers and dozens of smartphone makers. Many people only have one option if they want >10Mbps internet.
Fortunately I get to choose between Optimum and FiOS. Optimum gives me 60/25 for the basic rate to keep me from switching to FiOS.
I was addressing chimeracoder's point about vertical integration. There might be tons of Android manufactures peddling phones, but Apple and Samsung are eating up all the profits because they are verticicaly integrated. That's the major play Comcast is making.
I wouldn't be surprised to see this coming soon to wireless. Imagine movie caching servers integrated into the backhaul network instead of going over the public internet. The improvement in QoS would make being a Netflix type entity untenable.
He wasn't making a point about vertical integration, but rather about monopoly power. Perdue and Tyson are vertically integrated. They own feed mills, hatcheries, grow farms, packing plants, and distribution. No one cares because you can always just pick the package of chicken that costs $3.29 instead of $3.59.
I also don't see how Samsung is vertically integrated. They don't make the OS, the App store, or have content/DRM. They have in-house manufacturing, but Apple doesn't. The two companies are vertically integrated in totally different ways, thus vertical integration is a weak argument for their success.
That was also about monopoly power. If NBC were an independent entity, they would license their back catalogue to the highest bidder. Given that NBC is owned by a cable company, the strategy changes. The current dynamic for NBC is, if we license to Netflix, then some people will cut the cord, lowering Comcast/TWC cable revenue. The bigger Comcast is, the less likely NBC is willing to license content to Netflix. If NBC were independent, they would maximize their own revenue, but because they are owned by Comcast, NBC's decisions are to optimize profits for the combined company which is likely not in the interest of consumers.
This is the case regulators should make for putting conditions on the merger. Comcast should be forced to divest from NBC/Universal and agree not to acquire additional content. That would create a significant benefit for consumers.
That describes a vertical monopoly, which is not prohibited. If Apple hadn't acquired PA Semi, they would be selling their products on the open market to the highest bidder, etc. Same situation.
Google has threatened to go nuclear over net neutrality and open up their dark fiber network should things get ugly. Google has more fiber than most any one single company in the us and could be a legitimate threat should comwarner try to call their bluff. I have a feeling google would win that fight
There is no use for Google to participate in long-haul wholesale. There is a lot of supply there. The real issue is last mile, where consumers have no choice.
But the rules just changed. It remains to be seen what those guys will do. But I agree that the last-mile competition, or lack of it is far more important.
Really? The last time I checked, the cost for fiber optic back-haul was ridiculous! I need to get some new quotes within the next few months, though- we shall see.
I would love to see Google enter that fight instead of trying to regulate their competition away. Not because I'm that anti regulation, but because I don't appreciate the irony of Silicon Valley always bitching about regulation, but then demanding that the government create an artificial reality where owning the pipes doesn't give you a natural competitive advantage.
Would you appreciate it if one supermarket bought all the food and then price gouged you 100 dollars for meat?
I don't see how a monopoly helps anyone but the corporation, and even then just in dollars today. Strangling the entire market doesn't help anyone in the long run.
I'm not denying the antitrust concern of the union. I'm pointing out the hipocrisy of certain generally anti-regulation Silicon Valley companies trying to use antitrust law to preserve the viability of their role as middlemen. At the end of the day, Netflix's business model is inherently fragile. Amazon is somewhat better positioned, because they at least provide the upstream infrastructure. I think they know they need to play the last mile game, just as they're exploring doing on the physical goods side with drones and special deals with USPS.
I know. That's why Amazon is better positioned. They at least own the upstream infrastructure. Netflix is utterly dependent on three other industries, but is itself pretty easily replaceable. The had a first mover advantage in getting favorable content licensing deals before anyone thought it would matter, but that's fading fast as those deals are renegotiated. And its value add is totally fungible. People care about the content and will happily use another provider if they have the content. Netflix' foray into original content is an existential move.
Except it's not really that dependent on Amazon - there are nearly perfect substitutes for every AWS service.
Comcast is different because it already operates as a monopoly in many areas, and it's trying to change the rules so that it can leverage that monopoly, to the detriment of everyone but themselves, and there's not really anything that anyone but the regulators can do about it.
I wonder if torrent/p2p would be a viable business model for Netflix. Think about it : they have a massive install base inside comcast where they can run programs and on most such programs they can run code, and store data.
P2P isn't a good architecture for something like that. You pull data from a leaf node, through the core network, back to another leaf node, traversing the relatively slow last mile coax part of the network twice. Meanwhile, a relatively small number of movies and shows will dominate the demand, which Comcast can easily cache near the edges of its network. There is a reason Netflix is vying to get equipment in those spots.
Actually, they wouldn't arbitrarily price their products that way. Companies engage in a little thing called price discrimination. The only difference in a monopoly is that you are the sole price leader. That doesn't mean you can arbitrarily set the price high. Most cable companies have monopolies thru license in municipalities.
Somehow that doesn't work this way. In israel monopolies and price gouging of food is pretty common(not 100X, but maybe 2x), and i haven't seen no violent acts.
You'll get your stores raided if you control and gouge something like food and water though, possibly ending with a head in a grocery cart. Police might even help.
Cable has a bit more leeway with the crowd I'd imagine, though there'd still definitely be consequences. Just not as dramatic consequences. I'd hope people protest gouged cable prices peacefully.
If utility natural monopolies weren't regulated they wouldn't exist because local governments wouldn't allow them to dig up roads to put in their infrastructure.
Comcast has a huge advantage owning the pipes into my house, but they squander it. Rather than provide services, they become highway robbers on their own toll road. Comcast could have been netflix, akamai and so much more years ago. So tell me how they don't have advantage?
> Comcast could have been netflix
Netflix offers incredible value. Don't you think it's irrational for Comcast to offer up this value at the expense of their own profits when they are not being threatened? They are going to milk it for as long as they can.
Milking it is not a rational choice, expected but not rational. Comcast should have make the Roku, but due to a fixation on the analog cable infrastructure they did not. The amount of analog bandwidth they devote on their networks to digital traffic is a ridiculously small percentage of their capacity.
Comcast should have created the caching infrastructure that Akamai did. Comcast should have implemented cloud backup services. They have the capability to have 50+ Mbps from the customer to their datacenters. This is freak'n huge.
Why didn't comcast create a colo system so that providers could get as close as possible to the customer?
No, Comcast will go down with the Titanic with all of their riches. They have squandered more than they have protected.
Why precisely does Netflix need to "evolve"? I like Netflix just fine as it is, thank you very much. The totality of current online businesses are using "someone else's pipes", so framing that as a criticism strikes me as distinctly hollow.
Online businesses by and large use other people's pipes and that inherently makes them all vulnerable. Its like apps on iOS. Apple will always capture most of the value created by the ecosystem as a while, because they control the platform. App developers have little leverage. Its not profitable to be a sharecropper, but that's what online businesses largely are. Regulating and commoditizing the communications infrastructure into "dumb pipes" (I.e. net neutrality) is the only around that. Its regulation that picks winners and losers by telling an entire industry that they have to produce a commodity product so that online businesses can be protected from a flaw intrinsic to their business model.
This, I believe, is why Netflix is producing original content. Outside the US they license it to traditional networks as well (I've seen adverts for House of Cards recently through Sky here in Germany).
>To play devil's advocate, what it means is that Comcast has the better business model. After all, that's why Apple and Samsung dominate the cellular industry.
what?? Does Apple or samsung have any control on how much carriers charge?
By your logic, ATT wireless, verizon wireless, and other cell carriers have to make their own cell phone and not just be a middlemen that funnel someone else's content on someone else's smartphone.
Another problem is that Comcast is an internet provider for a lot of people. It's actually my only option right now, so if I want to access that Netflix subscription, I still need to pay Comcast, so point 1) will make that all the worse since it's already clear they throttle heavily on Netflix, this will only make the degraded experience even more expensive.
> 2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"
Not when they're direct competitors to Comcast, Comcast is the only ISP for most people, and Comcast can legally charge Netflix et al out of the market.
I don't think your second premise is entirely true, since Comcast doesn't provide enough bandwidth for streaming services like Netflix and YouTube already. Those services are going to become harder and harder to use if anything.
This would be a perfect point for the regulators to harp on for approval... No need to divest, just require a condition of the sale to provide a neutral network.
>the AnitTrust people would have to be really asleep at the wheel for that
Call me a pessimist but I think this will go through. Why? The lobbyists already sounded out (lobbied/paid-off/promised-job-in-future) enough people in govt to feel that this will go through, or at least there is enough chance of it happening.
I bet this will go through, especially using the point that they don't compete against each other (which would be stupid reason to accept by AntiTrust people). They were NOT designed to compete against each other in the first place. They were given geographic divisions by regulators for that very reason.
> The lobbyists already sounded out (lobbied/paid-off/promised-job-in-future) enough people in govt to feel that this will go through, or at least there is enough chance of it happening.
I don't think that follows. AT&T / TMobile gave it a shot a couple years ago, and that was shot down.
In the end ATT ended up paying hundreds of millions of dollars as a fine to TMobile. I doubt Comcast would repeat the same mistake.
This will largely go through with the ironic claim that they don't compete against each other, when they were NOT designed to compete in the first place.
Was that a fine? I thought it was a breakup fee common in merger contracts so that you can't have the other company show you all their internal details then you say "nah nevermind" and you walk away with their roadmap/customer numbers/etc.
I don't think they compete directly in vast majority of markets and for this to go through they will surely forfeit those smaller contested ones.
I think this will go through. Then they will have a huge "content and subscriber" stick to wave around at Aereo, Netflix, Apple and anyone else wanting to play the net content hero.
> Then they will have a huge "content and subscriber" stick to wave around at Aero, Netflix, Apple and anyone else wanting to play the net content hero.
That's really the play here. Get a ton more captive users in order to better extort Netflix et al for access to those customers, and beat that stick until all their over the top service competitors are either out of business or uncompetitive. Then the real screwing of customers can commence in earnest.
I think people are overly optimistic about the ability to endlessly increase the performance of wireless networks. The existing networks make fairly efficient use of the spectrum they're allocated. That means you really only have two options to make it go faster.
1) More spectrum. But it's massively in demand (read: expensive), nobody wants to give any up, and even if you had "all" the spectrum there are still practical physical limits about how much data you can transmit without using a wavelength that won't penetrate walls.
2) More towers that each use lower power. This is the one that can get you almost arbitrarily large amounts of wireless bandwidth, but it's also the one whose cost converges on the cost of building a new fiber optic network as the number of towers you need approaches the number of users you have.
Neither one of those is going to make for an inexpensive roll out of a wireless network capable of handling Netflix's video traffic to millions of customers simultaneously in the same city.
Worth noting that this is illegal to some extent in ~19 states. The broadband oligopoly already thought of this, and has been working to pre-empt it for a while.
The difference between the sewer and broadband is that the price of giving sewer district a monopoly is regulation as a public utility.
So if whomever runs your sewer decides that they will not accept solid waste anymore, there is a regulator who will prohibit that from happening.
In many states, the Public Service Commission or similar entity has lots of regulatory authority over cable television, landline and electric rates, but no authority over cellular or broadband. Shockingly, the utilities have invested nothing in the regulated markets for 20 years.
Err, simple physics ensures mobile will never have the bandwidth of copper wire. Every band and protocol can be transmitted over the wire to each node independently.
This is what I was wondering. I live in an area that only had comcast an no other option. When I visit places it seems to be either Time Warner and Comcast but not usually both.
As someone who bailed cable/satellite a long time ago in favor of OTA broadcast, I'm personally less concerned about the impacts this will have on cable vs. the impacts this would have on cable broadband internet (though I definitely agree with concerns expressed over the impacts of cable).
For cable, we have Netflix, Amazon, etc. as a possible alternative. And I guess for broadband internet, we always have DSL to fall back to.
I wouldn't say it won't happen, but I don't know how much of #1 impact there will be considering it's already not practical to pull competing cable operator to begin with. (Unlike, mobile carriers, for instance.)
Obviously, I'm just speaking out from my experience, but how common it is that certain region is served by multiple cable operators? (And that you get to choose from?)
1) Americans can expect some of the worst Cable price gouging they have ever seen
2) NetFlix, Amazon Prime et al will become really popular as a result of all the customers saying "FU ComcastWarner"