| Date: Wed, 31 Dec 2014 09:52:21 -0500
From: Fred Goldstein <fg_es@ionaryQRM.com>
To: telecomdigestsubmissions.remove-this@and-this-too.telecom-digest.org.
Subject: Re: Verizon says it will charge NetFlix no matter what the FCC decides
Message-ID: <m812ic$861$1@dont-email.me>
On 12/30/2014 12:25 PM, Bill Horne wrote:
> On Tue, Dec 30, 2014 at 09:48:57AM -0500, Fred Goldstein wrote:
>> On 12/29/2014 12:26 PM, David Scheidt wrote:
>>> John Levine <johnl@iecc.com> wrote:
>
>>>>> Netflix is already paying various ISPs to ensure that its
>>>>> customers get a decent streaming experience, including Verizon,
>>>>> Time Warner Cable, Comcast and AT&T, but the company has
>>>>> voiced its concerns more than once regarding these payments,
>>>>> urging the FCC to look into these agreements.
>
>>>> Why is that bad? I am not a Netflix customer. Why should I
>>>> subsidize my neighbors who all want to watch Game of Thrones at
>>>> the same time?
>
>>> You already do. Verizon, Comcast, et al. have the internal network
>>> capacity to deliver the content to their customers. What they lack is
>>> the interconnect with the networks of content provider. They simply
>>> want to be paid twice for doing one job. They want their customers to
>>> pay them for being able to use the internet, and then they want
>>> content providers to pay them for being able to deliver that content
>>> to ISP's customers. Nice work, if you can get it, but not exactly
>>> honest.
>
>> While Verizon FiOS has rather high capacity, that is the exception
>> that proves the rule, not the general case. Internet services were
>> not built to replace Cable TV. High-quality video takes orders of
>> magnitude more capacity than most other Internet applications. So
>> expanding the network to support them can be a big deal, not just a
>> bigger cord at the interconnection point.
>
> IMNSHO, the general case is that home users have high-speed
> connections that can handle the load of a single video stream. If
> Verizon expected its customers to use only a tiny fraction of that
> capacity during a time when new services, ideas, and methods were
> popping up every hour, then I think the company deserves to suffer:
> Verizon is, after all, in the business of predicting consumer and
> business demands for its "shared use" products, and has over a century
> of experience in finding ways to meet those demands. Remember that
> Bell Labs scientists invented many of the statistical models which
> are used to predict the behavior of emerging markets!
A general case is one that encompasses almost everyone, not the single
largest case. I am thus looking at the broader ISP market, including
the wireless guys. I'm currently looking at the options for bringing
broadband access to the remote places in Massachusetts that still don't
have it. Stringing fiber to the forest would cost a lot. Wireless
might be cheaper, but its capacity is much much lower. A TV White Space
channel can carry 12 Mbps. As a shared medium serving multiple users,
how much TV viewing can it handle? Now, do we say "sorry, either it's
Netflix or you send letters", or do we allow a general case where ISPs
just might not be able to become de facto cable distributors?
Verizon's FiOS has plenty of bandwidth to the subscriber. Of course it
bottlenecks upstream. Internet demand does not work like PSTN demand. A
(wireline) call's a call, 64 kbps period. Hence the statistical models
work.
Internet apps keep expanding to fill available capacity. TCP in fact is
designed that way, to be predatory, seeking out the bottleneck capacity.
So you can't prevent loss; expanding supply necessarily expands
demand. Nor do the statistical models work, because it's a truly
cockeyed (that's a euphemism based on its first two syllables'
Indo-European homonym) feedback loop. So they might try to stay ahead
but then Netflix jumps in and pushes the curve an order of magnitude or
so and demands that others pay for it.
> Leaving aside the definition of "high quality video", I'll point to
> youtube, to facepage, and to all the other online diary sites which
> welcome images, plus iTunes, Amazon, etc. How come that demand
> (which includes video transfers) can be met, but not NetFlix's load?
> Is it because Apple paid up? Youtube? Facepage? Amazon? Somehow, I
> doubt it: Netflix is small enough to pick on, and therefore we're
> witnessing a corporate-sponsored shadow play.
Yes, they do mostly pay. They do it via the existing peering mechanism,
which is a mutual exchange of value. Those other sites tend to create
much higher value *per bit*, because their "eyeballs" use fewer
bits/minute. Even YouTube, which is mostly small Flash videos viewed on
a computer, not filling a big screen TV like Netflix. Still images are
much smaller in load.
>> This is the "but the network is there, my Blue Box call didn't cost
>> them anything" argument. The short-run incremental cost of any one
>> unit of demand tends to be zero, unless it hits the next incremental
>> point and becomes very high. Hence costing and pricing tend to
>> smooth out the curves and use averages.
>
> I disagree with your premise: Blue Box calls not only didn't cost "Ma
> Bell" anything, they made money for her! After all, the method used
> was to dial an 800 number and then trick the network into rerouting
> the call - but when the diverted connection was completed, the company
> that had the 800 number WAS CHARGED FOR *THE* *CALL*!
In that case the owner of the 800 number was being ripped off. So it did
cost someone something. Not Ma Bell necessarily, if nobody caught the
error, but it wasn't literally costless.
And that again is the problem with the Netflix model. The Internet is
not the PSTN! On the PSTN, carriers pay or collect a rate per minute
based upon the (hideously complex, the CABS mess) classification
assigned to that call and their role in carrying part of it. Nobody
argues over the value of the call, just over whether the price is "just
and reasonable", which comes up when the FCC rejiggers the tariffs. On
the Internet, there is no legal distinction between an ISP and a
customer. (What's a university?) So it's all a matter of perceived
value. If I as an ISP see value in more connectivity to you, I offer to
peer. If I as an ISP see more cost than value in connectivity, I offer
to sell you service (money equalizes the value). Netflix is trying to
get out of paying, by demanding that the Internet become regulated like
the PSTN and that they be given a special favored role. It is the very
worst type of regulatory gaming, not just trying to get ahead but doing
it by blowing up a working, critical, but very fragile, system.
...
> In like manner, there is a division of interest between Verizon's
> customers and the corporation vis-a-vis "High speed Internet"
> services, since Verizon seems to resent actually being asked to serve
> a "Sunday afternoon load" when it priced its services at fixed rates
> to attract consumer-grade customers. I think the capacity is there.
You can think what you want, and there may be capacity there, but ISP
prices aren't regulated, so if you impose more costs on the industry,
prices are bound to rise.
> Verizon's claims boil down to "We didn't see this coming", and to
> wishful thinking about the good-ol-days when every regulatory agency
> rubber-stamped every rate increase. Those days are gone, and Verizon's
> corporate culture can't adapt to a world where there are other
> providers and other competitors. It's not the "blue box" argument -
> it's the "We're the phone /company/!" claim.
The ISP side has never been regulated; it's Netflix who's crying for
rate regulation. Verizon is not my favorite company, to put it mildly,
but like an attorney defending an ax murderer because everyone is
entitled to due process, I'll defend them for the sake of everyone else.
>> Netflix is attempting to game the system. If you or I called up
>> Verizon and demanded a 10 Gbps free service to your house because
>> you're the coolest kid on the block and everybody else wants to
>> connect to you, they'd laugh you out. You want service, you pay.
>> Netflix doesn't want to pay for their connections. It's that
>> simple. They are abusing the Internet and bleating about
>> "neutrality" to try to destroy it in order to make it into their
>> private Cable TV domain, regulated for their benefit.
>
> Sorry, and no offense, but I feel you're being overly simplistic.
> Netflix is relying on its customers to pay for the transport layer,
> it's true - but every Internet user pays for the transport layer,
> and Verizon is trying to have their cake and eat it too, by crying "No
> fair!" when one service doesn't cut them a check for the privilege of
> being successful. Verizon is already getting paid, AFAIK, and just
> because the corporation doesn't want to adapt doesn't mean I'm willing
> to foot the bill.
>
Internet users pay for peak-rate transfer. Cable modems are more common
than FTTH, and cable modems have shared capacity, not dedicated. So
what your neighbors do impacts your service. The only reason
residential rates per BPS are a tiny fraction of commercial rates (price
out a 100 Mbps business line lately?) is that they are assumed to have a
very low average use, compared to business lines that are assumed to
have many users already stat-muxed onto it, and thus maintain a higher
average. Netflix blows that model.
> Verizon wants to live in an "as if" world: a world where every data
> transfer required a separate pair of wires, and those with more data
> to move had to pay more. Verizon is acting as if it's entitled to
> deny the changes the Internet has brought to the telecommunications
> business, and in addition, to act as if it is entitled to change tolls
> for a bridge that was designed at taxpayer expense, built with private
> funds, and is being lawfully operated (with occasional backups, I
> admit). Verizon isn't willing to add any extra lanes, only to demand
> that motorists pay them extra because they used to run the only
> ferry.
Verizon's wire rates should be regulated, as they are monopoly owners
of local loop plant. The present vertically-integrated model is broken
and cannot be fixed, though fixing it is unthinkable in captured
Washington. Nonetheless, I am distinguishing between the lower-layer
telecom portion of Verizon's business and the Internet itself. Netflix
is trying to blow up the unregulated higher-layer Internet for its
advantage. You are invoking fear and loathing of Verizon based on
everything else they do, which is understandable. But I'm defending the
ax murderer here because he had an alibi in this armed robbery, and just
being a usual suspect is not the same as being guilty.
|
| Date: Tue, 30 Dec 2014 19:23:51 +0000 (UTC)
From: David Scheidt <dscheidt@panix.com>
To: telecomdigestsubmissions.remove-this@and-this-too.telecom-digest.org.
Subject: Re: Verizon says it will charge NetFlix no matter what the FCC decides
Message-ID: <m7uu47$18a$1@reader1.panix.com>
Fred Goldstein <fg_es@ionaryqrm.com> wrote:
:On 12/29/2014 12:26 PM, David Scheidt wrote:
:> John Levine <johnl@iecc.com> wrote:
:> :>Netflix is already paying various ISPs to ensure that its customers
:> :>get a decent streaming experience, including Verizon, Time Warner
:> :>Cable, Comcast and AT&T, but the company has voiced its concerns more
:> :>than once regarding these payments, urging the FCC to look into these
:> :>agreements.
:>
:> :Why is that bad? I am not a Netflix customer. Why should I subsidize
:> :my neighbors who all want to watch Game of Thrones at the same time?
:>
:> You already do. Verizon, Comcast, et al. have the internal network
:> capacity to deliver the content to their customers. What they lack is
:> the interconnect with the networks of content provider. They simply
:> want to be paid twice for doing one job. They want their customers to
:> pay them for being able to use the internet, and then they want
:> content providers to pay them for being able to deliver that content
:> to ISP's customers. Nice work, if you can get it, but not exactly
:> honest.
:>
:While Verizon FiOS has rather high capacity, that is the exception that
:proves the rule, not the general case. Internet services were not built
:to replace Cable TV. High-quality video takes orders of magnitude more
:capacity than most other Internet applications. So expanding the
:network to support them can be a big deal, not just a bigger cord at the
:interconnection point.
Verizon, comcast, et al are being paid to provide internet service to
their customers, by their customers. If the service they claim to be
providing isn't what they're providing, they should either change
their claim, or change what they provide. The facts are that all
these networks have serious capacity in their cores, and aren't
overloaded because of streaming video, and most of them have plenty of
capacity to their customers. (Comcast, in particular, has so much
excess capacity that they're trying to turn their customers' [homes]
into wifi access points [which] Comcast [uses to] collect money from
[other] users of the wifi networks.)
:This is the "but the network is there, my Blue Box call didn't cost them
:anything" argument. The short-run incremental cost of any one unit of
:demand tends to be zero, unless it hits the next incremental point and
:becomes very high. Hence costing and pricing tend to smooth out the
:curves and use averages.
Yes? What's your point? Comcast, Verizon, et al are selling a
service. They're happy to provide that service as long as you use the
services thye think you should, or at least not those they think you
shouldn't. Their pricing should include the per customer capital
costs of providing that service.
:Netflix is attempting to game the system. If you or I called up Verizon
:and demanded a 10 Gbps free service to your house because you're the
:coolest kid on the block and everybody else wants to connect to you,
:they'd laugh you out. You want service, you pay. Netflix doesn't want
:to pay for their connections. It's that simple. They are abusing the
:Internet and bleating about "neutrality" to try to destroy it in order
:to make it into their private Cable TV domain, regulated for their benefit.
Nonsense. Netflix is prefectly willing to pay for connections. What
they don't want to do is pay for something that the end customer is
*ALREADY PAYING FOR*, which is the delivery of bits to their home.
Verizon, Comcast aren't running networks in the usual sense of
internet networks, where the traffic into the network is roughly that
of traffic that leaves the network. They're net traffic sinks,
because their customers are consumers, not content providers. They
want to be paid twice to provide internet service to their customers:
once by their customers, and once by netflix. Their customers pay for
access to the internet, verizon, comcast, et al should provide that
access. Their customers are not paying for access to those sites and
services which comcast, verizon et al find most profitable for
comcast, verizon et al.
--
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