Monday, September 7, 2015

Here Comes Net Neutrality

From Karl Denninger at Market-Ticker, we get this tale of what Net Neutrality is really going to mean to us.  First, the setup from TechCrunch:
During an investor call today (link via Ars), Comcast executive VP David Cohen said that he predicts bandwidth caps (or, as ISPs prefer to put it, “usage-based billing”) to be rolled out network-wide within the next 5 years or so.

The reason they haven’t done so already? They’re still working out exactly where they can cap things before they start getting phone calls — that is, before people start calling up to cancel. Meanwhile, making things more complicated tends to scare people away, so they don’t want to just offer up multiple plans/tiers — so before they make any changes, they need to find that plan that works for almost everyone.
Switching over to Denninger:
See, at the core of the problem is one little company called Netflix that is responsible for more than a quarter of all traffic on the Internet during the evening hours.  And that company is hell-bent and determined to not pay for the load that it presents to the end-attachment points or how it concentrates that load, both of which break (in a bad way) the models that the ISPs (cable companies, etc) use to build their networks.

All problems of this sort can be solved by money, and this is fundamentally a fight about money.  Streaming an "SD" movie requires about a gigabyte per hour, per device.  HD doubles that and 4k doubles it again. 

Further, it's not just data delivered over time, it's another qualitative measurement called jitter.  In other words you can't have a stream that has material gaps in the delivery of the data or the display of your video will stutter and, if bad enough, fail to play entirely.
Karl goes on to run numbers on the amounts of data we're talking about here, and some of the business/politics that has been involved.  I've gathered from reading his place pretty regularly that he isn't particularly fond of Netflix, and this piece definitely has that flavor.  On the other hand, if he's right about what has been going on, he really has a point.  And his experience from having owned an ISP is full of reality.
While the problem is less-severe for "landline" (e.g. Cable, FIOS, etc) customers it is by no means not present.  If you have a 50Mbps connection from Comcast, for example, you could consume 375 Megabytes per minute.  That works out to 22.5Gb/hour roughly 16.2 Terabytes per month.

Again, Comcast cannot engineer for that while charging you $50/month.  Can you buy such service?  Sure!  I used to buy service of similar quality as an ISP all the time -- a 44.7Mbps (each direction) DS-3 "clear channel" line for which I actually paid to move that full amount of data all the time.

But while it's gotten much cheaper than the five-digit price tag per month I paid at that time for such capacity it sure as hell isn't $50/month even today.
There was a lot of sentiment from young tech heads that they were being screwed because their ISP was wanting to charge extra for Netflix or other streaming services.  Net Neutrality, at its root, says "all bits are equal" and they can't charge you more for one service's bits.  But they can charge you what it costs them to provide those bits and they can meter how many bits you use.  Simply, they're going to have to charge what it costs them or go out of business, and if they don't charge enough, they can't get enough money to build out infrastructure for the Next Big Thing (Netflix 4K?).  By the looks of it, we'll all be having metered internet services in the next few years. 

Go read the rest of the piece at Market Ticker.  Let it sink in. 
(Lisa Benson at Town Hall)


  1. I live in a little town in the middle of nowhere and we get unlimited broadband service for 45 bucks a month. We cancelled Dish Network and watch Netflix and Amazon Prime every night and get other information including news from all over the world over the net. We also watch Youtube for hours.

    So, why can't Comcast do the same? Greed, that's why.

  2. It's funny that we're coming back to the metered model. I remember quite well having to pay for minutes on CompuServe and The Source, plus having to pay long distance when there wasn't a local access number. I also remember paying by the minute for ISDN, cell phone minutes, and most every other neat new technological invention. I think "all you can eat" bandwidth is an aberration, just like "free" electricity--it was going to be so cheap after the nuclear power revolution that it wouldn't be worth metering it. Neither worked out so well, although for different reasons, but I don't see why people think they can ignore basic economics just because a computer is involved.

  3. ISP companies have been charging as much as they can get away with for many years now. Especially for those with no alternative providers available. And what have they done with that money? Pocketed VAST amounts thinking the cash cow was going to roll on
    forever. Now technology has evolved to where usage poses the reality of overtaking the available supply. WHY? Because these companies
    look to the future and decide to spend AS LITTLE as possible on getting ready for the next big breakthrough. Now that their ass is in
    a crack they want to either raise rates....very hard to do or limit use....just as unsavory. And they've bought enough of Washington that no help for the consumer is likely to show up.

  4. If you live in the middle of nowhere and get unlimited service then someone is subsidizing it.
    If Netflix uses 1/3rd of the bandwidth and doesn't pay for it than we all are subsidizing it.
    If you live in a big city and want all you can eat bandwidth it's gonna cost a lot.
    ISP companies charge as much as they can, that's called capitalism. Competition should moderate that and that too is called capitalism.
    The effort to bring the internet to everyone regardless of their ability to pay is going to cost everyone who can pay and that is called socialism.

  5. Oddly that "Netflix"(to include other streamers such as Amazon, Redbox, and payperview) bandwidth, is paid for, hell its paid for twice, first "Netflix" is paying for its connection to the back bone, and the user is paying again for their connection to the network.

    Now the argument could be made that this price that both parties are paying is not enough for either the QOS or the speeds that are advertised, but that is not the fault of either, if you sold me, and I have a contract that shows its unlimited and at a set rate, and I use it as such, thats the providers fault for pricing it wrong.

  6. Used to be we used Common Carriers (Ma Bell and the Baby Bells) to transport our bits, either on POTS, ISDN or leased lines. We were limited in bandwidth by the capabilities of our modem or CSU/DSU.
    Now that Net Neutrality has become "law of the land" in February of this year, our ISPs are now our Common Carriers.Since the ISPs cannot by law do traffic shaping based on the source or destination, they are going to either throttle our bandwidth or charge us per bit/byte. Just like the cell phone companies used to do, charging per-minute fees to make calls.
    While I agree that Netflix and such have already paid for their chunk of bandwidth, they are not necessarily paying for the entire piece. They pay their respective ISP for connectivity, but we are not necessarily paying for our end of the connection.
    Analogy: your friend drops a package off in your local USPS office and pays for shipment to your residence. But the package has to transit through a number of non-USPS companies to get to your address. The USPS has gotten their chunk of change, but who's paying all of the other companies en route to you? Does the USPS split their money to the other carriers, or does the recipient pay upon receipt?

  7. There's also the little fact that networks are built for the expected traffic, and if the models are wrong, the networks break down.

    Example: right now, your local phone system (POTS) is set up for no more than 10 or 15% of the lines in town to be in use at the same time. That's why systems go nuts on Mother's Day and you can't get through. Same thing if there's a disaster. There physically aren't enough wires to go around.

    If you'll recall right about the time dial up started to die off, the local POTS providers were talking about needing to build out all new infrastructure (and raise rates) to handle all the people on a modem surfing the web.

    Their model for the traffic to build for was failing.

    This is what happened for Netflix. The ISPs built out for an expected amount of traffic, and then the world shifted on them usage skyrocketed beyond what they expected. It suddenly wasn't you sending a few emails, reading a few sites and watching some 360 rez videos on YouTube. It was much more traffic. Every system has its limits and they (Netflix) were pushing lots of systems to their limits. Still, Comcast was the only ISP to go back and negotiate for more money from them (from what I heard) and they had reached an amicable settlement before the FCC went and took over.

    The thing about Net Neutrality's "all bits are equal" is that while you may not consider your classic cable TV as "bits", to the provider that's what it is. If there's not enough capacity, your TV will cause Netflix (and Amazon and...) to buffer. And vice versa.

    We just have a few rough decades ahead until everyone has terabit fiber.