Comcast-Funded Think Tank: Broadband Usage Caps Make Netflix Streaming Better. You're Welcome.

from the sinking-to-new-logical-lows dept

As we’ve noted for some time, the broadband industry (and all the think tanks and politicians that work for it) have spent the last few years trying to vilify Netflix. That’s primarily due to the company’s support of net neutrality, but also its opposition to anti-innovative and anti-competitive broadband usage caps. These attacks usually start with the criticism that Netflix now dominates around 37% of peak downstream traffic (as if that’s a bad thing), followed by some bizarre and unfounded claim that Netflix should be forced to “pay its fair share” (read: give us a cut of revenues despite us having no legitimate claim to it).

While these assaults had quieted down for a while, Daniel Lyons (not the fake Steve Jobs Daniel Lyons) and the American Enterprise Institute last week came out with a bizarre missive on broadband caps, in which Lyons tries to claim that broadband usage caps are a great way to force Netflix “to become a better corporate netizen.” As noted above, Lyons starts by highlighting how Netflix consumes a huge amount of peak Internet capacity:

“Netflix has long reigned as one of America’s most significant Internet-traffic generators. Network equipment company Sandvine reports that the video-streaming company is by far the leader in peak period traffic, responsible for more than 33 percent of all fixed Internet traffic during peak hours — more than twice the share of the next-biggest competitor, YouTube. This means that at times when the Internet is most susceptible to congestion, Netflix alone is responsible for one out of every three packets sent through the network.”

For clarity it should be noted that Netflix customers are responsible for this consumption. Netflix consumers who, in the United States, already pay more for bandwidth than consumers in most developing countries. Netflix in turn not only pays for bandwidth, it now pays ISPs for direct interconnection to their networks, after ISPs were accused of intentionally degrading peering points to force its hand. Everybody is paying, and paying, and paying some more — so it doesn’t matter one iota how much bandwidth Netflix is consuming — because consumers are demanding and (probably over)paying for it.

Back in December, Netflix announced it was making some changes to the way it intelligently encodes its titles. This shift involves encoding titles differently depending on type and genre, since cartoons (with static backgrounds) technically eat less bandwidth than live action movies. The move was prompted by one thing: this month’s expansion by Netflix into 130 more countries. Netflix’s primary concern? Making sure that networks — especially of the mobile variety in developing nations — would have a more consistent and trouble-free viewing experience. It was just a smart, albeit admittedly belated shift in improving the way Netflix operates.

Apparently seeing a flimsy logical opportunity for the ages, Lyons tries to claim that Netflix was forced to improve its efficiency — solely thanks to the wonder and glory of broadband usage caps:

Usage-based pricing forced Netflix to be more mindful of the size of its digital footprint. Because they face potential overage charges, consumers are becoming more aware of the amount of bandwidth their online activities consume. This leads edge providers such as Netflix to develop more efficient methods of delivery, in response to increased consumer sensitivity. The result is a more efficient operation that benefits everyone by freeing up network capacity — which is like broadband providers improving speeds, but without having to install new network lines.”

That’s an astonishing, incredible load of bullshit.

Netflix has long allowed capped users to adjust streaming quality to manage consumption, but to claim caps are to thank for these improvements is aggressively dishonest. Lyons and his friends at the AEI are funded by Comcast, the same company that’s aggressively expanding utterly unnecessary usage caps on millions of consumers. Those caps have one overarching function: to raise rates on uncompetitive markets, give Comcast’s own services an unfair advantage, and to protect Comcast TV revenues from Internet video.

There’s clearly some worry on the part of Comcast and its think tank friends that the FCC will finally get off its ass and begin pressing Comcast on its anti-competitive abuse of usage caps, but if this is the best argument the AEI can come up with, Comcast may want to reconsider its disinformation budget for 2016.

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Companies: aei, comcast, netflix

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Comments on “Comcast-Funded Think Tank: Broadband Usage Caps Make Netflix Streaming Better. You're Welcome.”

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40 Comments
That One Guysays:

Even then...

Even if the claims about why Netflix fiddled with the encoding on their offers was true, that doesn’t really make it any better to anyone who realized that caps have nothing to do with ‘network congestion’ and everything to do with squeezing customers for as much money as they can get.

‘They made it so that their titles would be smaller, making it so that you can watch more of them before you have to pay to temporarily bypass the completely unnecessary limit we imposed!’

Even if Netflix was trying to make it so that their customers were able to watch more before hitting their caps, the cable companies are still the ones who imposed those caps in the first place.

Anonymoussays:

Re: Re: Re: Re:

…they often only have one provider capable of offering decent speeds…

Assuming they actually get decent speed. I get 70% of the advertised speed on most days, never seen anything higher. And that’s just download speed. Upload speed is ludicrous: 2 hours to upload a one minute video to YouTube at the average 720×480 resolution.

PaulTsays:

Re: Re:

All of them. The driver is always what consumers demand. Sometimes it’s porn (adoption of VHS over Betamax, for example), sometimes its piracy (if you believe the **AAs, of course, high bandwidth and fast downloading are also for things other than their content).

This time, it’s legal content not supplied by the porn industry, but the underlying reasoning is the same.

TechDescartessays:

Side Effect

The result is a more efficient operation that benefits everyone by freeing up network capacity?which is like broadband providers improving speeds, but without having to install new network lines.

Companies optimize streams not with the goal of “freeing up network capacity” but with the goals of: (1) reducing their own bandwidth usage, and (2) helping their customers receive the best product regardless of available bandwidth (and frequently assuming the worst). “Freeing up network capacity” is a mere side effect?and not the best foundation on which to construct a business. The ISPs better get back to increasing network capacity, either by installing new lines or otherwise increasing the capacity of existing lines … or someone else will.

That One Guysays:

Re: Re: Side Effect

The ISPs better get back to increasing network capacity, either by installing new lines or otherwise increasing the capacity of existing lines … or someone else will.

Ah, but that’s where those ‘totally state-rights, not bought and paid for anti-competition’ laws come into play. Someone else can’t offer a better service because the laws have been written barring them from doing so in a number of states, which means the current major ISP’s in those areas just need to remember to pad the right wallets and they can completely ignore upgrading their networks, while continuing to increase their prices.

Petersays:

Comcast are collecting a ‘Netflix-Tax’ already, from consumers who voluntarily pay for a faster internet to watch Netflix in the best possible quality. If it weren’t for Netflix and other video services, who would need a fast internet at the rates Comcast charges? People would pay for the cheapest line available and still see their emails coming in fast enough.

And with T-Mobile now effectively removing data caps for bandwidth-guzzling video services on mobile connections, it is difficult to see a technical justification for data caps on fixed-line services at all.

Anonymoussays:

why the fuck are these and similar ass holes tolerated? isn’t it about time some of the consumer protection groups got together and started kicking ass? exposing the fact that certain groups that are supposed to ensure a level playing field are actually paid for by the very companies/industries that are getting everything their own way, so will always have the upper hand may help a bit!!

Violynnesays:

This means that at times when the Internet is most susceptible to congestion, Netflix alone is responsible for one out of every three packets sent through the network.

Damn it, Netflix. Just how many times do I have to tell you to stop going into my house, logging onto my laptop, and taking over the limited bandwidth of my AT&T account?

Oh, I see what AEI did there!

Joking aside, Google should pay attention. If Netflix is gone, guess what’s next in the moving target line.

Ninjasays:

Re: Re:

That. They talk as if Netflix was the one forcing traffic onto people instead the other way around. It would be hilarious if it wasn’t damn tragic.

Netflix is not responsible for artificial caps they are imposing, their lack of infra-structure upgrading or overselling of their capacity. They should be the ones explaining the consumer that they sold what they can’t deliver. Or that they are outright lying and just wanting easy money. I’d personally go for the lies + greed option.

Nomad of Noradsays:

Re: Re:

“Joking aside, Google should pay attention. If Netflix is gone, guess what’s next in the moving target line.”

Thing is, Google are in a position to undermine the power of Comcast and the like from continuing their greedy, price-gouging ways… by starting fiber based Internet service in more territories and thereby forcing Comcast and other ISPs to improve their service or die.

Roger Strongsays:

SourceWatch: American Enterprise Institute

Some of their other conclusions:

– Minimum Wage Hikes “Simply Reckless”

– Dodd-Frank Wall Street Reform “Disastrously Wrong Response”

– Doubts on Global Warming (having nothing to do with the $millions received from Exxon Mobil, a former head of ExxonMobil as the vice-chairman of AEI’s board of trustees, and using that money to offer scientists and economists $10,000 each “to undermine a major climate change report.”)

– Support for “Regime Change” in Iraq

– Defending Big Tobacco (Nothing to do with major funding from Philip Morris.)

OldMugwumpsays:

Re: Ad hominum attack

That’s a form of ad hominum attack.

AEI has taken positions you don’t like on other things, therefore they must automatically be wrong on this.

I agree that they’re wrong on this, as well as some (not all) of the other things you list.

But you have to attack their case based on the facts and what they actually said.

If you simply dismiss them because you don’t like their positions on other things, you make yourself look like an equally unthinking partisan.

And that does nobody any good. We need to debate real issues, not paint each other as evil.

Roger Strongsays:

Re: Re: Re: Ad hominum attack

I disagree. I tried to avoid this by leaving out their Koch brother ties, their reputation as a “base for many neo-conservatives”, etc.

What remains is still valid point relevant to their pro-usage-cap position: “Think tank” is weasel-wording for “PR Firm.” That a “think tank” takes Comcast’s position is not a happy coincidence when it’s really a Comcast-funded PR firm with a long history of promoting positions of others who fund them.

Whether or not I like their positions is irrelevant. Even if I like their position on global warming, tobacco or usage caps, it only tells me what they’re funded to promote, not what a think tank believes.

OldMugwumpsays:

Re: Re: Re: Re: Re: Ad hominum attack

Some “think tanks” are in fact PR firms in disguise.

But that’s the unusual case, and I don’t think the case with AEI.

Instead, people with an agenda fund the think tank that happens to already agree with their position.

Which is not the same thing as hiring academics to make your case. You’re supporting those who – honestly and from conviction – already agree with you.

As I said, I agree with you that AEI is wrong here, and on some (but not all) of the other things you listed.

That doesn’t make them a shill. It just means there’s a disagreement. We can disagree and argue the merits of the positions without accusing each other of bad faith.

Glennsays:

Yeah, I remember a couple/three years ago… streaming video?… seeing that “Loading… loading… loading…” message repeatedly. When did it get “fixed”? After Netflix paid the Comcast (and Verizon, and at&t, and ???) extortion fees for “special” service (a “relationship”). Wow! Thanks, Comcast… you’re so wonderful–always looking out for our best interests (correction: your revenue stream).

Adelesays:

Never change, AEI. Never change.

Is anyone surprised someone from AEI is peddling bullshit? This is the same group of lobbyists and corporate blowjob artists that argues as hard as possible AGAINST corporations paying their fair share in taxes and AGAINST paying workers fair, livable wages yet somehow it’s up to us to pay for our “fair share” for bandwidth?

This is the market’s invisible hand giving you so many middle fingers.

Anonymoussays:

Know what you don’t hear about with all these claims of net usage traffic? You don’t hear that Netflix has offered to install free of charge hardware to cache the most often demanded streams so they don’t have to be retransmitted but can be obtained fairly locally without having to stream each and every demand for the more popular items. This would drop the load of traffic across the board for every ISP that accepted the offer.

Odd how that isn’t in the picture when these pro cap mouth pieces go to talking. But not too many years back it was Google who was the big traffic demander they wanted money from.

The real problem here is that each and everyone connected to the net had to pay someone for access. It is not Google nor Netflix that is demanding traffic but rather the paying customers who pay to both Netflix as well as their ISP. Right now in the chasing of profits, customers can never pay enough in one form or another.

Nicolassays:

Usage

I fail to see a rational objection to the idea that people who consume more should pay more. AEI’s posting only seems bizarre to someone who doesn’t grasp basic economics. I can’t think of a single supporter of free markets who isn’t opposed to net neutrality, but it appeals greatly to people who expect lunch to be free.

Am I The Only Techie Against Net Neutrality?
http://www.forbes.com/sites/joshsteimle/2014/05/14/am-i-the-only-techie-against-net-neutrality/#2715e4857a0b538371c4352e

OldMugwumpsays:

Re: Re: Usage

Well you can now. I’m a firm supporter of free markets, but I support net neutrality.

Because the market for telecoms isn’t free – it’s heavily regulated and rigged – just try to enter the business without greasing a ton of palms from the FCC down to your local city council.

If we had a competitive market in telecoms, I’d be against net neutrality. As long as we don’t, we need limits on the abuses monopolists are permitted.

Wendy Cockcroftsays:

Re: Re: Re: Re: Usage

If we had a competitive market in telecoms, I’d be against net neutrality. As long as we don’t, we need limits on the abuses monopolists are permitted.

But a free market demands net neutrality for equality of access: no artificial advantage and no anti-competitive practices.

So if you actually believe in a free and open market, as I do, you’d object like hell to walled gardens and anti-competitive practices as this creates an imbalance between the supply and demand sides.

OldMugwumpsays:

Re: Re: Re: Re: Re: Re: Usage

In a free market by definition, sellers can offer whatever goods and services they want.

Including bad ones that no reasonable buyer would want to buy. That’s stupid (because the seller will go out of business), but it’s not illegal. In a free market.

If the market is free, sellers have little practical choice except to offer things the buyers actually want. Because if they don’t, somebody else will, and get the business.

So in a free market there’s no need for net neutrality – anybody who offers a walled garden isn’t going to get any customers.

But only if the market is free, meaning others can compete and make a better offer.

PaulTsays:

Re: Re: Usage

“I fail to see a rational objection to the idea that people who consume more should pay more.”

Nobody’s objecting to that. They’re objecting to the idea that Netflix should pay more, despite the fact that they and their customers already pay for the bandwidth they use.

“I can’t think of a single supporter of free markets who isn’t opposed to net neutrality, , but it appeals greatly to people who expect lunch to be free.”

So, you have no idea what net neutrality is, got it.

PaulTsays:

Re: Re: Usage

Too add to this – the “free lunch” argument is what indicates you don’t know what net neutrality is. It has nothing to do with getting things for free, it’s to level the playing field and ensure that the system can’t be gamed and people double charged for what they’re currently paying a normal price for.

It’s not saying that people shouldn’t pay Comcast for bandwidth, it’s saying that Comcast can’t prioritise people who pay them more at the expense of smaller players, or use tricks to downgrade the experience for users of competing services to drive traffic to themselves, for example.

If you think it’s about a”free lunch”, you’ve horribly mistaken.

Anonymoussays:

Re: Re: Re: Re: Usage

It’s not saying that people shouldn’t pay Comcast for bandwidth, it’s saying that Comcast can’t prioritise people who pay them more at the expense of smaller players, or use tricks to downgrade the experience for users of competing services to drive traffic to themselves, for example.

Where “free market” means “no limits on anti-competitive practices.”

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