After 20 years, the Internet is no longer a free market. Comcast and Netflix have signed a deal that has advocates of network neutrality in a panic.
According to “Forbes,” with 33 million United States customers, Netflix generates about 30 percent of all Internet traffic. Because of this, Netflix relies on Content Delivery Networks (CDNs) to get your shows and movies to you as instantly as possible without any “traffic jams.”
The problem with Netflix and its use of CDNs comes with the principle of peering. Internet Service Providers (ISPs), like Comcast, often make deals with larger companies when the Internet traffic gets to be too much. In this case, each company sends traffic to the other, making the two “peers.” Typically, no money changes hand in these situations.
When the Federal Communications Commission imposed net neutrality rules, it ignored peering completely. That’s because net neutrality was designed by the FCC to regulate ISPs in making sure all Internet traffic reaching you (the consumer) is done fairly. So basically, your ISP can’t charge you a fee to use Pandora but allows you to use Spotify freely.
Essentially, Netflix pays Comcast millions of dollars to bypass any third party CDNs or distributors and connect directly to Netflix’s data centers and servers. They do not garner any special treatment. That being said, Comcast is most concerned with making sure its customers get what they’re paying for. They won’t be charging their users more or anything like that.
However, Netflix users could see an increase in price. That’s because Comcast can now tell Netflix that they’re going to have to pay more money to keep using their services.
Netflix’s idea of cutting out the middleman is an attempt to make the Internet more efficient. However, it also makes the Internet less competitive. For two decades, the FCC has been proud to call the Internet an open and competitive market. Bigger companies will likely take over the smaller ones, making powerful ISPs such as Comcast even more powerful.
The current net neutrality regulations require all ISPs receive their Internet traffic from one big source. Some advocates of net neutrality want to prevent ISPs from dividing this big source into fast and slow lanes centered on matters of business. This idea gets sticky for the FCC because each Internet service provider will have its own pool.
With each ISP having its own source pool, regulating the content quality of each would be nearly impossible. But as long as ISPs aren’t blocking certain content from their users, I don’t see the harm in the Netflix-Comcast contract. Besides, the FCC can’t regulate this type of deal based on net neutrality since Comcast isn’t prioritizing Netflix or discriminating against other video streaming companies.
However, at some point, more and more companies are going to sign contracts with ISPs to ensure their content is streamed at the fastest speed possible. So yes, eventually, we will live in a world of people with “high class” Internet providers, but that time is far into the future.
Ultimately, this new contract is ideal for the consumers — for the time being. Netflix customers who use Comcast will be thrilled the quality of their videos is good. Comcast will be able to sell more broadband connections by advertising that Netflix will be streaming faster and in a higher quality than with other ISPs (let’s be honest, there are many 20-somethings who do without cable and rely solely on Netflix to watch television shows or movies).
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Comcast/Netflix merger fails to neutralize net neutrality
Claire Wilson
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February 27, 2014
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