To quickly update those of you who are unfamiliar with the spat companies like Netflix and others have been having with Comcast, Comcast has been charging these companies a toll fee so that Comcast and similar ISPs’ customers can have access to uninterrupted video playback. Before Netflix had to bite the bullet and pay for the ISP toll back in February, Comcast customers received by far the worst experience when it came to Netflix streaming speeds.
In fact, Netflix became so slow during the months of December 2013 and January 2014 that Netflix reported a fluctuation of 4 times the usual amount of complaints regarding videos that were loading slowly. This was all reported by Netflix in a petition Netflix submitted to the FCC in an attempt to block the Comcast and Time-Warner merger. Time-Warner has resorted to similar practices as Comcast with Google.
Here’s a statement from Netflix:
For many subscribers, the bit rate was so poor that Netflix’s streaming video service became unusable. Some of them canceled their Netflix subscription on the spot, citing the unacceptable quality of Netflix’s video streams and Netflix’s inability to do anything to change the situation.
At this point, you may already be thinking that maybe Netflix should pay a toll so that Comcast users can access their content in a speedy manner. After all, Netflix accounts for about a fourth of Comcast’s internet congestion during peak hours. When we look at the problem from this angle, Netflix does look to be more at fault.
That’s until you consider the following:
1. Comcast sells bandwidth to their customers
Comcast and similar ISPs all sell bandwidth. The amount you are required to pay depends on how much bandwidth you sign up to have access to. When Netflix agreed to pay for toll back in February, this did not increase your bandwidth. What all that means is that, in the instances where Netflix wasn’t paying a toll, you the Comcast customer were not getting the bandwidth you were expecting to get when you signed up with Comcast.
In all forms of business, your reception of services you paid for shouldn’t be desecrated because of someone else’s relationship with the business. Why should Netflix have to pay Comcast to make good on their contract for delivering bandwidth that you are already paying for? It’s evil.
If there is congestion on the bandwidth, Comcast shouldn’t be selling so much bandwidth if they cannot handle it. However, Comcast CAN handle it. They just want to suck the money out of everyone involved before they do so.
2. Comcast can handle the congestion without being congested
Comcast has the ability and regularly cache their servers to decrease the amount of bandwidth being utilized. Netflix even provides Comcast with the needed infrastructure to accomplish this caching. All of this means that Comcast isn’t charging toll because their bandwidth is congested, they are congesting their networks to force companies to pay. That’s a big deal.
The Solvable Problem for Comcast’s tolls
Bitter-sweetly, the solution to tearing apart Comcast lies within the US Government’s hands. Companies like Comcast, Time-Warner and a few others have created pacts that enable them to act like a collective monopoly called an oligopoly (checkout the video below for more on oligopolies. By agreeing to not enter into each other’s territories, and in situations where they share the same territories, they have already agreed to not lower prices that stalls competition. These pacts allow Comcast to play dirty.
The only long-term solution that will be best for innovation and customers is for the government to break up the oligopolies. America has been built on competition by allowing the competition to determine market prices. If the government breaks up this pact, companies like Netflix and Google can continue with innovation while customers will be able to save money or simply have their preferred service.