Comcast Escalates the Web Business Debate

Who pays for traffic? Who pays for the infrastructure that holds the internet together?

Well, an easy answer would be “The ISP.” This is Comcast’s position.

I am not so sure myself, because I suspect the real answer is a lot more complicated than that. I pay Comcast on the local side, but I am also putting out almost a hundred a month on the other side – to the web hosts on the data origination side.

Now Comcast thinks that they should get a cut of that, too. At least sometimes.

Specifically, Netflix is now ramping up U.S. demand for bandwidth, and the ISPs are going to have to upgrade at the same time people are ditching their cable subscriptions.

See, Netflix sends a whole lot of data out. By some calculations, they’re originating 20% of US web traffic at peak times. So they hired this company Level3 to help handle it all, and now Comcast has sent Level3 an ultimatum: Let us in on the cut, or we won’t deliver your traffic to our customers.

Now, I have to confess that I don’t know a whole lot of the business details here, but it is definitely something I will be studying and researching over these next few weeks.

Something tells me that Comcast’s demand isn’t quite right. We pay the ISP to deliver our requested traffic to our homes and businesses, not to make deals and fees for the content providers. If Comcast can’t keep up with customer bandwidth demand at the current prices, then they’ll have to look in to tiered plans and premium services, but shaking down a popular content provider seems like a weak move.

There is another problem with Comcast’s threat: they often hold local monopolies on cable lines. Sure, you can run high speed internet on DSL and old phone lines, but it just isn’t the same! Cable is the best option a lot of people have, and when I say “option,” I really just mean they can take Comcast’s poor service and restrictions or go without cable.

So why Netflix? Well, if this was really a problem, Comcast might have brought this up a few years ago when Youtube started hogging up the pipes. But Google is a lot bigger than just video delivery, and it is also an incredibly popular brand, so the move might have backfired in a big way. Now though, Comcast can aim at Netflix – something that only about 5% of the population uses, and something that is exclusively competing in Comcast’s realm of movie and television content delivery.

Unfortunately, whether or not Comcast’s complaint is economically valid, their friendships in Congress have been pretty solid. This gives them a decent chance of passing favorable regulations, regardless of the actual best interest of the nation & internet.

This issue, and related debates about net neutrality are probably going to get a lot more intense now before they go away. America’s broadband infrastructure lags behind other nations, and now as internet video starts to really rise in popularity the issue will be coming to a showdown. Who is going to pay? Well, we all will, one way or another… so what is important now is that we figure out what we want to get for our money, and make sure those opinions are heard!

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