The inside story of how Netflix came to pay Comcast for internet traffic

Netflix lawyers just delivered this document to the FCC, arguing against Comcast’s proposed acquisition of Time Warner Cable. From the document:

Netflix attempted to address congested routes into Comcast by purchasing all available transit capacity from transit providers that did not pay access fees to Comcast—which involved agreements with Cogent, Level 3, NTT, TeliaSonera, Tata, and X0 Communications. Although all six of those providers sold transit to the entire Internet, only three of them—Cogent, Level 3, and Tata—had direct connections to Comcast’s network.

In 2013, congestion on Cogent’s and Level 3’s routes into Comcast’s network steadily increased, reaching a level where it began to affect the performance of Netflix streaming for Comcast’s subscribers. When Netflix approached Comcast regarding the lack of uncongested settlement-free routes available to its network, Comcast suggested that Netflix return to using CDNs, which Comcast could charge access fees that would then be passed on to Netflix, or use a Tier 1 network like which charged its own access fees. Comcast made clear that Netflix would have to pay Comcast an access fee if Netflix wanted to directly connect with Comcast or use third-party CDNs. In essence, Comcast sought to meter Netflix traffic requested by Comcast’s broadband subscribers.

Is it any wonder Comcast and Time Warner are the most hated companies in the US?

  • matthewmaurice

    I wonder how many of the people who hate Comcast and/or Time Warner have checked to see if their legislators received contributions from Comcast and/or Time Warner and then wrote a paper letter to those legislators telling that legislator how they feel about the way those companies have abused their monopolies? Bottom line, it’s cheaper, faster, and more effective for Comcast to lobby legislators than please their customers.

    • Moeskido

      Many of those people are probably also dissociative libertarians who’ll try to defend the advantages of mergers in sectors that already have little or no competition. Comedy gold.

      • Terry Maraccini

        You don’t like big government? Try big corporations. Libertarians my foot.

      • Dieter Engel

        That makes no sense. Comcast and Time Warner are cable companies. These companies operate monopolies granted by local municipalities who use the power of government force to keep competition out. As a result these two companies have become super powerful.

        Libertarians are against monopolies.

        Yet leftists- who seem to love them, especially government monopolies- constantly blame libertarians for the problems caused by them.

        It’s not comedic at all, it’s tragic. I mean, is critical thinking no longer taught in the — again a government monopoly– schools?

    • Terry Maraccini

      That’s silly. They all did. This is America

  • Terry Maraccini

    You can complain all you want. But, the recourse available is nil. We live in a country that lobbies its way into power and once there entrenches itself like a barnacle.

    They do as they please because they can.

    Let em merge. What difference does it make anyway?

    • Moeskido

      A few years of slightly more choice available in a few areas.

    • matthewmaurice

      The recourse is informed voting! If the guy who represents you in, local/state/federal government took money from a company that abuses you to stay in office, vote him out. If their replacement doesn’t vote to provide you choice and protection let them know and vote them out. Lobbyists only succeed at buying influence because it’s understood that money buys re-election. When incumbents start losing elections despite big war chests lobbyists become irrelevant. Of course in an era of 20% turnout for off-year elections and 40% turnout in mid-term elections informed voting is very uncommon.

      • John Barnes

        That’s crazy talk. You’re asking people to be responsible voters who actually put in a little effort to decide who the best candidate is and vote out those who have let us down. Too many people just vote for a party and just don’t give a damn.

        • Dieter Engel

          That so many people don’t seem to understand that these are government granted monopolies in the first place convinces me that not only are people not looking into how their legislators are voting they are not informed of even the basics of how this industry operates.

          It’s not legislators giving them the monopoly. It’s your city.

          • Moeskido

            After thirty-plus years of reduced federal infrastructure funding, cities, like states, have little power to “grant monopolies” on any scale. All they can do is beg for attention from one or two merged corporate giants that might fuck them over less, or that might be willing to offer camopaign donations to an officeholder seeking reelection—if they think they can get favorable terms in return.

            Congressional deregulation and crony oversight agency appointments at the federal level are what’s responsible for the fact that we have no choice in sourcing our services from what should be public utilities.

            Our cities are just begging for scraps at someone else’s table.

          • Dieter Engel

            The cities are literally granting monopolies, not figuratively. They literally passed laws giving cable companies a monopoly on cable service in the city. This means that if I wanted to come in and offer TV to everyone on a subscription basis, I would not be allowed to run my cables, by law. In most cases, I wouldn’t even be allowed to use an alternative technology to do the same thing.

            This is true of virtually every city in the USA.

            This is a literal granting for %100 of the market to one company. Anyone who tried to compete would be thrown jail.

            This is the very definition of regulation.

            The fact that you blame it on deregulation shows a significant gap in either education or comprehension about the situation.

          • Moeskido

            Deregulation created the few behemoths we must now pretend to choose from, and the monopolist environment which they created.

            Thanks for the insults.