Netflix To Cogent To World

Wed Jul 30 16:21:46 UTC 2014

> There really is very little reason why certain major content 
> owners and providers who operate their own IP networks 
> cannot turn around and become full-blown wholesale ISP's 
> (and in some cases, consumer ISP's).
> 
> As a transit provider industry, we need to get our act 
> together and play nice, before we all get run over by the 
> content owners. They will not hesitate to take us out of the 
> equation the first chance they get.

Yes and no…

The barrier to Netflix becoming a consumer ISP is very high… Very very high. It costs a lot of money to deploy all that last mile infrastructure, assuming you can get permits, acquire rights-of-way, etc. to even do it.

Much of the current consumer ISP infrastructure happens to be owned by content providers that Netflix is competing with. The rest is largely owned by other content providers that are attempting to compete with Netflix _AND_ the other content providers. ($CABLECOs (e.g. Cox, Time Warner, et. al.) in the former case and $TELCOs (e.g. FIOS, uVerse, et. al.)  in the latter).

In the US, at least, both $CABLECOs and $TELCOs look more like law firms than communications companies if you analyze their business models. They seem to spend most of their time seeking ways to create a regulatory environment that favors them and disadvantages their competition rather than focusing on customer service and innovation to gain better profits. For the most part, their ability to do harm is somewhat limited by the fact that their interests largely run contrary to each other, so you have roughly equal forces fighting for legislation and rulings in roughly opposite directions.

Unfortunately, when they agree, it is almost certainly the consumer that loses and loses big.

The current situation with Netflix (and other content providers) is one such example. One of the few things they can agree on is that it is easier for them to try and extort money from content producers that compete with them than it is to change their business model to account for the true costs of providing what they promised.

One interesting thing about this in my opinion is that the worst consequence if they get their wish (the Slow Lane proposal, as I call it), the worst effect on consumers is an unintended side-effect. It will create an additional set of entry barriers for companies attempting to compete with Netflix and other content providers that have sufficient resources to pay the “exit the slow lane extortion”.

So not only is this bad for consumers by raising the cost of their content services by a factor of  $ISP_EXTORTION+MARKUP, but it’s also bad for consumers by creating a new barrier to competition in an area of the market that was previously more open.

Owen