From Freepress, an explanation of why the Comcast-Netflix deal is so bad:
This is more than a deal between two giant companies: It will affect everyone who uses the Internet. And as with so many things involving Comcast, consumers will end up paying for it in the end.
The deal should also be a wake-up call to regulators who are weighing the proposed Comcast-Time Warner Cable merger and grappling with what to do about Net Neutrality.
And if the game of chicken that preceded this pact becomes the norm, it will be a disaster for the future of online video.
Nobody Wins, Everybody Pays
The exact terms of the Comcast-Netflix deal are secret, but this much is clear: Millions of consumers who already paid handsomely for a premium broadband experience received poor service for months on end. Comcast refused to make minimal investments to deliver what its customers already bought — and simultaneously pushed people to upgrade to more expensive services.
Comcast and friends like to cry foul at the sheer amount of traffic video-streaming companies use. But the actual investment these extremely profitable ISPs would need to make to ensure their customers get the quality of service they paid for is extremely small. We’re talking so small it wouldn’t make the slightest dent in the continued growth in broadband profits these companies enjoy year after year.
The dispute between Comcast and Netflix had gone on for months. It’s likely that millions of unsuspecting consumers paid to upgrade to faster speed tiers thinking it would fix their problems. Comcast customers report hearing about this “solution” from customer-service reps after trying — without success — to fix the problem on their own.
Comcast had no qualms about letting its customers suffer lousy speeds and service. To Comcast, bad service is just another negotiating tactic — the company knows that most of its customers have nowhere else to turn for high-speed broadband. (And for the few that do, the options aren’t great: Verizon is apparently degrading Netflix, too.)
This is what happens in a broken market: Powerful players abuse their power to serve their own anti-competitive ends.
Why Comcast Is Afraid of NetflixCord cutters hail the new streaming marketplace as a land of competition and diversity. Instead of shelling out big bucks to pay for 500 cable channels, consumers can cut the cord and get their programming from on-demand libraries on platforms like Amazon Prime, Hulu and Netflix. But the Comcast-Netflix agreement changes the landscape.
Online video scares the cable companies, which have enjoyed a monopoly on entertainment and information distribution since the 1990s, when broadcast viewership over the airwaves began to decline. Cable companies like Comcast make tons of money by elevating their own programming on their cable systems. And since Comcast acquired NBC, the company now controls a media empire that includes Universal Studios, cable networks like Bravo, MSNBC, and USA, and more than two dozen local TV stations across the country.
It benefits Comcast to keep independent programmers off of its own cable lineup and to make space for its own properties, because it’s way more lucrative than paying someone else for their content. And even today, any new cable channel essentially has to get picked up by Comcast, because the company is already the gateway to so many homes.
This deal spells bad news for future startups and anyone interested in creating or consuming online media (read: pretty much all of us). It will likely chill investment in online video startups as investors look to safer bets that don’t involve battling Comcast, a company that’s poised to control over half of the bundled home video and broadband Internet market.
“No Oversight? No Problem!”
Let’s be clear. The Comcast-Netflix agreement is not the outcome of a free market. This is Comcast having Netflix over a barrel, and backing off only when it became clear that this sort of trickery could potentially derail its mega-merger with Time Warner Cable.
This deal is a glimpse into the future of the Internet — and that future will look even worse if that merger goes through.
Disputes like this hurt the open Internet. They hurt consumers. And they’ll become par for the course if ISPs are allowed to get even bigger and operate without the Federal Communications Commission stepping in.
That sums it up well, doesn’t it? Whenever a big corporation or the 1% looks at the hoi polloi, they think “…Nobody Wins, Everybody Pays…”.
It’s how the little people are supposed to be dealt with.
WNYC had a discussion segment about this new “agreement” this morning. Several callers stated their service had become so terrible they’d cancelled Netflicks and/or made upgrades to improve service. One said she would be going back to cable for her viewing….
Mission Accomplished, Comcast.
And all you customers out there who have Time-Warner? Good luck with your new, greatly emboldened internet and cable overlord. Should it go through, and with this Corporatist administration and so little concern –or maybe with so little action on things which concern the lower economic quintiles– about these monopolies and duopolies, it most likely will be approved.
I still laugh bitterly whenever I think of Time’s cover showing Obama as FDR….
When I wrote to Earl Blumenaur, a supposedly progressive Dem, about verizon taking over my internet provider (Clear) and what a horrible option Comcast is (that deal was announced the day after my letter), I called out the Dems for completely rolling over for the monopolists on anti-trust enforcement.
Blumenauer’s only response was that it’s terrible how we a captive to Comcast, but the only solution is for “us” to build more broadbad infrastructure so someone else might be able to compete against Comcast. Are *all* the Dems so beholden to the corporations (I know Bill/Hill/Barry/Al/Harry/Nancy are/were) or did they all drink the kool ade beliefs that all regulations are bad bad bad? Only carrots for the US Chamber of Commerce, no sticks. Sticks are for whistleblowers and small time drug offenders. What a pathetic sack of shit we have for reps in Oregon (St Ron Wyden wouldn’t come out and say it directly, but his weasle words let you know he was totally in favor of Social Security cuts. And even on domestic spying, he knows what’s happening, knows it’s illegal, but he still doesn’t have the courage to stick up for Snowden, or tell us what’s going on himself.)
Oh, and I meant to mention that Felix Salmon had a good post the other day about how we have plenty of broadband infrastructure in this country already, and the only reason we pay the most for the worst internet service in the world is because of monopolies rigging the markets to extract maximum rents for minimum service.
Guest, do you have a link for the Salmon piece? T/U.
How about we all just cancel our cable..it’s too expensive anyway. If we organized a boycott the price would come down.
According to a segment I heard on public radio (not sure which program), an analyst of the cable business said they keep the price of broadband high to make up for those leaving the cable portion of their business. AND, since they have local complete monopolies, in most cases (NYC being an exception, which has both Cablevision and Time Warner), customers have zero options for fast internet other than the cable company.
Here in NJ, we were promised FIOS, but then Verizon realized they could make just as much money by stiffing the lower economic quintile areas and just putting fiber optics into the areas with higher median incomes. They actually announced this plan, iirc, saying, well, you can always go wireless. But wireless has an upper limit on speed which is not high enough to satisfy most users.
Corporatists rule. They view those of us not in the top 20% as simply bothersome and not worth dealing with.
Internet MUST, MUST, MUST be treated as a untility and fully regulated. And cities/townships must install the infrastructure to reach all the citizens; then, open us use of those fast wires to actual competition.
But, in NJ, Verizon and AT&T seem to rule the public service commission and the legislature. Governors, too, most likely. Chris “We Dasn’t Tax the Rich!” Christie will do nothing for us peons. Except assist the Big Corporations to financially suck all they can from us.
Thank goodness for libraries, but, damn, it’s not always easy to get here to use the web. Grrrrr. Peonage is not fun.