Quite the brouhaha arose last week over Comcast's demands that Level 3 Communications pay exorbitant fees to deliver Netflix content to Comcast subscribers. There was outrage -- but not nearly enough.
Level 3 was just a proxy with a contract to run Netflix's wildly popular streaming service -- a service, by the way, the likes of which the American consumer has wanted for a long time. There's lots to love about a $7.99 monthly fee to access untold thousands of movies and television shows with the click of a remote control. Comcast, however, is not a fan. Hmm, do you think its antipathy has something to do with Comcast's overpriced On Demand service?
Last week's episode was another chapter in the open warfare on Internet-based streaming video by Comcast and other ISP/cable operations. They are not waging a fair fight with compelling, competing services. Instead, they are trying to extort money from Internet content providers like Netflix by sticking it to third-party communications partners like Level 3.
Peering arrangements between major carriers have always been subject to payment from one side or the other, depending on the bandwidth balance. If one carrier is shoving a ton of traffic on the other without taking a similar level of bandwidth on their own network, there's usually an agreement in place to compensate the carrier bearing the brunt of the flow. However, these agreements are about bandwidth in bulk, not about specific applications.
Comcast is whining about Netflix traffic specifically, demanding a perpetual fee to "transmit Internet online movies and other content to Comcast's customers who request such content." The customers in question are already paying Comcast bunches of money every month for Internet access. In many places, these consumers have no alternative to Comcast for broadband access.
In effect, Comcast is trying to charge everyone involved in an Internet transaction simply to carry the data that they're already obligated to carry. The company is double-dipping, and if nothing is done to regulate this type of action, this is just the beginning of what will shortly become a sea change in how the Internet operates. We can expect the costs for everything we do on the Internet to rise drastically.