I've seen estimates claiming that Netflix streaming accounts for nearly 20 percent of all Internet traffic at some points in time. That's a big number, and it speaks to the success Netflix has had transitioning itself from a DVD dinosaur to a cutting-edge content delivery service. On the other hand, Comcast and similar cable providers have been happy to sit on their spotty behinds and rake in money from their subscribers while delivering subpar content services. They're upset about Netflix's success, so they're unleashing the lawyers and shaking down the competition.
Is Netflix's success increasing traffic through Comcast's network? Yes. Is Comcast entitled to payment from Netflix or its partners because of that traffic? No, not any more than InfoWorld should pay Comcast so that you can read this post. Comcast sells its customers a path to the Internet -- the whole Internet, not just the parts that nobody visits. Netflix already pays large sums of money for Internet service to deliver its content; the fact that it doesn't pay Comcast is immaterial. Otherwise, what would stop Comcast from deciding to extort money from every Internet service that had the cash to spare? It's a classic protection racket.
Imagine an apartment building that has its own laundry facilities. They're expensive and unwieldy, but they're cheap for the building owners to run. An outside laundry business starts offering far superior off-site laundry services with free delivery to the building, meaning that fewer and fewer people use the building facilities. Rather than improve the on-site facilities to compete with the new service, the building decides to post guards and charge the off-site company a stiff fee to deliver to the building. This is in essence what transpired last week.
Shame on Level 3 for acquiescing. It could have easily made a very public furor over this demand, posting open letters and clarifying what Comcast wanted, right along with explanations of why Comcast subscribers may be having problems using Netflix. That's the only way to send this kind of nonsense back to the murky depths from whence it came.
If there's one thing I've learned from movies and television shows, it's that you never negotiate with the hostage taker -- it makes them more likely to take additional hostages.
This story, "When Comcast Bullies Netflix, the Internet Loses" was originally published by InfoWorld.