IDG Answers is a community of experts who are passionate about technology. Ask a question or answer one below.
I understand why Netflix agreed to pay Comcast, and I'm conflicted about it. Joshua Brustein at Businessweek.com raises a good question:
"The most vulnerable companies here aren’t the likes of Netflix, which is big enough to force Comcast to the table. If nothing else, Comcast couldn’t afford to anger regulators with a fight against such a household name right now. But smaller companies will have much less leverage and could get worse terms."
The planned merger of Time-Warner and Comcast will result in a single company in charge of almost ¾ of the cable industry, which means that same company will also be one of the largest ISP in the country, if not the largest. There is essentially no governmental resistance to the formation of this monopoly, and at the same time, there are essentially no net neutrality rules remaining in effect that would prevent Comcast from throttling Netflix. Comcast is a direct competitor to Netflix with RedBox, and if Comcast “encourages” Netflix streaming quality to degrade, the loss of customers is a very real possibility for Netflix.
To be fair to the ISPs, Netflix is responsible for a huge amount of traffic. Peering agreements for Netflix used CDNs like Limelight and Level 3 to push content to users. What Netflix wanted to do, and what Comcast had refused, was to use caching hardware within ISPs network to more efficiently deliver that content. This isn’t unusual, Google, Amazon and Ebay all do it. Comcast refused to do the same for Netflix until they paid up, and Netflix decided that it was worth it.