Comcast and Netflix announced a deal Sunday that will definitely increase the quality of your Netflix streaming videos. That’s, seemingly, the good news. The bad is that it may mean the creation of a movie streaming monopoly and tiered access to data across the internet. In response to seeing a decrease in their video delivery speeds of more than 25%, Netflix sought and received the reservation of exclusive bandwidth across Comcast’s network thus cutting out local middle men creating a ‘pay to play’ tiering agreement that was unheard of until now. It also may make net neutrality concepts null and void.
Specifically, such an agreement will mean that any competitors that might want to take on Netflix will now have to compete against a company whose high speeds are essentially locked in by the largest cable provider in the country which means that start ups would likely never be able to provide the level of quality that Netflix will. It also raises the question, will competitors like Hulu have to enter into a similar deal just to get a similar level of quality? If so then the exact scenarios long feared by net neutrality advocates would appear to have arrived.
“This is the water in the basement for the Internet industry,” Mr. Wu said, the first in what could be a flood of such arrangements. “I think it is going to be bad for consumers,” he added, because such costs are often passed through to the customer.
One fear is that if such deals become common, only the wealthiest content companies will be able to afford to pay for them, which could stifle the next Netflix from ever getting off the ground.
Combining this latest deal with Comcast’s proposed merger with Time Warner Cable, valued at $45 billion, would mean that tiered service across the internet would now be the norm given that Comcast is already the nation’s largest cable and internet provider even without merging with Time Warner. Such a merger would expand Comcast’s customer share from 37% of marketshare to a whopping 57% of marketshare. Behold, the graphs:
Which means that 57% of marketshare, every Comcast household, will now have Netflix data prioritized across the network they pay for access to whether they want access to Netflix data or NBA League Pass or Crackle or Hulu or what have you. Want to do something bandwidth intensive during peak hours besides watch Netflix? Sorry, your data isn’t going to be prioritized, Netflix’s is.
This may result in customers effectively having less choice about what they can do with the bandwidth they pay for. Additionally, since both Time Warner and Comcast are frequently listed among the worst companies in the country for customer service, they likely won’t be reacting to any complaints anytime soon.
Even more disconcerting is the assertion by Forbes that this may all be about politics and campaign donations anyway.
As the New York Times reported, “91 of the 97 members of Congress who signed a letter in 2011 supporting the Comcast NBC merger received contributions during that same election cycle from the company’s political action committee or executives.”