Netflix: Metered Broadband a Pure Cash Grab - High-Def Digest Forums
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Old 05-17-2011, 12:06 PM
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Default Netflix: Metered Broadband a Pure Cash Grab

Great to see this topic being discussed. The public needs to be informed about the actual costs of broadband from sources outside of companies wishing to maintain their video source monopoly.

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Netflix initially tried to downplay metered billing as a threat to their business, though in recent months the company has gotten increasingly vocal about the issue -- especially after launching streaming video service in Canada and running face first into that country's low caps and high per byte overages. Netflix has insisted such a pricing model is in no way tied to economic reality, is a move by ISPs to to protect traditional television revenues, and recently stated AT&T's new caps were moving "in the opposite direction" from what consumers want.

Consumer advocates have long agreed, arguing that the move toward overages is about cashing in on Internet video while protecting TV revenues -- and contrary to carrier claims -- is in no way an act of financial or congestion management necessity. This week Netflix ramped up their arguments, meeting with FCC boss Julius Genachowski and publishing a letter (pdf, via GigaOM) sent to the agency that doesn't pull any punches. In the letter, Netflix CEO Reed Hastings reiterates that the pricing models Canadians in particular have seen popping up are simply not based on any financial reality:
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Netflix further notes that the Lemay-Yates Report concludes that the wholesale incremental cost for delivery of Internet traffic, for average “heavy users”, ranges from below 1 to at most 1.4 cents per GB, with a figure of below 1 cent per GB being the most likely. Consequently, the prices proposed in Bell’s GAS tariff provide margins in excess of 99%. Further, it concludes that the incremental cost decreases with increasing usage.

The dramatic disjunction between incremental cost and the UBB rates proposed belies any argument that the incumbents’ UBB rates are primarily intended to recover any additional costs to the system occasioned by “heavy users” and not already covered by the flat-rate component: such excessive margins clearly have more to do with maximizing the size of the incumbents' windfall. Indeed, the Lemay-Yates Report establishes that greater traffic does not necessarily have any incremental effect on congestion.
http://www.dslreports.com/shownews/N...sh-Grab-114215
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Old 05-17-2011, 12:13 PM
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The cost for the wholesale delivery of incremental Internet traffic via the local access cloud has been estimated to range from a penny per GB to 1.4 cents per GB for average heavy users ranging from 60 to 250 GB of usage per month, well above the current average usage of all Internet users, which has been estimated to be around 24 GB per month in 2011 in Canada.
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The report then goes on to show that in cases of a telecommunications network set up like Bell Canada’s, more traffic actually lowers the fixed cost on a per gigabyte basis, even after taking into consideration the need to add more ports. Additionally, the Lemay-Yates report notes a similar cost model would apply in cable as well.
http://gigaom.com/broadband/netflix-...k-all-profits/

https://prodnet.www.neca.org/publica...211netflix.pdf
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Old 05-17-2011, 12:18 PM
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Providing internet bandwidth is not like providing electric or gas service where each unit has a fixed cost, so yes, it's absolutely a cash grab by the greedy ISPs. This is one area that needs government intervention.
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Old 05-17-2011, 12:22 PM
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OMG. Coldfoot and I agree on something!!!
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Old 05-17-2011, 01:14 PM
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Somewhat related, Netflix passes up BitTorrent for internet traffic. That is a great sign for content owners!


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Netflix ended up surpassing BitTorrent for both download (29.70 vs. 10.37 percent) and aggregate Internet traffic (24.71 vs. 17.23 percent).

The traffic numbers show us that Netflix is an even more dominant force on the web than some think, and it also shows us just how quickly new markets will jump on the Netflix bandwagon.
http://venturebeat.com/2011/05/17/ne...merica-traffi/
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Old 05-17-2011, 04:21 PM
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Originally Posted by chipvideo View Post
OMG. Coldfoot and I agree on something!!!
Same here! What's going on?!
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Old 05-17-2011, 05:45 PM
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I hate this metered bullshit. I just don't think Netflix has the lobbying power like the monopolistic cable companies to spur change. Makes me also fear that Netflix might lower the quality of their streams so as to lower the bandwidth costs if they are unable to do anything.
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Old 05-17-2011, 07:43 PM
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Originally Posted by jiggawhat View Post
I hate this metered bullshit. I just don't think Netflix has the lobbying power like the monopolistic cable companies to spur change. Makes me also fear that Netflix might lower the quality of their streams so as to lower the bandwidth costs if they are unable to do anything.
Once UltraViolet comes out the studios will also have cause to get involved.
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Old 05-17-2011, 08:43 PM
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Originally Posted by PSound View Post
Once UltraViolet comes out the studios will also have cause to get involved.
Well two of the big ones are owned by media conglomerates: Paramount and Warner Bros so don't know which way will be more beneficial to them.
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Old 05-17-2011, 08:57 PM
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Originally Posted by jiggawhat View Post
Well two of the big ones are owned by media conglomerates: Paramount and Warner Bros so don't know which way will be more beneficial to them.
Not sure about the Paramount connection, but Time Warner Cable is no longer linked to Time Warner.
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