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Remember last month, when Netflix and Comcast signed a deal to guarantee fast delivery of the video service’s streams to the cable company’s customers?

That’s exactly the kind of deal Netflix shouldn’t have to sign, says Netflix CEO Reed Hastings.

That’s the gist of the argument Hastings makes in an essay he has posted on his company’s blog, titled “Internet Tolls And The Case For Strong Net Neutrality.”

In the essay, which the company has also filed with the Federal Communications Commission as that agency prepares to create new net neutrality regulations, Hastings says that “interconnection” deals, like the one he signed last month, shouldn’t be necessary to ensure that his stuff — or anyone else’s — gets to broadband customers.

Hastings’s essay also spells out the fact that his company is now paying Comcast directly to connect with its pipes — something people at both companies acknowledged privately but wouldn’t say out loud last month.

Earlier this month, Netflix CFO David Wells told investors that the Comcast deal wouldn’t have any impact on his company’s financials, but said the company was still “philosophically” opposed to the idea. Hastings expands on that theme in his essay:

“If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future …” he writes. “Without strong net neutrality, big ISPs can demand potentially escalating fees for the interconnection required to deliver high quality service.”

That said, Hastings doesn’t seem to be backing out of his deal. And his comments appear to leave the door open for other big broadband players, such as AT&T and Verizon, who’ve said they want something similar:

“Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful ISPs to protect our consumer experience. When we do so, we don’t pay for priority access against competitors, just for interconnection. A few weeks ago, we agreed to pay Comcast and our members are now getting a good experience again. Comcast has been an industry leader in supporting weak net neutrality, and we hope they’ll support strong net neutrality as well.”

Comcast owns NBCUniversal, which is an investor in Re/code. I’ve asked them for comment.

Update: Here’s a statement from Comcast’s David Cohen, who oversees the company’s approach to regulators, among other duties:

“There has been no company that has had a stronger commitment to openness of the Internet than Comcast. We supported the FCC’s Open Internet rules because they struck the appropriate balance between consumer protection and reasonable network management rights for ISPs. We are now the only ISP in the country that is bound by them.

“The Open Internet rules never were designed to deal with peering and Internet interconnection, which have been an essential part of the growth of the Internet for two decades. Providers like Netflix have always paid for their interconnection to the Internet and have always had ample options to ensure that their customers receive an optimal performance through all ISPs. We are happy that Comcast and Netflix were able to reach an amicable, market-based solution to our interconnection issues and believe that our agreement demonstrates the effectiveness of the market as a mechanism to deal with these matters.”


Mono(du)opoly last mile access providers have tried to push the WAN/MAN demarc as far from the edge as possible starting with Kingsbury 100 years ago.  When will regulators learn that trying to concentrate interconnection destroys scale and generativity?  And this will only get worse as the volume of traffic/capacity shifts from its current 1-way orientation to 2-way.  What will a "ubiquitous" 2-way HD telepresence world look like if Comcast has 18, Verizon 12 and AT&T 4 interconnection points nationwide?  The amount of inefficient capacity utilization (due to tromboning and hairpinning of media) will be enormous.

Personally I believe net neutrality is a convenient fiction by those who would avoid understanding or learning from the origins of the internet based on, ironically, the expanded flat-rate dial-up pricing models of the Baby Bells in the 1980s that were designed to expand the defensive moat around the Class 5 voice switches from the competitive, digital long-distance industry.  But the earliest ISPs, with regulatory cover from the FCC in the form of  Computers II/III, used the price arbitrage to build regional and national data bypass networks that exploded as the www stack got layered on in the early 1990s.

My view is that we lost net neutrality 10 years ago when regulators failed to extend open or equal access to broadband.


“The Open Internet rules never were designed to deal with peering and Internet interconnection, which have been an essential part of the growth of the Internet for two decades."

Uh, I'm pretty sure this is EXACTLY why 'Open Internet' rules were designed: to protect providers like Netflix against the very thing the mega-ISP's, like Comcast, are getting away with.

Question: if I pay my $9 a month to get Netflix, as well as pay my monthly Comcast bill, aren't I, and others like myself, getting "double billed"?

Just wondering...


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