On the NY Hack and Tell mailing list we've been discussing the recent news of Netflix paying Comcast for bandwidth. The two sides of the debate seem to be such;
Netflix had a cheaper inadequate backbone provider who doesn't have fast enough uplinks to major providers. Deals between providers can be anything they want, and Netflix just sidestepped the issue and got their own connection to Comcast.
Comcast is pushing smaller backbone providers out by pricing uplinks too high, forcing their customers to deal with them directly. Comcast is already being paid by their customers so this deal with netflix is essentially double dipping and sucks for competition and business.
Someone asked "If the internet were considered a utility, like electricity and water, would we be okay with metering it and paying per bit transferred?" and I had to jump in.
You know what? I would be. I'd be ok paying for what I use if there was a market that could set the price. Currently it's all about bandwidth speculation. For wholesale electricity there are 3 parts to your bill.
- The delivery fee, this covers the power lines and substations etc.
- The demand charge, this is calculated by the highest 30 minutes of usage during the billing cycle, they need to keep a % of that on hand in case you decide to spike again.
- The usage charge, the $ per kwh- this fluctuates as different zones have different transfer points with different limits and generators are all over the map. This is also public and available 24 hours to 15 minutes in advance depending on how you bill.
Commercial internet works similar to retail internet . I pay for the speed of my connection and I get to use it as much as I want. If I get a connection to a service provider I'll also pay them for an uplink to their backbone, data limits, speeds, who they're connected to, all factor into that contract. It's all upfront and I get to pick and chose. These two parts are of course often bundled together. If I'm in a datacenter already I may just be paying to patch a cable to another cage and then paying for the bandwidth. The key point is choice.
So we have an open market for commercial internet, just not retail. I'm curious what an open retail market would look like.
There are some great responses and I look forward to seeing where this goes. =)