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Culture War Roundup for the week of February 27, 2023

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I've been seeing media reports (1) about ISPs asking for companies (especially companies that use a lot of bandwidth like Netflix) to pay for network infrastructure. A quick google led me to a number of articles (2,3,{1}) that read something like:

"Large corporate bandwidth user resists efforts by ISPs or governments to make them pay for bandwidth use" (this is a little bit flippant, but isn't all that far from the truth).

My intuitive response is that users of bandwidth should pay for it, including large companies. This seems fairly straightforward, right?

Another article (4) mentioned that "net neutrality" is the idea that prevents ISPs from charging their customers. How is this defensible?

Another quick google leads me to this article (5) which mentions that one advantage of net neutrality is freedom of speech (which the modal mottizen might be inclined to support), but this goes against the straightforward argument that customers (e.g., Netflix) of a service (network infra providers) should pay for it. What gives?

Sources:

  1. This week (mar-2023): https://arstechnica.com/tech-policy/2023/03/netflix-fights-attempt-to-make-streaming-firms-pay-for-isp-network-upgrades/

  2. More than a year ago (sep-2022): https://arstechnica.com/tech-policy/2022/09/google-fights-latest-attempt-to-have-big-tech-pay-for-isps-network-upgrades/

  3. More than 10 years ago (feb-2011): https://www.osnews.com/story/24357/internet-infrastructure-who-should-pay/

  4. https://www.linkedin.com/pulse/who-pays-internet-infrastructure-simon-dillsworth/

  5. https://www.itpro.com/strategy/28115/the-pros-and-cons-of-net-neutrality

I hadn't heard about this argument in a while and the comments on your first link reminded me why: Comcast won in the US and got Netflix to pay them money because the US regulators failed to do anything about it. In addition to the double-dipping argument mentioned by another reply, it's important to highlight all of these costs are entirely artificial. Everyone could save a lot of money by the ISPs not refusing to rent space in their datacenters to Netflix, since Netflix's service actually requires almost zero Internet bandwidth due to nearly all of their bandwidth being them sending the exact same data to multiple customers, so more local caches improve their efficiency a lot. Comcast (and other ISPs with their own TV/video interests) is artificially greatly increasing the amount of Internet bandwidth Netflix needs because their parent company owns competitors to Netflix.

In addition to the double-dipping argument mentioned by another reply, it's important to highlight all of these costs are entirely artificial.

The economics of internet infrastructure are weird. Companies at the core (Tier 1) don't pay for connectivity to each other at all. They get paid by Tier 2 and 3 networks that can't summon the requisite connections and data flow to qualify.

Honestly, the fact that a decentralized Internet with global connectivity to almost everyone works is quite the technical and political feat.

But yes the fact that Comcast, part owner of competitor Hulu and cable TV operator, can do this is probably a tad disappointing.

The economics of internet infrastructure are weird.

Yeah, which is why I'm not entirely sure if Netflix or Comcast is right on the "double-dipping" claim.

Isn't this double billing? Which is a terrible idea and entirely unnecessary.

Someone has to pay for the internet infrastructure. And it makes sense that payment should be roughly proportional to usage. A system in which all users of the internet pay their ISPs for access to the internet, proportional to the amount they use, while companies and other web hosters pay nothing for this, is stable and sane, and what we have now.

An alternate system where companies and other web hosters pay proportional to the amount people use their site would also handle this. I think it's inferior to what we have now, because it strongly discourages the usage of free content (or cheap content paid for by ads), and would require websites to charge microtransactions to casual viewers to compensate for their access, so costs would just pass on to the same people they are now but with more friction.

But this? Trying to make companies pay for bandwidth use that customers are already paying for? That's pure greed, it makes no sense. ISPs are already getting paid for Netflix use, because Netflix users have to pay the ISP directly for however much bandwidth they use, which then compensates the ISP for the costs of building the network infrastructure. Netflix is not the customer of the ISP, the actual customers are. They're already being paid (and more than they deserve anyway given their natural monopoly).

One-sided billing went out when uni-directional communication went out

Let's start our story with the physical precursor to all this digital stuff - mail. Party A pays a company to transport Item X to Party B. (Or, at least the agreement is to transport it to a location believed to be Party B.) The exchange of money agreed upon between Party A and the company may have depended on how large Item X was or the distance it needed to travel. Bulk/bundled pricing could be possible. In any event, for this story, Party B does not pay the company anything. If the company turned around and said to Party B, "Actually, I got yo' shit; pay me more if you want it," that would be double billing and without checking, probably illegal (unless, of course, in certain scenarios where Party A's agreement specified that Party B would be providing some compensation; COD does exist).

One might mistakenly view one's relationship with a package service as, "I pay you for your service, and the charges apparently include the amount that I send out as well as unlimited reception of goods." Perhaps this misunderstanding could be amplified by having a bulk/bundled billing, say, you pay an $Y "service fee" that includes being able to send out up to Z letters per month or something. "I pay you plenty and don't always send out the maximal amount I'm allowed; clearly, the extra must cover things like how much it costs for me to receive stuff." But this is clearly misleading and wrong.

Sears used to sell a ton of stuff via mail-order. This sort of thinking could result in folks concluding, "Yo, we the people already pay the mail service, like $Y/month! That clearly compensates them for both sending and receiving! The companies shouldn't have to pay them more! That would be double billing!" And while the companies shouldn't have to pay more to receive the letters that contain your orders, they sure as hell are going to have to pay them more to mail you back a fridge.

Intermediate conclusion: if the only things that ever traversed the internet were UDP packets, perhaps a sensible pricing scheme could be devised that only charged one of the sender/receiver. (I kind of kid, because you could still plausibly charge each side for just the packets they send for other types of connections.)

Enter telephones. Telephones are inherently a two-way communication medium. Suppose I want to talk to Bob down the street. I could go run my own telephone line directly connecting us, then use it for free, but I'm probably going to instead pay a company to hook me up to their centralized telephone service, so that I can talk to lots of different people. Bob is also likely to do the same. Now, when I call Bob, is it "double billing", because we both paid for such service? Probably not. There are special cases here, of course. Say, what if it's an especially expensive call to make (long distance/international)? It could get complicated, because there might be multiple companies involved, and they might be trying different pricing schemes. Maybe the telecom company in my country lets me receive international calls for free, but charges to initate them; maybe the telecom company in Bob's country charges either way. I remember exactly these sorts of things happening in the early days of cell phones and just having to plan out, "Hey, you should call me instead," or like, "We were talking on a call that you started, but now that it's 7pm, we should hang up and I should call you, because it'll be cheaper."

In any event, in a telephone network, you might have nodes which primarily receive or primarily send, and these things might affect how much it costs to build the infrastructure/run the network. You should expect that companies will try out different pricing schemes. With telephony, Sears can now take orders via telephone. "Customers" would pay Sears for products. "Customers" would pay the phone company for phone service. Would it have been a stable system for Sears to go to the phone company and say, "Yeah, dude, the 'customers' pay you for phone service. Set us up a connection with 1,000 lines for free, otherwise it's 'double billing'." Then the next year, Sears' sales go up, and they come back, "Make it 10,000. Free. Don't care how much trouble you have to go to. Actually, ya know what? Christmas time is busy; make it 50,000, just in case. Make sure it's free or we'll sic the press on you."

"Company" and "customer" are not categories that attach to packets on the internet.

So, I'm calling Bob down the street. What about? Who knows. The telephone company can't listen in without a wiretap warrant; they don't know. Maybe Bob set up a little business, and I'm buying something from him. Maybe the thing I'm buying is actually being sent to me via the telephone conversation we're having (I give him a credit card number over the phone, and he like, tells me his stock picks or something). At what point does Bob get to go to the telephone company and say, "Yo! This here a 'company', not a 'customer'! The 'customers' pay you so that we can talk. FREE!" (Nevermind that Bob is an asshole that is actually just a customer of Jane's Stock Tips that he repackages and sells for more money. The telephone company can't know this either, because again, no wiretap warrant.)

Bob makes enough money off his shitty stock picking business that he decides to buy a ranch in the middle of nowhere, like he's always dreamed of. He contacts the telephone company, "Yeah, hi! I'm gonna need you to go ahead and run like fifteen telephone lines a few hundred miles out to my little compound. Business is booming, and I have the whole family answering calls and giving stock tips. I have a big family. So, if you could just go ahead and do that on Saturday, that'd be great. Thanks! ....oh, and remember... FREE!"

Would this system be stable and sane? I think already it appears not quite sane. How about stable? In this system, there appears to be a hell of a great incentive to gain the 'company' label. I might look like a customer at first glance, but I'm going to start up just enough of a business, host just enough content in my house (send just enough stock tips of my own out on the phone). I'm a "business" now. Can I go to the ISP/phone company and say, "Yo dawg, I'm not a businessman, I'm a business, maaaaan. FREE." What is the minimal level of business/hosting that I need to do to qualify? Can everyone on the block attain this minimal level? We'll all do it, and we'll all stop paying. Who pays now?

The internet is just a bunch of endpoints

A variety of big companies help connect up those endpoints, forming a massive morass in the middle of everything. Endpoints get charged by the company that helps them get into that morass. (Companies which set up that morass negotiate with each other to price traffic between their respective networks when they traffic to each other.) Endpoints get charged according to how much traffic they want to get in to and out of said morass. Large, heavily-used endpoints probably pay a lot. Small, slightly-used endpoints probably pay a little.

While packets don't come with a "company" or "customer" label, in reality, telephone companies and ISPs do have "business class" service. It costs more, not less. It recognizes that there may be differences in service needs. Individuals might be happy with cheaper service that doesn't come with the fifteen lines that Bob needs or better guarantees like that at least ten of them need to be functional 100% of the time. The usage demands of individuals can often be rounded off to "within some small bucket", and bulk/bundled prices can be easier for everyone than metering out every call/packet. Bob's business needs more than this small bucket, and he's going to pay more. Sears needs even more, and they're probably going to pay even more. Neither of them can be like, "Yo, the 'customers' already pay you; FREE."

This general story makes sense, and lots of academic ink has been spilled on "two-sided markets" with different features along these lines. In some cases, there may be benefits to providers; in some cases, there are some things we can do to reduce concerns. In the basic story, things mostly work out okay given some measure of competition. Of course, the basic story doesn't preclude the possibility that anti-competitive behavior could arise or that such behavior should be dealt with. Below, people describe Comcast as vertically-integrating their own streaming service and behaving anti-competitively toward Netflix; that particular anti-competitive behavior can and should be dealt with, but the solution is not some weird distinction between 'customers' and 'companies', where 'companies' can magically demand FREE no matter what their demands are.

Okay, you make some good points and I'm largely convinced away from my previous viewpoint.

But then, assuming we treat companies as indistinguishable endpoint users, why do ISPs need to demand that they specifically pay for infrastructure costs? Shouldn't that be baked into their business class service? Isn't the entire point of paying ISPs that they use the money for infrastructure? Is it just that there's an abnormally large amount of demand from a small number of servers that the regular infrastructure can't handle all at once? Does the increased usage from these companies not make their regular endpoint user costs abnormally high to compensate for this without special negotiations?

I think it's just a blend of the two things. Think again about telephone service circa 19XX, with some low value for XX. Telecoms have some reasonable expectation for the needs of most businesses, maybe tens to low hundreds of numbers. Then, some company like Sears changes the way they do business, shoots to the moon, and suddenly needs thousands of lines. You could imagine that the telecoms previously had written their regular endpoint user costs without even having the possibility of this use case in mind.

I can't find it now, but I recall seeing a picture of outdoor telephone lines in what I think was a European city back in the day, at like a central location. It was the most gawd-awful mess of just absolute spaghetti, worse than any "bad cable management in a server room" pic you've ever seen. But that was just, like, how they did things at that time. But now imagine Sears shows up and says, "We want to locate a call center in this city, and we need like thousands of lines, yo." The telecom might phrase it in terms of, "Yeahhhhh, we're going to need a new 'tier' in our list of regular endpoint user costs," or they might phrase it in terms of, "Dude, we simply need to completely redo our core infrastructure, because we can't scale to what you want with the way we've been doing things." It's probably some blend of the two, and they pretty much need to just negotiate it out. Hopefully, there's competition between possible providers and the telecom company isn't running their own business to compete against Sears, so that the result can plausibly be just a regular competitive negotiation. What I have less patience for is a company like Sears running to the newspapers and screaming about how horribly unfair it is that the telecom company won't just go to millions/billions of dollars of effort for free to accommodate their massive need.

Peters said. "Broadband customers, who drive this increased usage, already pay for the development of the network through their subscription fees. Requiring entertainment companies—both streamers and broadcasters—to pay more on top would mean ISPs effectively charging twice for the same infrastructure."

It seems natural to me that customers pay for the product that comes to them. If I get something trucked to me, I assume the cost of road tax (for upkeep of the road that the truck uses) will be included in whatever I pay the trucking company.

Or another example, when people talk about large companies 'emitting CO2' to imply it's their fault rather than ordinary people's, they do so to provide services we demand. The aluminium they smelt, chemicals they produce all go to an end-user eventually. It's not as though they're emitting CO2 for fun. Ultimate responsibility lies with the demand, not the supplier. If we charged the producers as well as the consumers for emitting CO2, we'd effectively just be charging consumers twice since producers can only push the cost onwards or reduce production.

If we discovered that Netflix was doing something ridiculously silly like using inefficient file-compression and increasing the amount of bandwidth used, then there would be some basis to complain. Or if energy companies were using extremely inefficient, expensive, unreliable sources of energy that necessitated costly construction of new power line infrastructure and the closure of power-intensive industries like aluminium plants, then there would be reason to impose punitive action against them.

If we discovered that Netflix was doing something ridiculously silly like using inefficient file-compression and increasing the amount of bandwidth used, then there would be some basis to complain.

A post above yours says that they basically are.

I think you've misread it.

Netflix wanted to rent space in local datacenters to reduce the necessary bandwidth. Comcast shut them down.

That post says the opposite of your claim.

That post says that Comcast refused to let Netflix reduce its bandwidth usage unless Comcast gets paid.

Actually, it's worse than that. Comcast refused to let Netflix reduce its bandwidth usage at any cost. And then managed to get Netflix to pay them extra for that bandwidth usage.

It seems natural to me that customers pay for the product that comes to them. If I get something trucked to me, I assume the cost of road tax (for upkeep of the road that the truck uses) will be included in whatever I pay the trucking company.

I pay both Comcast for the pipes and Netflix for the content that comes over the pipes. If Comcast starts charging Netflix for delivering what I already them pay for, that might be shrewd business on Comcast's part, but I'm not going to like a Netflix fee hike to cover what I'm already paying for.

Presumably, large companies have a contract with their ISP to obtain access to a certain amount of network bandwidth. If an ISP wants to renegotiation that contract when it expires, that's perfectly reasonable. Otherwise, how are they justified in attempting to charge the company more than the contract requires?

I believe the anti-ISP side here is that the ISPs are overselling bandwidth, and then when a customer actually uses all of the bandwidth they bought, the ISP is in trouble. They need to upgrade the infrastructure to actually accommodate the bandwidth usage, and they are attempting to pass this cost on to a customer without re-negotiation of contracts.

Now, I'm a bit anti-ISP by habit, so can someone give the pro-ISP argument here?