While the author is correct to admonish the news media for its incorrect use of words like 'speed', 'throughput', 'bandwidth', etc., the author has much to learn about the economics and law at play here.
He says, "While I don’t know the price Comcast is charging Netflix, I can guarantee you it’s at the fair market price for transit in the market today and Comcast is not overcharging Netflix like some have implied."
Well, there is no "fair market price" in the absence of perfect competition. Where I live, Comcast is the only game in town. Verizon won't compete. So, Comcast is a monopoly. There's a monopoly price, and that price is significantly higher than what the price would be if we had a competitive market. In places where consumers have a 'choice' between Verizon and Comcast, there's a duopoly, with duopoly prices. Duopoly prices aren't much different from monopoly prices as far as consumers are concerned. The difference here is that Comcast/Verizon are making somewhat smaller duopoly profits, rather than higher monopoly profits.
Monopoly/duopoly, either way, consumers are getting screwed, whether that consumer is a household like me or a business like Netflix.
The author emphatically insists these deals have "NOTHING TO DO WITH NET NEUTRALITY." As a reminder, Net Neutrality was struck down by the Federal Courts on Tue 14-Jan-2014. So its funny we're seeing a tidal wave of deals between Netflix and the big three ISPs (Comcast, Verizon, and AT&T) just 6 weeks later, after numerous accusations of throttling. I know Comcast 'promised' to respect Net Neutrality until 2018. But Comcast has made me many promises they've broken, e.g., quoting me one set of prices, then charging me much higher rates when I get my bill. So why should I believe them now?
For a detailed economic analysis, I highly recommend looking at the 2010 paper "The Economics of Network Neutrality" by Nicholas Economides and Benjamin E. Hermalin. The paper finds that "network neutrality is welfare superior to bandwidth subdivision (granting or selling priority service)." See http://faculty.haas.berkeley.edu/hermalin/net_neutrality_v17...
I also recommend reading the 2006 testimony of Lawrence Lessig at the Senate hearing on Net Neutrality. He concludes that the loss of Net Neutrality will stifle innovation, damage the economy, and take away our freedom. See http://www.commerce.senate.gov/pdf/lessig-020706.pdf
I wish Lessig had expanded on his comments on freedom. We've seen illiberal countries like Iran, Libya, etc. block their citizens' access to internet sites that officials disapprove of. People think it can't happen in the US. But we see Arizona in the news today considering a law that allows firms to discriminate against gays. What if a major ISP's conservative CEO decides he doesn't want his customers accessing websites with content about gays, abortion, porn, gambling, alcohol, the big bang, evolution, islam, and so forth? Does his freedom of religion take precedence over my freedom of speech? It would be one thing if I could switch to a competing ISP, but as I've stressed, there's a real lack of competition. So, this scary scenario is becoming a real possibility now in the US.
He says, "While I don’t know the price Comcast is charging Netflix, I can guarantee you it’s at the fair market price for transit in the market today and Comcast is not overcharging Netflix like some have implied."
Well, there is no "fair market price" in the absence of perfect competition. Where I live, Comcast is the only game in town. Verizon won't compete. So, Comcast is a monopoly. There's a monopoly price, and that price is significantly higher than what the price would be if we had a competitive market. In places where consumers have a 'choice' between Verizon and Comcast, there's a duopoly, with duopoly prices. Duopoly prices aren't much different from monopoly prices as far as consumers are concerned. The difference here is that Comcast/Verizon are making somewhat smaller duopoly profits, rather than higher monopoly profits.
Monopoly/duopoly, either way, consumers are getting screwed, whether that consumer is a household like me or a business like Netflix.
The author emphatically insists these deals have "NOTHING TO DO WITH NET NEUTRALITY." As a reminder, Net Neutrality was struck down by the Federal Courts on Tue 14-Jan-2014. So its funny we're seeing a tidal wave of deals between Netflix and the big three ISPs (Comcast, Verizon, and AT&T) just 6 weeks later, after numerous accusations of throttling. I know Comcast 'promised' to respect Net Neutrality until 2018. But Comcast has made me many promises they've broken, e.g., quoting me one set of prices, then charging me much higher rates when I get my bill. So why should I believe them now?
For a detailed economic analysis, I highly recommend looking at the 2010 paper "The Economics of Network Neutrality" by Nicholas Economides and Benjamin E. Hermalin. The paper finds that "network neutrality is welfare superior to bandwidth subdivision (granting or selling priority service)." See http://faculty.haas.berkeley.edu/hermalin/net_neutrality_v17...
I also recommend reading the 2006 testimony of Lawrence Lessig at the Senate hearing on Net Neutrality. He concludes that the loss of Net Neutrality will stifle innovation, damage the economy, and take away our freedom. See http://www.commerce.senate.gov/pdf/lessig-020706.pdf
I wish Lessig had expanded on his comments on freedom. We've seen illiberal countries like Iran, Libya, etc. block their citizens' access to internet sites that officials disapprove of. People think it can't happen in the US. But we see Arizona in the news today considering a law that allows firms to discriminate against gays. What if a major ISP's conservative CEO decides he doesn't want his customers accessing websites with content about gays, abortion, porn, gambling, alcohol, the big bang, evolution, islam, and so forth? Does his freedom of religion take precedence over my freedom of speech? It would be one thing if I could switch to a competing ISP, but as I've stressed, there's a real lack of competition. So, this scary scenario is becoming a real possibility now in the US.