Comcast-Netflix deal represents the death of net neutrality… or does it?

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netflixI admit it, the first thing I thought of when I heard that Comcast and Netflix had reached a deal for smoother streaming was net neutrality. What kind of precedent would this agreement set? So now, if you’re a big content provider, you can pay big internet service providers (ISPs) like Comcast for preferential treatment on their networks? That’s not fair to all the littler sites out there (hi!) who couldn’t even get a meeting with the Comcasts of the world, let alone get preferential treatment — at least, not at a price they could afford.

imgresBut who cares? Your Netflix is going to work better if you’re a Comcast customer. The heck with net neutrality, the important thing is the net result: binge-watching reruns of 30 Rock with no annoying buffering. Right?

Many observers are arguing that this short-term benefit comes at the expense of the long-term health of the internet. USA Today was typical of many influential media outlets that expressed concern:

The network-sharing agreement between Comcast and Netflix has likely buried the idea that providers of high-speed Internet connections into U.S. homes have to take into account anything but market forces when setting prices for their service.

In other words, Net Neutrality is dead.

Its end was foreshadowed last month by an appellate court ruling in Washington, D.C., that threw out rules barring phone companies and cable giants from giving preferential treatment to certain content providers on their networks.

Now that the largest cable provider, Comcast, and perhaps the largest user of consumer bandwidth in Netflix have struck a deal, any legislation or executive action to authorize new federal telecom rules will have very little momentum in Washington.

As another example, the Washington Post‘s take:

Officially, Comcast’s deal with Netflix is about interconnection, not traffic discrimination. But it’s hard to see a practical difference between this deal and the kind of tiered access that network neutrality advocates have long feared.

Or how about The New York Times?

Netflix, which is growing fast and by some estimates accounts for 30 percent of all Internet traffic, may have the financial resources to cut deals with Comcast, Verizon and other broadband providers. But smaller companies or startups could find it difficult to compete if they, too, have to pay cable and phone companies for direct access to their networks.

Even Netflix might come to regret its deal if Comcast and other broadband providers substantially raise prices for such direct connections in the future. Netflix will find it hard to push back against big increases because there are just a few competitors who can deliver its video streams to consumers.

And there’ll be even fewer if the Comcast-Time Warner Cable merger is consummated.

But one influential blogger/analyst says all this concern is alarmist hogwash from media outlets that should understand this story way better than they do. Dan Rayburn, executive vice president of the blog and principal analyst for the influential research firm Frost & Sullivan, says the deal “is good for Netflix, Comcast and for consumers and it has absolutely nothing to do with Net Neutrality.” He writes:

[M]any who clearly don’t understand how the Internet works are writing about the news. Those who don’t cover network infrastructure for a living should not be trying to explain the technical details behind today’s announcement. Articles from mainstream outlets like TechCrunch, WSJ, NPR, Time and many others aren’t even getting the basics right. Words like transit, peering, speed, bandwidth, capacity, etc. are being used interchangeably without any understanding of what they mean.

So exactly what does it mean? Rayburn says it’s simply a “commercial interconnect deal” that (and this is his emphasis) again has “NOTHING TO DO WITH NET NEUTRALITY.” He even underlined that for added effect.

Read the whole article; it’s a bit wonky but the rhetoric is persuasive. The whole thing has the air of a somewhat bitter know-it-all techie who wants to prove his expertise just to be the smartest guy in the room. (Wait, that’s essentially what blogging is all about, right?) But I respect his knowledge base and pedigree, and it’s caused me to look at the issue differently.

However, any time two companies that approach monopoly status agree to something, it raises a red flag for me. What concerns me is that today it might be a “commercial interconnect deal,” but what comes next? What other deals are on the horizon? How will they be regulated — if at all? And how will they impact the average content creator?

It’s naive to think that big corporations have the consumer’s best interests at heart above all else. As always, follow the money.

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