If you are likely to click on a blog post about Net Neutrality or if you believe Comcast or any other specific Internet provider has a powerful influence on your life, you've probably heard the claim that "(*cough*Maybe*cough) Comcast has been throttling your Netflix access to shake down the video streaming giant for money." You've probably seen this "(*cough*theory that it is*cough*) ABSOLUTE FACT!" referenced as proof that we need FCC mandated/regulated "net neutrality".

I am about to offer evidence that the Comcast/Netflix Conspiracy Theory is based on naivety about how the Internet actually works. First, though, I will acknowledge that I don't think we need to put the Federal government in control of Internet speech, and that I believe legally mandated net neutrality will do just that. Also, I doubt the regulation is needed—because I don't think it is in the interests of an Internet provider to do that. However...whatever. This particular proof that Comcast is more interested in doing evil than having satisfied customers is not really grounded in evidence.

1) Dan Rayburn from the StreamingMedia blog carefully explained how your Netflix got broke in his post "Here's How The Comcast & Netflix Deal Is Structured, With Data & Numbers":

"ISPs have something called a peering policy which are rules that govern how networks connect with one another and exchange traffic. ISPs like Comcast will allow transit providers like Cogent to connect to their network, for free, in what's called settlement-free peering. However, once the transit provider sends more traffic to the ISP then they are allowed to, per the ISPs peering policy, the transit provider pays the ISP for more capacity to get additional traffic into their network. Remember, Netflix is the one paying Cogent and Cogent is selling Netflix on the principle that it can get all of Netflix's traffic into an ISP like Comcast. As a result, Cogent has to take all the necessary business steps to make sure Cogent has enough capacity to pass Netflix's traffic on from Cogent's network to Comcast. But Cogent isn't doing that. The reason for the poor quality streaming is that Cogent refuses to pay Comcast to add more capacity, even though Cogent is taking Netflix's money for the service. Cogent is charging Netflix for a service it can't deliver. Some are arguing that Comcast should be the one to pay to upgrade that connection with Cogent since Comcast charges consumers to get access to the Internet and is double dipping by charging both the consumer and the content owner. In reality, they aren't. Netflix does not need to go direct to Comcast and pay them anything, they chose to because they could not get the level of service they were paying Cogent for directly. Netflix has also decided it makes more business sense for them to build their own CDN instead of relying 100% on third party CDNs like they used to."

2) Another piece of the puzzle people offer to demonstrate their ISPs maliciousness is that they were promised 50Mbs service, so Netflix's 8Mbs load cannot be causing their service to be debilitated.

Whatever your ISP salesman told you, the contract you signed promised "up to" XX Mbs. The fiber optic box that brings your Internet (if you are lucky enough to have one of those) delivers around 100Mbs under ideal conditions. But the copper cable that delivers the Internet to most homes provides a maximum of 45Mbs under ideal conditions. What's ideal? Having the fiber optic box right next to your property line. If you live less than 500ft from that box, you're probably doing as well as you can. But if you are 3000ft from that box, you are probably getting less than 20Mbs on a good day. That's physics. That's the cable service that God gave you.

So, just because Google or AT&T bring 1GMbs service to your neighborhood, doesn't mean your home service will substantially improve.

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What Does This Mean for Government Regulation?

This is what it means: If you don't know a whole lot about something, it always looks easy and straightforward. The more you get into actually doing it, the more complex it gets. And that is why government regulation always makes things less efficient and more expensive. Because a regulator knows less than the experts and if they do become an expert they will become captured by the industry they regulate. They will see more in common between themselves and the people running that ISP than they do with ignorant consumers.

The payment model for data-transport is incredibly technically complex (I'm not getting into it here). And usually it is amazingly efficient. But government regulation is not going to improve it.

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UPDATE

So I decided to get into it a little.

Every Internet connection has two sides. There's you at your house or on your phone. And then there is Netflix or AOL or whatever rich, rich, greedy company wants to sell you their awesome service. To say "all data is treated the same" a applied to Netflix, is to say that if you rent store space at your strip mall, you will have to charge Marge's Import/Export Broker that uses almost no parking lot space because all their customers interact over the phone, should have to pay the same rent per square foot as the Walmart outlet renting space at the other end. Don't you suppose the Walmart is going to demand more maintenance from you than Marge? You don't think they should have to pay for that?

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Secondly, when you access a website or make a phone call, that data travels over multiple networks with multiple owners and multiple channels. Comcast only controls the piece of the path crosses their network.

Third, you know how people are always saying that we aren't investing in our infrastructure? That's true for public accommodations like roads and trains and bridges and our plain old telephone service (POTS) and the electrical grid. But do you know the one infrastructure that is state-of-the-art and constantly being upgraded? Our DATA grid: The system that transfers bits for your cell phone and computers and your Internet of Things. And it was ALL done with private money. And Google and AT&T are introducing 1GB connectivity to your home.

Ask yourself why AT&T invested so much money in a Fiber Optic network in the late 80s when they knew their monopoly on long-distance service was being drained away? Because they knew that their "competitors" (MCI and Sprint) would be their customers in the new system. When you make a cellphone call (and depending on where you live, a connect to a website), some computer somewhere looks for the cheapest route to the location you want to communicate with. Some routes are busier, they might be blocked. Some routes are more expensive. In order to connect your request, some computer, some where, goes out to that complex market, chooses a route, and if it is a route they don't own, they pay the provider the micropennies they charge and connect you. And this happens in the seconds before you hear a ringing or start to see your video load.

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Is there unfairness and unevenneess in pricing? Yep. Just as there was before broadband and DDL when some people used dial-up and some used ISDN at work.

Placing broadband under the same rules that we applied to telephone companies in the 1930s—rules that caused our telephone service in 1970 to be practically the same as the service and business models we had in 1940— will dry up all the private investment and disruptive innovation that we have got used to in the Internet.

UPDATE

From CNET:
Comcast vs. Netflix: Is this really about Net neutrality?

"The [...] dispute between Netflix and Comcast is not a Net neutrality issue because it does not have to do with how Comcast is treating Netflix's traffic once it's on the Comcast broadband network. Instead, it stems from a business dispute the two companies have over how Netflix is connecting to Comcast's network."