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back to article AT&T and Netflix get into very public spat over net neutrality

Friday is the deadline for public comment on US comms watchdog the FCC's forthcoming net neutrality regulations. And, as the deadline approaches, two of the major protagonists have got into a (sometimes bitchy) online spat. On Thursday Netflix CEO Reed Hastings published a pugnacious blog post saying that the FCC needs to …

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Meh

"Someone must pay a cost".

Hmm. I could have sworn that some folks already do pay a cost.

Oh yeah! They're called "customers".

Maybe you should think about providing them a little better service for the money they give you, instead of squeezing them for everything they've got without improving anything?

Just saying.

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Re: "Someone must pay a cost".

We all do, not only the fact that we pay for the service, but we have to put up with terms and conditions that we have no control or say over, we also have to put up with price rises without real consent (it's in the one sided terms and conditions) and to top it all, we never get the speeds or service we are promised.

It wouldn't be so bad, the fact that we pay, we don't mind paying, as customers that's what we are happy to do, but the least the ISPs could do is come good on the promises of speed and when we pay for unlimited it should be a proper definition of unlimited without any caveats.

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Re: "Someone must pay a cost".

As there is never any such thing as a free lunch, why should I, who has no interest whatsoever in streaming video, be subsidising those who do want it?

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Anonymous Coward

Re: "Someone must pay a cost".

As there is never any such thing as a free lunch, why should I, who has no interest whatsoever in streaming video, be subsidising those who do want it?

Why should Netflix, who has no reason to deliver streaming video to you, be subsidising your internet connection?

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99p

Re: "Someone must pay a cost".

Yeah, ISPs should introduce variable tariffs based upon data usage or something. Oh, wait.

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Re: "Someone must pay a cost".

Not sure how things work where you are, but where I live the cable provider provides tiered services. Want to grab your email, surf the web and do the occasional secure shell? Pay for the lowest tier. Want to stream video and do a lot of online gaming? Pay for the highest tier.

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Re: "Someone must pay a cost".

This is exactly what I do here in the UK.

I have just signed up to Nefflix and Amazon Prime. This means that my monthly download has increased and I have willing paid extra for the extra usage. Before my previous tariff worked out about 2GB a day on average now, for about twice the price I get unlimited. And it's not throttled or managed in anyway.

I now save on TV licence fee, which I no longer need, as the TV is an outdated concept (the news I can get from the internet, the weather from looking out the window, the few good British shows come onto the streams shortly and I now get the good US dramas which I could never get on BBC/ITV). So, I get what I pay for and it works out cheaper too.

And they throw in my phone connection too.

So, yes. It's like my car. The more I use it the more I have to pay in terms of fuel. I have no problems with this whatsoever.

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Re: "Someone must pay a cost".

"Why should Netflix, who has no reason to deliver streaming video to you, be subsidising your internet connection?"

They aren't. They're paying for the extensions to the pipework to support their own business model. This is entirely optional. Had they opted to pay nothing extra, they'd get the service that everyone else gets (and is apparently satisfied with, at least to the point that they aren't switching providers).

If Netflix (or you) don't believe the ISPs financial figures, there's nothing to stop you building your own distribution network and making it available under a "fairer" pricing scheme.

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Re: "Someone must pay a cost".

Get a cheaper / slower internet service if you have no interest in streaming. I chose the most expensive package from my ISP because I am interested in streaming and generally downloading lots of things.

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Re: "Someone must pay a cost".

...and why should someone who may have no interest in Facebook, Candy Crush or whatever you may happen to do on your internet connection subsidise your usage... oh yeah it's called a subscription fee, they subscribe to the service to use it for the things that they need in exactly the same way as you do. Much in the same way as my taxes might happen to help pay for the road outside your house or the street lighting in your town, it's of no use to me, so why should I pay for it for your benefit. Someone may be using your ISP even less than you... why should they subsidise what to them may be your excess usage. Basically what I'm saying is.... stop being such a selfish whiner.

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Anonymous Coward

Re: "Someone must pay a cost".

I believe AT&T meant that you only pay for sending

So now Internet will be free as long as you browse website, the payment will be a bit more complicated for emails and other traffic info, but since we don't pay for outgoing traffic when a friend call us, we might use the same concept. Still who should pay when requesting content? should the customer pay to receive content from NetFlix, or should NetFlix pay to distribute it?

After all they already pay their access to a provider that guarantee them with some amount of traffic to all other providers? So why Comcast request additional payment? Do they really want to follow AT&T and consider that the party that generate traffic should pay?

AT&T may be suggesting that Internet should be, for consumers, free as in free beer. But, does it make sense for all the websites out there?

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Re: "Someone must pay a cost".

Then lobby the ISPs to provide pricing plans so that you pay for your usage and I pay for mine. Because as long as the big players in the US are marketing one size fits all plans, somebody is paying too much for their service.

According to the terms of service on my plan, I should have plenty of bandwidth to support my Netflix subscription without interruptions for "pleas wait - downloading" in the middle of a program.

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Re: "Someone must pay a cost".

"Yeah, ISPs should introduce variable tariffs based upon data usage or something. Oh, wait."

Someone who doesn't stream video has no need for a 25/25 internet connection. Therefore. anyone paying for that level is already voting yes for video streaming. There are nice little 1/1, 5/1/ 10/5 connection options for anyone who doesn't want to stream video.

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Re: "Someone must pay a cost".

I don't use netflix, so why subsidize some lardo who inhales the bandwidth I'd be using for my browsing? From what I've read one stinking PRIVATE company snarfs 1/3 of the total available bandwidth of the Internet. Damn straight, make them pay.

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Facepalm

Yes, I have just seen this on several other sites, thankfully though the comments are mostly rational.

What Mr AT&T seems to have somehow overlooked in his little diatribe is that - Netflix do pay bandwidth costs - just like every other service on the internet - in order to get their data piped across the public internet - they pay someone, probably multiple someones.

This argument is basically AT&T saying - yes - we charge our customers a fee to access the internet, but if they access TOO MUCH internet then it should be up to all the services that they are using (though they are only targeting Netflix at the moment, but that would quickly change) to pay us some money - or - put another way - AT&T are saying - yes we charge our customers a fee to access the internet and then we get down on our knees and pray to the gods that none of our customers actually do visit anything anywhere on the internet.

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"What Mr AT&T seems to have somehow overlooked in his little diatribe is that - Netflix do pay bandwidth costs - just like every other service on the internet - in order to get their data piped across the public internet - they pay someone, probably multiple someones."

I doubt he's overlooked it, and as the FCC's consulting on this at the moment, expect more opinions from the involved parties. Level 3's been complaining as well-

http://blog.level3.com/global-connectivity/chicken-game-played-child-isps-internet/

"To honor the promises they make consumers, these ISPs must then connect their networks to the other networks that can supply any Internet content the ISPs cannot provide themselves (which is most of it). It also means that as overall Internet content gets bigger (think of HD movies versus e-mails), all providers must “augment” their networks – making them bigger to accommodate the exponential growth due to the Internet’s success."

The problem is still a split set of contractual obligations and payments. Netflix pays Level 3 to deliver content, so presumably if that content can't be delivered, Level 3 should be expected to pay some of the costs to make sure it can. Consumers then have contracts with Netflix to deliver content, and pay Netflix; and consumers also have contracts with their ISPs to deliver 'up to xxMbps' of Internet with some SLA attached.

Content providers like Netflix, and transit providers like Level 3 & Cogent then assume that because the user is paying their ISP, all costs for delivering content should be borne by the user. Access provider networks like AT&T are suggesting the content providers should contribute more towards the costs of delivering their content. If the FCC disagrees, the access ISPs are going to have to recover increased costs from their customers, or switch more towards usage charging models to avoid penalising light users. The content providers aren't taking their positions for the good of the 'net though, they're doing it to avoiding having to pay.

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What is actually says in the article (here and elsewhere) is that Netflix are paying extra for a quality of service guarantee. That's something extra, that nearly everyone else doesn't get, so it costs extra, that nearly everyone else doesn't pay.

It's the difference between quantity of service and quality of service.

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Wait a minute...

...Aren't the ISPs' subscribers already paying for it? Isn't the only thing holding it back the fact that the ISPs would rather pay overly inflated bonuses to C level employees than upgrade before the coming shit storm shits all over the internet?

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Re: Wait a minute...

Why collect only from the party at one end when you can collect from both? Isn't that the point of being a middleman?

Those not from the US need to remember we're the one place in the world where the person calling and the person being called both pay for a cellular telephone call (at least for those who are still on per minute plans) Ditto for text messages. The telcos are used to screwing us, and can't understand why we don't shut up and bend over.

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Anonymous Coward

Cable/Fixed line telcos are all trying it on

They're just trying to get as much out of everyone as possible. Which is a absolute disgrace when today's digital highways are for an increasing amount of people, more important and physical roads.

Governments should nationalise all telcos and treat it as a national project for the good of the nation.

Either that, or increase and encourage more competition. These telcos are getting away with it because most consumers only have a very limited amount of "choice", often, there isn't even a choice.

The telecoms in most places are clearly enjoying a monopoly, and their peering negotiations are often like negotiating with protection rackets. Someone needs to put an end to this.

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Re: Cable/Fixed line telcos are all trying it on

Nationalise all telcos? Look up Britain's General Post Office/Post Office Telecommunications/British Telecom for an example. When I was at uni in the early '80s, we weren't allowed to run a network link between two adjacent buildings: it had to be run to a junction box half a mile away and then back again, by BT engineers, and took months. Good of the nation?

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Re: Cable/Fixed line telcos are all trying it on

It was bad.

But is the current situation truly better ?

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Re: Cable/Fixed line telcos are all trying it on

"Governments should nationalise all telcos and treat it as a national project for the good of the nation."

Except it is almost guaranteed the QoS would degrade if this happened. They need instead to remove all barriers to entry within the market and encourage new players (like Google) to decimate the current players offerings.

At the same time, the threat of dictatorial nationalization prohibits the carriers from wanting to put in more fiber. They'd be worried the government would wait for them to build a new network, then seize it all.

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Let's bill God ...

"Specifically, he wants networks to provide content at a set price without charging any extras of either the supplier of the consumer."

So just who does supply the consumer?

But seriously, typos aside, what you see here is the American AT&T cell phone mindset being applied to their Internet service - AT&T feels like it's entitled to charge customers for providing a service, charge them again when they use the service, and finally charge them again when someone else uses the service to communicate with them.

NB. In the US most phone contracts charge for minutes used, whether incoming or outgoing unless you purchase the more expensive "unlimited" calling plan.

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Cicconi has special skills

"Cicconi argues that the increasing amounts of bandwidth being taken up by Netflix means networks need to be upgraded to handle it."

I totally get it. If I had a restaurant with an all-you-can-eat salad bar, I'd definitely try to collect from the guy who grew the lettuce if I started getting more customers because I'd have get more capacity and perhaps even buy more chairs for my restaurant. That all adds up. The only problem for me is I'd have to learn to live with myself for being such an *ss. Cicconi is obviously more evolved than I am in that regard.

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Anonymous Coward

Re: Cicconi has special skills

Let me guess, Cicconi is of Sicilian descent, with family notably from the Palermo neighbourhood?

AC obv.

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There are plenty .......

....... of major tech companies in the US so why don't they all put some money in a pot and start a joint ISP? It pain me to say this but Amazon, Google, Cisco and Microsoft and the rest have the money, equipment and skills to destroy the incumbent suppliers, so why not take the short term hit and deliver the networks your customers and services need?

After that ........ mobile networks :D

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Re: There are plenty .......

Google already owns and operates a private network.

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Re: There are plenty .......

It doesn't matter how many ISPs are started, the telcos and cable companies still own the copper and fiber in the ground as well as the right of ways. Physics says wireless does not have the bandwidth needed. Google is willing to lose as much money as required to compete, in any other context this would be called predatory pricing. In telecom this is called "business as usual". Until the telcos and cable companies lose their government granted monopoly on the "last mile" (more correctly called the "local loop") nothing is going to change. I advocate splitting the local loop parts of the telcos and cable companies (and maybe electric) into a single separate company, require that company to sell access on a non-discriminatory basis, and heavily regulate that company. I also advocate removing the majority of regulation in the rest of the telecommunications industry. Once service providers and content providers are separated from the local loop a whole new generation of services will become available

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Re: There are plenty .......

Just don't follow the model used by Ofcom in the UK, whereby they accepted BT's proposal to split themselves into three parts (BT retail, BT wholesale, and BT Openreach, with the latter being the 'local loop' part), leading to a sort of corporate schizophrenia and now basically ends up with the different parts blaming each other when something goes wrong, and bouncing the fault backwards and forwards and not actually fixing it (and trying to charge the customer for the privilege with SFI2)...

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Re: have the money, equipment and skills to destroy the incumbent suppliers

Because they don't actually have all of those. Heck, they might not have any of them.

And even if they did, they'd still be missing the one key thing that the big suppliers pretty much have locked away: the right of way to install the wires to the actual consumer.

I'll grant that with MS's failing business model, it's the one hail Mary pass they might want to try. Start small in the Redmond area and roll out from there.

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Re: Just don't follow the model used by

Too late. That's sort of what happened with AT&T and the Baby Bells. And why we're in our current mess. Well, that and the laws that capped modem transmit speeds at 56K.

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Re: There are plenty .......

"of major tech companies in the US so why don't they all put some money in a pot and start a joint ISP?"

They'd rather wait for the next tech innovation to make wired networks obsolete. Fiber and coax are relatively old tech. There is a large risk in investing in it.

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Pass the cost on?

How long until Netflix pass the extra charge back to the consumer? I can imagine people being particularly overjoyed to find an AT&T surcharge on their bills, but if serving AT&T customers is more expensive...

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Re: Pass the cost on?

Netflix is the number one downloading application on the web so they should help out in some way. Now Youtube is the number 2 downloading web app. Both Netflix and Google have peering and caching servers. The difference is that Google has many more since they have more dark fiber. So therefore Google's load is much less on the internet providers networks.

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Re: Pass the cost on?

Are you suggesting Netflix don't pay for their multigigabyte connection to the net ? I don't think you'll find that's the case. But the ISPs sold bandwidth to their customers : they did expect them to use that to connect somewhere, right ?

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Re: Pass the cost on?

You might be onto a good idea there. Netflix charges their base subscription fee which appears on the bill. Then they tack on the ISP peering fee for each ISP they have to pay (with the corresponding markup for Netflix profit margin) and total it up at the bottom. And wait to see what happens.

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Holmes

He who pays the piper calls the tune

It's about time telcos/ISPs wised up to the fact that the only reason their customers give them money, is to access content from the likes of Netflix, Google etc. They should charge their customers for the bandwidth they use, rather than making absurd claims for bandwidth they cannot deliver.

If they're mad enough to force short term charges on the content providers, the latter will simply build their own networks, undercut the incumbents, destroy their business, and buy their assets for pennies on the pound/dollar.

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Re: He who pays the piper calls the tune

"If they're mad enough to force short term charges on the content providers, the latter will simply build their own networks, undercut the incumbents, destroy their business, and buy their assets for pennies on the pound/dollar."

Legally the content providers are not allowed to build their own networks. The free market has been prevented from functioning by oppressive government regulation (called the FCC).

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AT&T's internet service sucks anyway

Don't know why people bother with AT&T's internet service. Their TV service is pretty cool, compared to antiquated options from the likes of Comcast. But their internet service is so bad it's not even funny. I and used to have their "Highest" speed option (from their U-verse product line). DSL is DSL, no matter how people try to camouflage it.

The answer to the Net Neutrality problem is to have Internet services be a basic amenity, with minimum basic standards of service provided as an essential. Singapore has been providing their citizens wired Gigabit ethernet connectivity for years now. Why can't the rest of the world's nations follow suit?

It'll be a great infrastructure project, provide employment in times of need across the board and eventually a revenue source.

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Re: AT&T's internet service sucks anyway

Singapore has been providing their citizens wired Gigabit ethernet connectivity for years now. Why can't the rest of the world's nations follow suit?

Probably because the entirety of Singapore comprises a tiny little flyspeck island off the tip of the Malay Peninsula. Geography matters when it comes to wiring up a place. South Korea is relatively small in itself, thus their high-speed rollout didn't cost so much. OTOH, the United States is huge (one of the biggest countries in the world) with tons of rural area. In order for New York to be able to talk to Los Angeles at gigabit speeds, you needs a gigabit link all the way down, across two mountain ranges and more than a few rivers.

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Holmes

Re: AT&T's internet service sucks anyway

"Singapore has been providing their citizens wired Gigabit ethernet connectivity for years now. Why can't the rest of the world's nations follow suit?"

Because Singapore is a teeny tiny dot on a map compared to the North American land mass.

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Headmaster

Re: AT&T's internet service sucks anyway

It's a matter of imperative. If there is a demand, there will be supply. And the long term benefits of undertakings of such a magnitude will outweigh the costs.

There are options available via the cellular spectra to provide wireless access in the less accessible areas of the world. The current generation of this technology is called "4G".

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Net Neutrality

Somebody should pay for the cost of bandwidth sufficient to access services like Netflix.

That somebody would normally be the ordinary Internet surfer.

The only point of debate here is whether he is already paying that cost, and the companies wanting money from places like Netflix just want to inflate their profits. But let's assume that is not the case.

What's wrong with offering consumers the choice of a discounted Internet service that can't handle video streaming? Well, not much; dial-up may have been derided, but it was never controversial.

Cable Internet that only handles video streaming from sources that provide advertising revenue to your ISP... what's wrong with that? Well, the problem is that it looks like a real high-bandwidth Internet service, but it really isn't. It's confusing and deceptive. That's the legitimate argument in favor of (one of the aspects of) net neutrality.

When it comes to torrenting and the like, though, I'm surprised net neutrality got as far as it did, given the level of concern about piracy.

There is an argument for net neutrality, but the arguments that stand on solid foundations need to be put forwards explicitly, instead of expecting everyone to just agree that net neutrality is a sacred principle that must never be abrogated.

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WTF?

Re: Net Neutrality

I'd have a bit more (just a smidge) empathy for AT&T were their financials not so strong and getting even stronger despite continued economic weakness. If anything, this is exactly the time to invest in physical capital given zero effective interest rates. So, AT&T just when DOES it seem the right time to invest rathee than, say, triple earnings per share?

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Re: Net Neutrality

> the arguments that stand on solid foundations need to be put forwards explicitly

He who pays the piper calls the tune. ISP's obtaining funding from places other than their current customers will slant policy towards those who pay lots. If Netflix pays... then the smaller video providers can't afford to compete.

Finally the network is funded and controlled by Big Players with QoS used to throttle all the competition. The users with their discounted fees and paltry contributions become irrelevant to the industry. Everything descends into a maelstrom of advertising and high-fees.

Remember that the costs passed onto Netflix by the ISP will just get fed back to the users in the form of higher Netflix fees. All that you have achieved is ceding control of the internet to the big players instead of charging users more directly.

Only the middle-men want this kind of deal. Netflix doesn't want to raise prices to cover the extra fees - possibly becoming uncompetitive. Users don't really want network performance manipulated by backroom deals - e.g. AT&T Mobile pumping in funds to de-prioritise skype so people give up on VoIP. Only AT&T like this model because they have nothing to lose from providing a rubbish service to users and don't care whether it is Netflix or Netflix's competition who pays them.

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Re: Net Neutrality

The real problem that the cable companies can't get around is the appearance of conflict of interest since they are also service providers. You can't shake the nagging thought that they're penalizing Netflix not because it would cost more to build out their infrastructure, but because it competes with their buffet style television options. And with Verizon having entered the buffet style television market as well, they now count as a cable company in that respect.

I don't have a problem with ISPs charging more to consumers who use more bandwidth. I don't have a problem with ISPs implementing QoS that prioritizes phone calls > browsing > streaming > downloading > torrents. And I'm willing to negotiate exact order or allow folks to pay to reorder depending on their usage patterns.

What does make my blood boil is when I know how much I'm paying and I hear an overpaid exec saying he wants to charge me more through a backdoor.

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Re: Net Neutrality

"Somebody should pay for the cost of bandwidth sufficient to access services like Netflix."

I already do. I pay for a 25/25 FiOS connection. Any time my Netflix hangs, freezes, buffers, etc, that is a breach of contract on the part of FiOS and I should be able to sue them for the cost of the contract.

Let's put that into law and see what happens. I bet suddenly the cable companies would have a whole lot of money available for putting in new fiber.

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Gotta love monopoles. They have the arrogance that can only come from knowing you have no other options.

They have no incentive to increase service speeds and throughput because they'll get the same rates regardless. There's no competition who will offer better. Then because their service sucks they get to pretend it's the websites who are too blame for the ISP's crappy service.

You know who's able to stream Netflix just fine? The rest of the world. The sane every other country who properly regulates their broad band as common carrier, just like we did until the Bush administration.

Nothing is going to change until we go back to that.

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