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Netflix Folds; Agrees To Pay Comcast To End Streaming Congestion

Tyler Durden's picture


There go the margins... For months, Netflix and Comcast have been 'negotiating' over whether the video streaming service should pay for the apparently excessive load it places on Comcast's network, but now, as the WSJ reports, Netflix has agreed to pay to stop the network provider slowing its stream and impacting customers. According to Netflix data published in January, the average speeds of Netflix's prime-time streams to Comcast subscribers had dropped 27% since October.

Percentage share of traffic on the web...


With Netflix accounting for almost 30% of web traffic at peak times, it is no surprise that Comcast's squeeze finally paid off. There are no details yet on the multi-year "mutually beneficial" deal but it is clear that broadband providers are gaining leverage over content providers.

Via WSJ,

Netflix Inc. has agreed to pay Comcast Corp. to ensure Netflix movies and TV shows stream smoothly to Comcast customers, a landmark agreement that could set a precedent for Netflix's dealings with other broadband providers, people familiar with the situation said.


In exchange for payment, Netflix will get direct access to Comcast's broadband network, the people said.




For months Netflix and Comcast have been in a standoff over Netflix's request that Comcast connect to Netflix's video distribution network free of charge. But Comcast wanted to be paid for connecting to Netflix's specialized servers due to the heavy load of traffic Netflix would send into the cable operator's network.




Netflix Chief Executive Reed Hastings decided to strike the deal after Netflix saw a deterioration in streaming speeds for Comcast subscribers. According to Netflix data published in January, the average speeds of Netflix's prime-time streams to Comcast subscribers had dropped 27% since October. Mr. Hastings didn't want streaming speeds to deteriorate further and become a bigger issue for customers, the people said.




The deal could force Netflix's hand in its standoff with other major U.S. broadband providers, including AT&T Inc., Verizon Communications Inc. and Time Warner Cable Inc.? all of whom have also refused to connect with Netflix's servers without compensation. Netflix's streams with Verizon in particular have gotten worse in recent months.


Netflix has little room to pay more to transmit its TV shows and movies. In a February regulatory filing, Netflix said that if providers don't interconnect with its servers, its ability to deliver streaming video, its business and operating results could be "adversely affected" due to increased costs.

The deal is the latest sign that broadband providers are gaining leverage in their dealings with content companies.


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Sun, 02/23/2014 - 13:49 | 4468030 HyBrasilian
HyBrasilian's picture

I thought JDS Uniphase was supposed to have prevented all this back in the 90's...

Sun, 02/23/2014 - 13:51 | 4468035 clooney_art
clooney_art's picture

This should have ended the other way around with customers leaving Comcast. That would have sent the right message.

Sun, 02/23/2014 - 13:53 | 4468041 HyBrasilian
HyBrasilian's picture

They all #FAILed to properly estimate the DEMAND for Miley Cyrus 'TWERKING' content...

Sun, 02/23/2014 - 14:10 | 4468081 JohnnyBriefcase
JohnnyBriefcase's picture


Leave comcast for what? In many places it is the only option if you want internet.


Edit: Sorry Spastica Rex and feeb for cutting the comment line to say the same thing. Mine was a kneejerk post in regard to the assumption by many that everyone has a choice when it comes to ISPs and everyone who has comcast keeps them cause we want to.

Sun, 02/23/2014 - 14:39 | 4468157 max2205
max2205's picture

I see a drastic PE adjustment on Monday and a tweet from iacann that he dumped last week

Sun, 02/23/2014 - 16:27 | 4468511 James_Cole
James_Cole's picture

I see a drastic PE adjustment on Monday and a tweet from iacann that he dumped last week

Yes, on the one hand great to see NFLX take a dive. On the other.. wtf is this bullshit with comcast?? Don't understand how Americans are OK with that, that's like soviet levels of communism.

Sun, 02/23/2014 - 23:09 | 4469642 jcaz
jcaz's picture

Nah, they'll spin this into a positive for NFLX by market open on Monday, the stock will be up $30-  bad is good, remember?

Sun, 02/23/2014 - 13:59 | 4468061 Spastica Rex
Spastica Rex's picture

should have ended the other way around with customers leaving Comcast

For what - nothing?

Damn - maybe monopolies aren't appropriate as central drivers of our "capiptalist" economic system.

Sun, 02/23/2014 - 14:02 | 4468070 feeb
feeb's picture

Tough to leave CMCS in many locations where they are a monopoly provider. 

Sun, 02/23/2014 - 14:14 | 4468087 EscapeKey
EscapeKey's picture

They provide equipment, not the network. The network giants however took all their income and decided to pay out bonuses to insiders, instead of upgrading the network back in the 90es/20xx.
And now, the us has one of the worst broadband infrastructures in the western world. And idiots actually cheer on Netflix losing this struggle.
Christ, the media really has brainwashed the American public.

Cringely wrote a good piece on it back in 2007

Sun, 02/23/2014 - 20:18 | 4469139 NihilistZero
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Netflix isn't using Comcast's bandwidth, Com cast customers are using the bandwidth they fucking pay for!   This is why we should have non profit municipal broadband.  Fuck Comcast and their ilk. They add ZERO value and now they are taxing Netflix as a backdoor way of taxing their customers for using what they have paid for.  May all these corpratist cunts die a slow and painful death.

Sun, 02/23/2014 - 20:42 | 4469194 TBT or not TBT
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Comcast gave generously to the Jarret campaign, so things will tend to work out for them for another three years at least.

Mon, 02/24/2014 - 11:37 | 4470915 TheAntiBen
TheAntiBen's picture

NO, NO, NO!!!  The answer is not to ask the Government to run YET ANOTHER BUSINESS.  Seriously, when is this going to end!?!  Government should not be a business, they should simply oversee the businesses to provide a fair playing field!


Let's review some government business that are just doing AWESOME: 

Postal Service (massively in debt) - Check. 

Amtrak trains (massively in debt) - Check. 

Medicare/Medicaid (massively in debt) - Check. 

Social Security "Retirement Savings Bank" (massively in debt, and not retirement but this is how it's being used) - check

Federal Reserve Bank (purchasing all the debt) - check

Mon, 02/24/2014 - 15:47 | 4471992 NihilistZero
NihilistZero's picture

Post Ofiice would be fine if not for stupid mandates.  And who said it has to be federally run?  Just provide all municipalties with a grant to build out fiber.  2 moths of QE would cover it and it wouldlower cost therby increasing consumer spending in other areas.  If they're gonna print regardless, I'd rather the funny money go to people than Verizon execs or bankers.

Sun, 02/23/2014 - 13:54 | 4468033 MsCreant
MsCreant's picture

Comcast: Who run barter town?!?!?

Comcast: Who run barter town?!?!?

[multiple sounds from famous movies are heard mumbling in the background]

Comcast: Embargo!!!

Sun, 02/23/2014 - 13:59 | 4468046 LawsofPhysics
LawsofPhysics's picture

Correct.  I expect considerably more extortion to be forthcoming.  When fraud is the status quo. possession is always the law.  If you own a business, you better own 100% of the production capacity and supply chain to your customers.

The world is about to (re)learn what counterparty risk is really all about...

Sun, 02/23/2014 - 14:11 | 4468099 EscapeKey
EscapeKey's picture

But of course. The lines have been drawn, soon the entire Internet will be sliced up and sold as "bundled packages" ie "get 50 media websites for a cheap introductory offer of $29.99/month.

Sun, 02/23/2014 - 14:18 | 4468113 XenoFrog
XenoFrog's picture

It's going to be awesome. Want to visit that eurobased website? sorry you have to pay $9.99 for the International Upgrade.  Want to visit Zerohedge? Sorry but the FCC has determined it is dangerous domestic terror related and we've voluntarily blocked it.

This is the end of the Internet.

Sun, 02/23/2014 - 15:10 | 4468262 EscapeKey
EscapeKey's picture

No doubt zh goes in the "esoteric content" category here in the uk, which is voluntarily blocked by our glorious ISPs.

Sun, 02/23/2014 - 18:54 | 4468909 zerozulu
zerozulu's picture

and they hate us for our freedom...

Sun, 02/23/2014 - 20:28 | 4469161 malek
malek's picture

Exactly, plain and simple extortion.

In all these discussions around traffic generated by Netflix it surprises me no one asks the question how much Youtube (a/k/a Google) is paying for example to Comcast...

Sun, 02/23/2014 - 13:58 | 4468057 pragmatic hobo
pragmatic hobo's picture

and of course the comcast customers who do not use netflix will continue to pay same monthly fee as those who do use it ...

Sun, 02/23/2014 - 13:59 | 4468058 buttmint
buttmint's picture

D'oh! Comcast financed and installed fiber-optic network...all that infrastructure and service trucks and pole climbing, trenching and Netflix and other content providers want to waltz in and skin the cream off the top? Hilarious.

Netflix reminds me of the SNL skit whereby the John Belushi was the house guest who would NOT LEAVE.

If Comcast had any brains, they would BUY Netflix. Ever visit the crappy and websites? They are an exercise in HOW NOT TO BUILD A WEBSITE. Comcast oughta be ashamed of the crap they post. It is all one big ad designed to funnel one to crap-ladened TV packages. In a very real way, Comcast created the conundrum that gave rise to NetFlix.

Netflix knows what people want. Comcast doesn't, yet owns the data pipe.

Sun, 02/23/2014 - 14:01 | 4468068 LawsofPhysics
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"yet owns the data pipe." - So you tell me, who's the real genius? See my post above.  Ownership has it's privileges...

Sun, 02/23/2014 - 18:55 | 4468912 pitz
pitz's picture

Same dynamic is going to play itself out with Amazon and FedEx, UPS, the USPS, etc.  After all, Amazon doesn't own the infrastructure of distribution.  They only own a few warehouses, at best, and have a ridiculously overpriced stock.

Sun, 02/23/2014 - 14:13 | 4468104 Maverick Ninefingers
Maverick Ninefingers's picture

I've heard free market libertarians argue for privitization of roads, and that is exactly the situation we have here.  Comcast built the roads and they are exacting their toll.  Netflix is transporting their goods over the road with 18-wheelers and it's congesting traffic, so they have to pay up or their trucks will be delayed at the toll booth.

Sun, 02/23/2014 - 14:26 | 4468131 johnQpublic
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damn i hate driving around truckers

bunch inconsiderate bastards

and the lesson is............

Sun, 02/23/2014 - 20:46 | 4469199 DosZap
DosZap's picture

damn i hate driving around truckers

bunch inconsiderate bastards

and the lesson is............




Sun, 02/23/2014 - 15:34 | 4468330 Rock the Casbah
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The revenue side needs to be regulated by a Public Service Commission but there is no reason not to privitize the cost side.  If you don't, you get the DMV. 

Sun, 02/23/2014 - 16:21 | 4468492 ebworthen
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But Cumcast buying Time Warner Cable and gaining a monopoly for tax breaks and publicly funded networks isn't a problem?

Sun, 02/23/2014 - 16:11 | 4468457 XenoFrog
XenoFrog's picture

Actually, taxpayers paid for a large chunk of the fiber-optic network.

Sun, 02/23/2014 - 17:53 | 4468755 pitz
pitz's picture

Nearly all of the cost in telecom is in building and maintaining the local networks, coax, twisted pair, or in very limited cases (ie: FiOS), optical fibre.  Not the long-haul fiber networks. 

Sun, 02/23/2014 - 19:51 | 4469068 XenoFrog
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Thankfully they were compensated for that effort with billions of dollars in tax breaks and hand outs from the Feds.

Sun, 02/23/2014 - 19:59 | 4469093 pitz
pitz's picture

Not really, except perhaps in certain rural situations where the difference between subsidy and no subsidy was service (or not).  Other than that, all of Comcast's network was built with the money contributed by, or borrowed by its shareholders. 

Sun, 02/23/2014 - 17:55 | 4468758 pitz
pitz's picture

Buy Netflix?  Pay top dollar for what effectively is a few FTP servers?  Are you kidding?  That won't help Comcast deliver more infrastructure to the consumer.  The underlying problem here is that Comcast simply isn't making enough money relative to the costs of upgrading the network to support unicast IP video on a widespread basis. 

Mon, 02/24/2014 - 07:35 | 4470194 Ace Ventura
Ace Ventura's picture

"The underlying problem here is that Comcast simply isn't making enough money relative to the costs of upgrading the network to support unicast IP video on a widespread basis."

Comcast isn't making enough money? Now THAT'S funny right there, I don't care WHO ya'are.

Sun, 02/23/2014 - 13:59 | 4468062 laomei
laomei's picture

And net neutrality ends not with a bang, but a whimper

Sun, 02/23/2014 - 14:10 | 4468098 Johnny Cocknballs
Johnny Cocknballs's picture

Grow the power of corporations and the FCC will.

Content soon will there target be.

That is, I'm willing to bet that dusty old Constitution will eventually "fail us" because our government will "ignore" it for the benefit of "corporations" and the power of the "state" to "censor."


In principle, it makes sense that a resource hog pay more.  The danger is both corporations and government will try tirelessly to control content.  Indeed, in a sense they already have in that Obama signed the "internet kill switch" thing and ther'es surely more that we don't know about and surely the amber alert tech allows them to disable phone networks...


p.s. Dara Kerr makes me think of blowjobs.


Sun, 02/23/2014 - 14:02 | 4468072 Wooden Tiger
Wooden Tiger's picture

At this house, we already pay Comcast extra money to get more bandwidth... Double, squeeze.

Sun, 02/23/2014 - 15:12 | 4468264 Stuck on Zero
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Is Netflix the user of bandwidth or is the consumer?  Netflix merely puts content up there for people to grab. 

Sun, 02/23/2014 - 17:52 | 4468750 pitz
pitz's picture

Netflix is one half of the use, just like the downloader is the other half.  The very nature of the Internet is such that uploads must equal downloads.

Mon, 02/24/2014 - 09:28 | 4470368 StandardDeviant
StandardDeviant's picture

Well, except for multicast, to be picky.  But that's not what Netflix is doing, so your point stands.

Mon, 02/24/2014 - 11:57 | 4471023 Parabox
Parabox's picture

Agreed.  People keep calling Netflix a resource hog, but that's not the way it works.  Netflix has a service.  Netflix is not forcing their service out through Comcast lines to thousands of homes.  Thousands of homes are using the Comcast service they paid for to request information from Netflix.  It would not be any different if there were 20 content providers like Netflix, the traffic would be the same.

It's like saying Frigidaire should pay the electric company a stipend when everyone has their air conditioners cranked in the summer.  Its backwards!

Sun, 02/23/2014 - 14:05 | 4468080 Maverick Ninefingers
Maverick Ninefingers's picture

The graph only adds up to 85%.  I wonder what they left out.

Sun, 02/23/2014 - 14:15 | 4468106 Skateboarder
Skateboarder's picture

It starts with po and ends with rn.

Sun, 02/23/2014 - 14:16 | 4468107 Thorny Xi
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SPAM email

Sun, 02/23/2014 - 14:05 | 4468082 buttmint
buttmint's picture

..the 800lb gorilla in the room is Google Fiber Optic. Once that goes live as it is in the Kansas City testbed, then people will have a choice. Right now, it is Comcast, or head to your local cappucino shop for your email....

Sun, 02/23/2014 - 14:21 | 4468121 XenoFrog
XenoFrog's picture

Comcast and Verizon will just pay local politicians to create bans on any cable but theirs. The monopoly will stand.

Sun, 02/23/2014 - 17:50 | 4468748 pitz
pitz's picture

Google's a joke in that area.  Are you really serious? 

Sun, 02/23/2014 - 14:06 | 4468084 cocoablini
cocoablini's picture

And there goes net neutrality. The internet is dead.Long live the internet

Sun, 02/23/2014 - 14:07 | 4468089 buzzsaw99
buzzsaw99's picture

Mayor Carmine De Pasto: If you want this year's homecoming parade in my town, you have to pay for it.

Dean Vernon Wormer: Carmine, I don't think it's right that you should extort money from the college.

Mayor Carmine De Pasto: Look, these parades you throw are very expensive. You using my police, my sanitation people, and my Oldsmobiles free of charge. So, if you mention extortion again, I'll have your legs broken.

Sun, 02/23/2014 - 14:18 | 4468114 Rising Sun
Rising Sun's picture

Same fucking shit happened to Google 10+ years ago - what did Google do?  Built their own networks.


Netflix couldn't see this coming?  Netflix management should be fired for being so fucking stupid.





Sun, 02/23/2014 - 14:24 | 4468129 XenoFrog
XenoFrog's picture

Building your own network doesn't do any good if none of the other companies will connect to it. As the article said.

Sun, 02/23/2014 - 15:38 | 4468344 Rock the Casbah
Rock the Casbah's picture

Last mile connection in the US is a cesspool of local and state government corruption. 

Sun, 02/23/2014 - 17:49 | 4468746 pitz
pitz's picture

Google only has minimal 'networks' that actually deliver to end users.  They own a bit of wholesale type stuff, but its negligible in terms of what's needed to actually deliver their service to actual users.

Sun, 02/23/2014 - 18:03 | 4468782 dark pools of soros
dark pools of soros's picture

terms of the deal not even posted yet..  they probably got comcast on the cheap to clear the road for the time warner merger...     not much business sense with the commentors on this site.. so many holier than thou fuckheads


Sun, 02/23/2014 - 23:44 | 4469709 jcaz
jcaz's picture

Jeez, Reed- you're up late- shouldn't you be sucking ComCast's dick about now?   There is no "cheap" with ComCast.....

Sun, 02/23/2014 - 14:35 | 4468147 drendebe10
drendebe10's picture

Comcast sucks donkey dongs and turds

Sun, 02/23/2014 - 14:51 | 4468176 buzzsaw99
buzzsaw99's picture

+1 comcast is a road apple

hope they choke on time warner

Sun, 02/23/2014 - 14:49 | 4468205 NoIdea
NoIdea's picture

Netflix just needs to move to the bitTorrent protocols. Much more efficient on bandwidth apparently

Sun, 02/23/2014 - 15:24 | 4468280 buzzsaw99
buzzsaw99's picture

very informative. the point everyone except a few on here seem to be missing is that the customer pays their isp for bandwidth. charging content providers also is monopolistic, anti-competitive, corruption laden asshole practices double-dipping and should be illegal. i pay for my bandwidth, it's none of my isp's business what i use it for. if the isp can't cut the mustard and doesn't want netflix customers just come out and say so. cut off everyone who uses netflix in favor of comcast approved content users. they won't do that though because they want everyone to keep making payments for cable television. i hope they choke on it. why don't they start extorting amazon too? what's to stop them?

Sun, 02/23/2014 - 18:18 | 4468815 Maverick Ninefingers
Maverick Ninefingers's picture

They aren't paying for bandwidth, they're paying for access.  Just like people would pay to use a private road.  Well, some people want to drive faster on the road, so they pay extra so they're can drive in the express lane.  Charging content providers to use the network is analagous to a corporation wanting to truck their product over the road - they have to pay like anyone else - more, actually, if they're using big trucks.  I understand that corporations make agreements to let each other use their roads for free, and that's fine, but if one corporation is trucking so many 18-wheelers through that it's congesting traffic, it's the road owner's prerogative to deal with the situation. 

Since October, the road owner decided he just wouldn't let as many of Netflix's 18-wheelers on the road.  Now, he's saying, you can drive as many trucks on the road as you want, but we're not letting you do it for free anymore, you have to pay up.  The toll money will be used to maintain and widen the roads.  I don't see a problem with this.  Like roads, cable networks are not an infinite resource.

As far as charging other content providers, I doubt it will happen unless they are congesting the network with their traffic like Netflix is.

Sun, 02/23/2014 - 20:54 | 4469224 XenoFrog
XenoFrog's picture

If the road is 95% built and paid for by other companies and the taxpayers, you can't claim ownership of the whole thing just because you built the last 100ft.

Tue, 02/25/2014 - 10:14 | 4474928 MagicMoney
MagicMoney's picture

FCC taxes cable companies to expand broadband. Why do you give the impression that taxes that pay for such expansion are paid by everybody directly in taxes? It's not. FCC puts taxes on broadband companies to expand as part of central planning of getting more broadband access to more people.

Sun, 02/23/2014 - 14:49 | 4468210 Caveman93
Caveman93's picture

Bullish for Redbox! I will actually have to get off my fat Amerikan ass though but no problemo!

Sun, 02/23/2014 - 16:25 | 4468506 Midas
Midas's picture

Hold on my fellow american, no need to get off that couch.  Just go old school and have your Netflix delivered by the USPS.  Old is new.

Sun, 02/23/2014 - 18:05 | 4468786 Caveman93
Caveman93's picture

You my friend are pure genius! I am ordering my pizza online now as we speak!

Sun, 02/23/2014 - 14:53 | 4468219 Gohn Galt
Gohn Galt's picture

Monopolies work.  FCC is just another protection racket.

Sun, 02/23/2014 - 15:03 | 4468239 Duc888
Duc888's picture



Why not just rent the DVD?

Sun, 02/23/2014 - 15:29 | 4468322 css1971
css1971's picture

Oh quit whining. Netflix business model depends on freeloading on someone else's investment.

Hopefully the ISPs will now create "media packages" for those who want to download movies and propaganda, which should proportionately reduce the cost for others.

Sun, 02/23/2014 - 16:00 | 4468375 buzzsaw99
buzzsaw99's picture

i down voted you but actually agree with some of that. the ones getting the free ride are the isp(s) who charge customers for fast download times and then slow them down on purpose.  i say class action lawsuit them for ripping us off for failing to deliver promised services and shoddy networking. they only want people who pay for bandwidth they don't use which means the isp(s) are the freeloaders. however, if i pay more for high speed internet, which i do,  the isp should not be able to shake down my content provider(s) too. comcast needs to have their ass kicked or else isp(s) will monopolize the entire internet, picking winners and losers like gubbermint goons. where does it stop? maybe they will go after zh too i mean they make all the rules right? Pay homage to comcast or die bitchez.

Sun, 02/23/2014 - 19:12 | 4468953 pitz
pitz's picture

Who's shaking down whom?  Seems that Netflix was shaking down Comcast through inducing Comcast's customers to make disproportionate use of the network on services never designed for such disproprotionate use.  If end-users upgraded to services designed for the sort of utilization implied by Netflix at the outset (and paid the incremental cost), then we would not be in this pickle. 

Sun, 02/23/2014 - 16:15 | 4468470 XenoFrog
XenoFrog's picture

Netflix freeloads on someone else's investment in the same way that every other website/content producer does. They're just an easy target because their service is popular.


Netflix doesn't use the bandwidth. Comcast's paying customers use the bandwidth by choosing to use Netflix. There is no freeloading going on, unless you think paying $80-150 a month for internet service is freeloading.

Sun, 02/23/2014 - 17:47 | 4468740 pitz
pitz's picture

Yes, $80-$150/month for internet service designed for low utilization that is used to a high rate of utilization is freeloading.  Especially if you're using it in an effort to evade the normal tariff structure and 'free ride'.

Sun, 02/23/2014 - 19:53 | 4469074 XenoFrog
XenoFrog's picture

If Comcast is selling something they can't deliver upon, they need to upgrade their network, like companies all over the rest of the world have done and are doing. It's not that the network cannot handle it, it's that they want you streaming their services instead of Netflix's. It's corporate warfare and has nothing to do with the capacity of the lines.

Sun, 02/23/2014 - 19:58 | 4469088 pitz
pitz's picture

Sure, they need to upgrade.  And they need to earn more money to pay for it if the use case for their services has changed.  Multicast services (ie: cable TV, IGMP, etc.) use relatively little bandwidth and network resources compared to unicast IP services like Netflix. 

The lines themselves only have finite capacity.  And as time goes on, the ability to shove data down them becomes increasingly less as loads grow.  Technology has done a lot for coax and twisted pairs, but there are real physical limitations in the proverbial pipeline, and eventually the upgrade path required is going to be enormously expensive.

Sun, 02/23/2014 - 20:52 | 4469217 XenoFrog
XenoFrog's picture

It's not a problem of capacity. Comcast would be happy as fuck if Xfinity streaming services were eating up 40% of their lines instead of Netflix.

Sun, 02/23/2014 - 15:43 | 4468360 Johnny Cocknballs
Johnny Cocknballs's picture

Actually Comcast has a good argument.  This reminds me of the Metallica/Napster dust up way back when. 

Metallica: it's our intellectual property, a product of our work, not paying us for something we aren't giving away is theft

College KidsFascists!!  We don't want to pay you.


It's not precisely the same, but the pro-Netflix arguments per se aren't very convincing, for various reasons, not least of which is a bandwidth hog also affects other content providers.

But most of all, css1971 nails it - it's freeloading on someone else's investment and work. That is unquestionably the case.

I want an unencumbered internet at least as much as anyone here.  But I'm not going to pretend that Netflix is doing anything but claiming a right to stuff they dont own, a "right" which diminishes the rights of others.

I am completely aware of the slippery slope arguments Frog and Escape present {which also have a tinge of the 'corporations are evil' stuff I've seen elsewhere which overlooks the fact it was the corps that created and built and maintained what everyone takes for granted} but, sorry, it amounts to a college kids wanting free music argument. 


Ethically, and legally - we need to do better than "I want it for free" as justification for a result that, please understand me, I want as well.  Wanting something isn't the same as having a right to it.


Sun, 02/23/2014 - 15:54 | 4468397 buzzsaw99
buzzsaw99's picture

so you think content providers AND isp customers should have to pay the isp? you are indeed a fascist.

Sun, 02/23/2014 - 16:25 | 4468501 Johnny Cocknballs
Johnny Cocknballs's picture

why don't you 1] reread my post and then 2] look up the word 'fascist'.


Sun, 02/23/2014 - 16:39 | 4468545 buzzsaw99
buzzsaw99's picture

every content provider on the planet should have to pay the isp(s) something based on your logic.

Sun, 02/23/2014 - 17:41 | 4468710 pitz
pitz's picture

Of course.  Everyone should be paying.  Uploaders and downloaders. 

Sun, 02/23/2014 - 16:20 | 4468474 XenoFrog
XenoFrog's picture

Netflix isn't using the bandwidth. Comcast's customers are. Netflix could close tomorrow and that bandwidth would just be used up by people going elsewhere for their entertainment. That's what Comcast is counting on as they continue to try and force people into using their Xfinity streaming content.

Sun, 02/23/2014 - 16:43 | 4468557 buzzsaw99
buzzsaw99's picture

you understand this issue very well methinks

Sun, 02/23/2014 - 16:49 | 4468574 Johnny Cocknballs
Johnny Cocknballs's picture

Yeah I understand what you're saying, but by the same token, what governs should be the agreement between Comcast and its customers, right? 

So, if you agree, as I think you do, that Comcast can arrange contracts with its customers such that they pay more as they use more, the question becomes, I think, do they have a legal or ethical or pragmatic right to prioritize packets {or whatever} in such a way that streaming sites might be impacted?

Well, what's the contract say about it?  What did the customer agree to? 

Netflix isn't a party to that contract - they're riding the rails for free.  They are profiting, necessarily, from the creation and maintenance of that network.  They are using the bandwidth - their business depends on it.


I mean, in rereading some of the posts, I would agree that there is a slippery slope concern, and though I actually wasnt aware of the xfinity angle, that certainly illustrates the problem - it's probably for the best that the ISPs just limited any excess fees to those users using it.

So I agree that it's for the best...

But Im not convinced that this means they don't have an ownership or equity right to charge content providers who profit from a network they depend on but didn't pay for.  Your view is that this is dangerous, I agree, but so is gun ownership, etc. etc.  The question is does a company nevertheless have the right to charge 3rd parties.

I think they do, but it's a right it would be better if they didn't exercise. Now, you could argue that the customer using Netflix, paying higher rate, is basically paying for Netflix presence as a kind of proxy.... the question seems to be, can you force a company to accept a proxy payment or does a private company have a right to charge or not carry certain providers.  Not wanting them to isn't the same as providing an argument that they don't have an ownership right to do it {presuming their agreement with their customers allows for it.}}

I don't think you're entitled to profit from my labor without giving me something in return, if I ask for something.  I want to get to your position, I just can't find a way there that maintains this basic idea.

I'm willing to have my mind changed though.  This one feels squishy, if you take my meaning.  I get the "they shouldn't" arguments, but I'm not convinced there's a compelling "they don't have a right to" argument.



Sun, 02/23/2014 - 20:03 | 4469101 XenoFrog
XenoFrog's picture

Comcast doesn't own a majority of the Internet yet they're holding it hostage as the last mile providor. If anyone is freeloading its Comcast/Verizon. This is corporate warfare between Comcast's Xfinity streaming and Netflix. Unfortunately, this is just going to result in a stifling of creative ventures as every big website can just pay Comcast to throttle their competition. Want to create the next great website to compete with Facebook? Good luck, your packets are getting lost. Want to compete with Amazon with a novel new site?  Sorry, Verizon and Amazon are corporate friends, so your site is going to be blocked on their network.

This isn't a slippery slope. We're already at the bottom of the slope the minute we all sat back and let Comcast throttle Netflix traffic to make their own streaming services look better.

Sun, 02/23/2014 - 16:57 | 4468526 macbone
macbone's picture

WTF are you talking about. Netflix is a distributor of content that other people produce. They pay large amounts of money in licences which allow them to exhibit said content to their customer base. The cable monopolies business model is to sell access to said material and ALL OTHER INTERNET products because without these products there would be no reason to pay 50 bucks of month for Internet access in the first place.

Furthermore once Comcast bought the NBC/Universal content production conglomerate they became a direct competitor of content provider Netflix. There could not possibly be a more obvious example of predatory anti-competitive monopolistic practices than this blatant case of corporate blackmail. I'll make it simple for you. Content that Netflix puts up is FAR more popular than content that Comcast/NBC/Universal puts up and you think it's legal for Comcast to sabotage access to Netflix's product and the extort payments from them because "it's too popular, man."

Jesus, no wonder this country is so fucked up.

I.e. My comment was meant to reply to the nitwits johnnycockandbullshit and cs1941 or whatever.

Sun, 02/23/2014 - 17:01 | 4468607 Johnny Cocknballs
Johnny Cocknballs's picture

a lot of this is gratuitous.  There may be a monopoly issue. But there may not be.

And in any event there's a legal query and a disparate ethical query.

states have a right to jail you for smoking weed.  Doesn't mean it's right. 

And you have entirely failed to even begin to address the basic query - if Acme ISP builds and maintains a network, why does Acme Content have a "right" to profit from said network?  What's your argument anti-trust or related doctrine even begins to apply here?  Do you think satellite companies are obligated to accept all feeds?  Are cable systems required to carry all channels?

How, without whining, is this different - legally?


p.s. "there could not possibly be a more obvious example of predatory anti-competitive monopolistic practices than this blatant case of corporate blackmail"

- you're kidding, right? 


Sun, 02/23/2014 - 20:06 | 4469104 XenoFrog
XenoFrog's picture

ACME ISP profits by offering connections to content that people want.  If the only content you could reach on ACME's network was generated by them, no one would use them. How dare those content providing websites like ZeroHedge profit from ACME's hard work?

Mon, 02/24/2014 - 08:06 | 4470214 Ace Ventura
Ace Ventura's picture

Nobody here is asking for 'free internet', much less already getting it. Anyone accessing this site through Cumcast is already paying a hefty monthly bill for less than stellar many cases with NO alternative choice if they want internet service in the first place.

How on earth does this translate to wanting something for nothing? What Cumcast is doing here is charging multiple times for access to the same bandwidth, which they are deliberately choking down (creating artificial bandwith issues) as a means to extort more money from all users/providers. And like someone mentioned earlier....claiming ownership of the entire pipeline because they laid the last 100 feet of coax just boggles the mind.

Kinda like me claiming owernship to an entire castle because I installed the release-latch on the drawbridge.

If Netflix is going to have to pony up more money to supposedly get 'the proper bandwith assigned'....then I expect a considerable discount from Cumcast because that bandwith is going to be taken from the rest of us. After all, there's a bandwidth problem right? Let's just say I won't be holding my breath.



Sun, 02/23/2014 - 16:03 | 4468432 Smegley Wanxalot
Smegley Wanxalot's picture

So now that the crappy cable companies are going to have this new revenue stream, our bills will be lowered .... when???

Sun, 02/23/2014 - 16:18 | 4468487 XenoFrog
XenoFrog's picture

The only time your Comcast bill will ever go down is when you call up to cancel your service. I suggest making the call every six to nine months. They'll shave 30-50% off your monthly fee like it's nothing (because it is. All pure profit for them).

Mon, 02/24/2014 - 08:15 | 4470230 Ace Ventura
Ace Ventura's picture

I can vouch for this method, as I have used it repeatedly. Cumcast has caught on, however, and are now making you pay full price for something like 2-3 months before they'll give you a 'special discounted rate' again. Sure, you can go through the entire cancellation/equipment turn-in/reconnection process ($$$), but if you only have to pay the normal rate for 2 out of 12 months.....well now you can do some 'worth it math'.

Still, I would much prefer to have multiple options. In this area its either Cumcast or Verizon, and amazingly....their fee/content structures are almost identical. Lotta choice there.

Sun, 02/23/2014 - 16:04 | 4468433 blindman
blindman's picture

John Prine - Spanish Pipedream

Sun, 02/23/2014 - 16:24 | 4468497 syntaxterror
syntaxterror's picture

Bullish for NFLX!

$1000/share, here we come baby!

Sun, 02/23/2014 - 17:00 | 4468605 Waterfallsparkles
Waterfallsparkles's picture

Comcast and Verizon are selling speeds they cannot deliver.

Sun, 02/23/2014 - 17:13 | 4468637 buzzsaw99
buzzsaw99's picture

yep, it's false advertising. if everyone tried to use the max speed they are paying for at the same time it would be game over for isps. i smell a class action lawsuit coming from all sides against them all.

Sun, 02/23/2014 - 17:39 | 4468709 pitz
pitz's picture

No they aren't.  Its the very nature of IP networking that there is the concept of statistical multiplexing.  That is why it is so cheap compared to architectures like ATM which are dramatically more expensive. 

Sun, 02/23/2014 - 17:43 | 4468719 buzzsaw99
buzzsaw99's picture

multiplexing = stealing from peter AND paul to feed their own bonus?

Sun, 02/23/2014 - 17:58 | 4468767 pitz
pitz's picture

Not at all.  Multiplexing is the concept of realizing that most lines stay idle 99% of the time, so in the aggregate, they don't pay to build networks to accomodate 100% demand.  This is why the Internet is so darn cheap.  But the model is broken when services like Netflix start loading out an Internet connection to 50% demand for significant periods of time.  Typically correlated across the entire user base. 

Sun, 02/23/2014 - 17:26 | 4468672 medium giraffe
medium giraffe's picture

When you've got them by the kbps, their hearts and minds will follow.

Sun, 02/23/2014 - 17:30 | 4468686 pitz
pitz's picture

Its pretty simple.  Comcast (and the other telcos) have most of the investment of the industry.  We're talking amounts close to $1T for all of the physical network infrastructure installed in the United States.  And the Netflix's, the Google's, etc, of the world expect to, for a mere few billion in investment, capture substantially all of the profit from such. 

Doesn't take a rocket scientist to understand that eventually firms like Comcast would tire of seeing P/E = a gazillion for the firms that merely ride on their networks, while they have significant long-term issues accessing capital for upgrades. 

I don't understand the hatred towards the telcos either.  They're the ones making the investment to bring you the services.  Not Netflix and their relatively few FTP servers scattered across the country. 

Sun, 02/23/2014 - 17:45 | 4468732 buzzsaw99
buzzsaw99's picture

the telecoms work for the nsa. fuck them and the horse they rode in on.

Sun, 02/23/2014 - 17:59 | 4468770 pitz
pitz's picture

No, the evidence is that the big brand name "content" providers are more in bed with the NSA, than the mere transport providers who have to spend enormous amounts to comply with all the bullshit NSA mandates without compensation. 

Sun, 02/23/2014 - 18:41 | 4468867 novictim
novictim's picture

Soooo...what stops Comcast from restricting content based on political of social bias?

And about that cable bill:  When we paid for broadband speeds why would it be Comcasts concern that we use that bandwidth for NetFlix?  

This is bad inn so many ways.  I feel the unrelenting domination of this monopoly racket taking advantage of us at every level.

Get off your knees and fight back, people.  Make your politicians and the phony "regulators" at the FCC fear you or you will lose everything a Democracy is about.

Sun, 02/23/2014 - 18:47 | 4468887 pitz
pitz's picture

Comcast could care less about what you send over the network (or what is sent).  The problem is simply that the loads imposed by the streaming unicast IP TV services are far in excess of what the network was ever engineered for.  Comcast needs a revenue stream in order to upgrade the network accordingly, and, as a secondary concern, replace income lost from the loss of cable subscribers who help pay the overall cost of running the infrastructure. 

Don't know why ZH'ers think this is some sort of attempt at fascism or control.  Its simply about the overwhelming loads and the economics of Netflix's traffic. 

Sun, 02/23/2014 - 18:57 | 4468918 novictim
novictim's picture

Maybe Comcast should take a portion of their enormous profits and drop soem of it on INFRASTRUCTURE?

Can we expect a MONOPOLY to do that ?  NOPE.

Sun, 02/23/2014 - 19:04 | 4468934 pitz
pitz's picture

Why build infrastructure just to make it easier for people to pay them less by dropping cable and going with a Netflix subscription instead?  It makes no sense.  At least now they're trying to re-jig the revenue model so it makes sense to build infrastructure.  Instead of dumping shareholders' profits into black holes.

Sun, 02/23/2014 - 20:09 | 4469114 XenoFrog
XenoFrog's picture

"Comcast could care less about what you send over the network (or what is sent)."

Hilariously untrue. They keep very close records on what is sent both ways and where you go, that information is tremendously valuable.



Sun, 02/23/2014 - 18:50 | 4468895 novictim
novictim's picture

Wow...reding through the threads.


I'm guessing 50% of you are payed shills for Comcast.  

And yet you folks don't want a increase in the Minimum Wage?  No wonder the Netflix bashing sounds so retarded.

Sun, 02/23/2014 - 18:54 | 4468907 pitz
pitz's picture

Nobody sounds like a Comcast shill.  Netflix was seriously abusing the financial model of "the Internet" to abuse Comcast's infrastructure.  They fought back.  Why does Netflix, which barely has invested a dime in infrastructure, get the sky-high P/E, while Comcast pokes along with a relatively low multiple? 

At least Comcast, as much as they are hated, employs local people, and spends money into the local economies in support of building and maintaining its infrastructure.  Netflix, it all goes to California, and not a dime even comes back to shareholders.  Meanwhile the local telecom infrastructure cannot be upgraded because Comcast's revenue is insufficient. 

Sun, 02/23/2014 - 19:01 | 4468924 novictim
novictim's picture


You are paying about $1500 per year to Comcast.  It is pure profit as COMCAST spends little on infrastructure and mostly pockets the payments.  

Comcast payes staff in the 3rd world to take you f'ing phone calls and those slaves make pennies.  

Think!  COMCAST sells you ELECTRONS that cost them nothing, nada, the big ZERO!

HOw much cable do you think $1500 per year could buy you?  And your neighbors!  How far would it stretch?!

You are a shill for COMCAST or you live your life in self imposed slavery.  Or both.

Sun, 02/23/2014 - 19:03 | 4468928 pitz
pitz's picture

Actually Comcast's infrastructure was enormously expensive to install.  And even worse, will be enormously expensive to upgrade as current facilities become increasingly inadequate.  Comcast has billions worth of investment that they need to see a return on, and the electronics that Comcast sells you have a significant cost from the point of reception to the point of delivery. 

If you want Comcast to be able to use US call centres, or provide a modern network, you certainly aren't going to see that on a piddly $1500/year or whatever it happens to be.  They've been forced into draconian cost cuts as a reflection of the highly competitive and low margin nature of the industry.

Sun, 02/23/2014 - 19:25 | 4468991 novictim
novictim's picture

Those poor guys at ComCast!  

Here, let's make the cable company monopoly a local tax-payer owned nonprofit.  It'll take that heavy burden off those pitiable Comcast executives and share holders.

Sount like a deal, Mr. Shill?




Sun, 02/23/2014 - 19:29 | 4468998 pitz
pitz's picture

Well, when you're ready to stop humming "Solidarity Forever" in your blind embrace of communism, maybe we can have a reasonable discussion of this.  Do you really think incompetent public "servants" would actually do a better job than Comcast?  Do you really want the quality of your Internet service to be linked to government budgetary cycles? 

Sun, 02/23/2014 - 19:41 | 4469034 novictim
novictim's picture

Incompetent?  Like those suck-holes in the banking sector who dive bombed our economy?

You mean the traitors who off shored American jobs and technology over the past 40years?


But you don't mean entities like the Bank of North Dakota that is owned by the public and never lost a dime with the financial crisis?

Or the Medicare administration that provides all the services of a private insurance carrier but at less than 5% overhead (compared to the 25-30% overhead of a company like CIGNA or UNUM or AETNA...


You are certainly a paid shill and your tropes are failing you here. HAHAHAHA

Sun, 02/23/2014 - 19:46 | 4469050 pitz
pitz's picture

Comcast, a company that actually invests (or did invest) billions in in-the-ground infrastructure, employs real every-day people in support of their systems, and actually delivers a useful service in a non-predatory fashion are a bunch of saints compared to the bankster cabal that you're talking about. 

Not saying they're perfect, but at least they provide a useful service and are re-invest in America.  Can't say the same for most other large companies that are increasingly abandoning America, playing every trick in the book to evade taxes, etc. 

Sun, 02/23/2014 - 20:14 | 4469123 XenoFrog
XenoFrog's picture

You mean Comcast, a company that invests billions in taxpayer money in in-the ground infrastructure... and pocketed billions more.

Sun, 02/23/2014 - 21:59 | 4469411 macbone
macbone's picture

Hey Brian? Brian "Pitz" Roberts? You're fucking delusional. They only laid cable when they were assured a monopoly in every city they service. They did not "build the infrastructure", they laid their inferior cables over and through an existing structure usually owned by the cities. They are NOT spending their steady over priced cash stream on "rebuilding the network". They have spent the money on building a verticle monopoly first NBC Universal and now Time Warner and all of its content providing companies. They have the lousiest customer satisfaction numbers in the business for many years running. And they just blatantly crippled their competition in order to extort a portion of their rivals earnings like a mafia gang moving in on the liquor rackets.

YOU are clearly a paid shill who writes exactly like a public relations hack who has a half truth for every obvious and reasonable concern. Comcasts profits go into buying up content providers for verticle intergration, buying up their competitors to complete horizontal expansion. And now harassing and extorting revenue from the only company innovative enough to challenge their 500 channels or none anti-consumer business model. Eat crap you lying corporate whore.

Sun, 02/23/2014 - 23:26 | 4469681 novictim
novictim's picture

Nicely put, Mac!

Sun, 02/23/2014 - 23:55 | 4469730 jcaz
jcaz's picture

Well played, Mac- interesting to see that ComCast is already sending drones to ZH-

Go back to your cubical, Pitz-  you've been outed....

Sun, 02/23/2014 - 19:20 | 4468975 novictim
novictim's picture

-- Cable Company Monopolies are ENORMOUSLY Profitable

-- Cable Monopolies are so poor they have trouble making payroll every month

Sun, 02/23/2014 - 19:29 | 4468996 pitz
pitz's picture

Telecom is a high gross margin, but very low net margin business.  So they appear to have a lot of cash rolling in, but they have enormous capital requirements and relatively high re-investment requirements.  If that re-investment is disrupted, even for a few years, the customer experience tends to deteriorate quite significantly.  Especially with Internet traffic doubling every year or two. 

I don't think anyone believes they have trouble making payroll, but the answer to your ridiculous ZH poll is somewhere inbetween the extremities.  Comcast is a business that has honestly installed billions worth of infrastructure and their owners, employees, and other stakeholders need a return on their investment.  Unlike Netflix which pretty much has no earnings nor realistic prospects for meaningful earnings, most people actually bought Comcast stock to make money.

Sun, 02/23/2014 - 19:40 | 4469030 I Write Code
I Write Code's picture

It's all the big players trying to operate with blunt instruments.  The "fair" thing to do would be to charge everyone for measured gigabytes, with a premium for high bandwidth, but that's a terrible pain to do, legacy POTS spent more money on billing than they did on providing service.

It's very reasonable to bill any big pipe for connecting to the cloud, just how reasonable depends on the numbers.

Sun, 02/23/2014 - 19:44 | 4469045 novictim
novictim's picture

The "fair" thing would be to BUST UP the MONOPOLIES in the cable business, provide multiple smaller entities who would then compete for our business.


Cable is a MONOPOLY in >90% of their coverage areas.

Sun, 02/23/2014 - 19:48 | 4469057 pitz
pitz's picture

Cable or telecom infrastructure is so expensive that such is not practical.  If Comcast is an excessively profitable company, as you would claim, then why don't you go buy its stock and participate in those profits? 

Sun, 02/23/2014 - 19:58 | 4469085 novictim
novictim's picture

Are you clocking out soon?  I'm sick of the inane comments like "telecom infrastructure is expensive".  


And $150 dollars per month isn't expensive?  Go eat some lumpia.

Sun, 02/23/2014 - 21:20 | 4469302 ActionFive
ActionFive's picture

The city sponsored WiMax outlets were quickly dealt with

Sun, 02/23/2014 - 19:55 | 4469079 novictim
novictim's picture

Expect "pitz" to stop posting on the hour as his minimum wage job with Comcast will be forcing him to clock-out soon.

What is the minimum wage in the Philipines??


 Is it 5pm-quiting time in the Philippines?  Comcast is too cheap to pay overtime. Do they pay "over time" there in the Philippines? What would that be?  50cents per hour?

Sun, 02/23/2014 - 20:02 | 4469098 pitz
pitz's picture

You bitch about no jobs being in America, but then you advocate that firms that actually build American infrastructure and provide useful services to Americans shouldn't be allowed to raise their prices.  No wonder they're forced into a lot of outsourcing! 

Sun, 02/23/2014 - 20:11 | 4469119 novictim
novictim's picture

And there we have it folks.

 Here is the confession of a paid shill and his prostituted advocacy of off shoring American Jobs.  


This creep has no idea what a monopoly is and how UNAMERICAN he is to proselytize for them.

Sun, 02/23/2014 - 20:16 | 4469131 XenoFrog
XenoFrog's picture

I don't know about where you live, but Comcast routinely raises their prices.

Sun, 02/23/2014 - 22:05 | 4469440 pitz
pitz's picture

All their inputs are rising in cost, and they sell a very highly in demand product.  So why wouldn't they raise their prices? 

Sun, 02/23/2014 - 23:21 | 4469669 novictim
novictim's picture

Comcast is a MONOPOLY, so of course they will raise their prices...again and again and again.

Mon, 02/24/2014 - 00:46 | 4469816 Randoom Thought
Randoom Thought's picture

Yes, and every time they do, I threaten to go to AT&T and they lower the price back to where it was. I have not had a rate hike in  years. Their cost to acquire people back is much higher than the cost to keep people. So, they do the intelligent thing.

Sun, 02/23/2014 - 21:01 | 4469254 Blankenstein
Blankenstein's picture

Comcast is buying Time Warner Cable, soon it will be Amerika's TASS.

Mon, 02/24/2014 - 00:02 | 4469735 22winmag
22winmag's picture

Are you shitting me? If I pay Comcast or any other provider for a certain chunk of internet access it shouldn't matter whether I'm streaming NetFlix movies or watching HD porn or engaging in any other bandwidth heavy activities.


This BS will just result in an endless loop of access providers and content providers jacking each other up (and off) for more money that will always be paid for by the consumer.

Mon, 02/24/2014 - 00:42 | 4469806 Randoom Thought
Randoom Thought's picture

Sure if you are paying by the "chunk of internet accss" as measured by some standard and if you exceed that chunk you pay more. That way the Netflix users would pay for the additional required infrastructure.

Mon, 02/24/2014 - 11:48 | 4470979 novictim
novictim's picture

Yep!  Well said!.  The idea that a monopoly can turn around and charge a content provider some sliding scale rate is rife for abuse.


Think, ZH!  Can NETFLIX then choose to go with another internet provider?  Cable monopolies are the only source of truly high-speed internet in the vast majority of markets and there is only ONE cable provider to choose amongst.

Remember citizens.  We own the right to regulate these clowns like comcast.

Mon, 02/24/2014 - 00:38 | 4469794 Randoom Thought
Randoom Thought's picture

When Netflix was delivering DVDs by mail they had to pay the postoffice for delivery. Why should Netflix assume that the infrastructure that other built and paid for is free for them?

Mon, 02/24/2014 - 11:41 | 4470944 novictim
novictim's picture

You, the consumer, paid for broadband speeds!  YOU PAID!



And now you think it is this MONOPOLY's business what content you download?  What is COMCAST hated CHRISTIAN prayer downloads?  Would it be ok to charge them more?


You are just another paid shill for comcast.

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