Comcast-Funded Think Tank: Broadband Usage Caps Make Netflix Streaming Better. You're Welcome.

As we've noted for some time, the broadband industry (and all the think tanks and politicians that work for it) have spent the last few years trying to vilify Netflix. That's primarily due to the company's support of net neutrality, but also its opposition to anti-innovative and anti-competitive broadband usage caps. These attacks usually start with the criticism that Netflix now dominates around 37% of peak downstream traffic (as if that's a bad thing), followed by some bizarre and unfounded claim that Netflix should be forced to "pay its fair share" (read: give us a cut of revenues despite us having no legitimate claim to it).

While these assaults had quieted down for a while, Daniel Lyons (not the fake Steve Jobs Daniel Lyons) and the American Enterprise Institute last week came out with a bizarre missive on broadband caps, in which Lyons tries to claim that broadband usage caps are a great way to force Netflix "to become a better corporate netizen." As noted above, Lyons starts by highlighting how Netflix consumes a huge amount of peak Internet capacity:

"Netflix has long reigned as one of America’s most significant Internet-traffic generators. Network equipment company Sandvine reports that the video-streaming company is by far the leader in peak period traffic, responsible for more than 33 percent of all fixed Internet traffic during peak hours — more than twice the share of the next-biggest competitor, YouTube. This means that at times when the Internet is most susceptible to congestion, Netflix alone is responsible for one out of every three packets sent through the network."

For clarity it should be noted that Netflix customers are responsible for this consumption. Netflix consumers who, in the United States, already pay more for bandwidth than consumers in most developing countries. Netflix in turn not only pays for bandwidth, it now pays ISPs for direct interconnection to their networks, after ISPs were accused of intentionally degrading peering points to force its hand. Everybody is paying, and paying, and paying some more -- so it doesn't matter one iota how much bandwidth Netflix is consuming -- because consumers are demanding and (probably over)paying for it.

Back in December, Netflix announced it was making some changes to the way it intelligently encodes its titles. This shift involves encoding titles differently depending on type and genre, since cartoons (with static backgrounds) technically eat less bandwidth than live action movies. The move was prompted by one thing: this month's expansion by Netflix into 130 more countries. Netflix's primary concern? Making sure that networks -- especially of the mobile variety in developing nations -- would have a more consistent and trouble-free viewing experience. It was just a smart, albeit admittedly belated shift in improving the way Netflix operates.

Apparently seeing a flimsy logical opportunity for the ages, Lyons tries to claim that Netflix was forced to improve its efficiency -- solely thanks to the wonder and glory of broadband usage caps:

Usage-based pricing forced Netflix to be more mindful of the size of its digital footprint. Because they face potential overage charges, consumers are becoming more aware of the amount of bandwidth their online activities consume. This leads edge providers such as Netflix to develop more efficient methods of delivery, in response to increased consumer sensitivity. The result is a more efficient operation that benefits everyone by freeing up network capacity — which is like broadband providers improving speeds, but without having to install new network lines."

That's an astonishing, incredible load of bullshit.

Netflix has long allowed capped users to adjust streaming quality to manage consumption, but to claim caps are to thank for these improvements is aggressively dishonest. Lyons and his friends at the AEI are funded by Comcast, the same company that's aggressively expanding utterly unnecessary usage caps on millions of consumers. Those caps have one overarching function: to raise rates on uncompetitive markets, give Comcast's own services an unfair advantage, and to protect Comcast TV revenues from Internet video.

There's clearly some worry on the part of Comcast and its think tank friends that the FCC will finally get off its ass and begin pressing Comcast on its anti-competitive abuse of usage caps, but if this is the best argument the AEI can come up with, Comcast may want to reconsider its disinformation budget for 2016.

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