Media companies, carriers aim to pick your pocket

Multifront war on Netflix will cost customers plenty, for little benefit

Using Netflix as an excuse, carriers are lobbying hard for tiered pricing and new content controls that will increase their revenues, protect them from competition and hurt customers in both business and consumer markets.

Now content companies are planning to squeeze more money out of Netflix and other disintermediators in an effort to get a little of their own back, at the expense of customers who will pay higher fees to each of the parties involved.

According to the carriers and, to a lesser extent content companies like Time Warner and Starz, multimedia streaming providers like Netflix, YouTube, Skype and others are ruining the Internet.

Not only are they clogging the Internet's pipes with the kind of content that doesn't make carriers money, they're distributing content in ways that don't bring the kinds of profits content companies would like.

The FCC vote will come Dec. 21. The agreement is expected to pass.

Comcast's overt effort to throttle Netflix traffic flowing through its network is a good example of how carriers respond to resource-intensive services their end-user customers want -- punitively.

On the other end of Netflix' content stream, content providers like Time Warner, Starz, Soney and Disney are reevaluating Netflix as a partner and reportedly planning drastic increases in the amount they charge it for content that, for the most part, has been produced, paid for and partly amortized before Netflix viewers ever see it.

The result on the content side will be huge increases in Netflix' costs, which it will pass on to customers by raising subscription rates.

If the tiered pricing plan FCC Chair Julius Genachowski previewed Dec. 1 goes into effect, Comcast, Verizon and other carriers will also be able to charge Netflix more to send its traffic across their various networks unimpeded.

That's roughly like trying to drive across Afghanistan on national roads, but stop to pay "tolls" to heavily armed turnpike crews from every tribe, warlord and village strongman along the way.

Quality of service will inevitably decline as costs rise, giving consumers a double shot in the wallet.

A third shot will come from increased costs of wireless, which carriers think should be exempt from even the weak protections the FCC thinks might be appropriate for the wired Internet.

With no controls at all wireless carriers -- who kept technical advances to a minimum and per-minute prices astonishingly high for a decade after the U.S cellular communications networks became an object of ridicule for the rest of the world -- will be able to freely turn the screws on both business and consumer customers .

And business customers -- who are increasingly sending video, audio and encrypted SAAS, Cloud and virtualized traffic across the public Internet -- will be caught in the same trap.

If Comcast can squeeze more money from Netflix while increasing fees for customers at the same time, it will be able to do the same thing for small- and mid-sized businesses that need more than what FCC chief Genachowski calls "reasonable" discrimination among different types of traffic.

The rules Genachowski previewed don't allow legal traffic to be blocked, and require "transparency" in the process carriers use to determine what should be throttled and what not.

It doesn't define whether VoIP is a "reasonable" type of traffic and peer-to-peer or remote-desktop protocols from Citrix or VMware are "unreasonable," however, meaning Comcast, not you, might be the one who determines which apps work in your office.

Kevin Fogarty writes about enterprise IT for ITworld. Follow him on Twitter @KevinFogarty.

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