from Hacker News

How can ISPs need more money for service when Netflix charges only $7.99?

by t3hSpork on 5/21/14, 10:04 PM with 11 comments

So here is my thought: Lets take, as an example,a group of people who get Netflix. Those same people use CheapBastardISP. Those customers pay $50 a month for broadband. They use that broadband to connect to Netflix and download movies. The ISP screams that their customers are using too much bandwidth and Netflix needs to pay them more.... this makes no sense. The customer uses the ISP's pipe and Netflix pipe to download the movie. If Netflix can pay for that amount of bandwidth use when customers pay $8, why cant the ISPs handle that amount of bandwidth on $50?

I seriously do not think that Netflix takes up more than 1/6th of the total internet use of all their customers on average.

  • by feld on 5/21/14, 11:39 PM

    Bandwidth isn't cheap if you're away from a large metropolitan area. Our prices are somewhere near $3k per gigabit circuit, but you can do 10gbit for like $6k. Cogent and HE are dirt cheap if you can get them, but Cogent is garbage and HE isn't always available.

    Netflix is a serious strain on our networks. It only takes 75 subscribers streaming HD concurrently to eat 500mbit. Do the math. 75*$6=$600, but our cost on that bandwidth is $1500?

    It hurts. Don't blame the ISPs though. The entire ecosystem is designed to screw anyone who can't get multiple 40gbit+ circuits.

    edit: had netflix at $7 not $8

    Might I also add that a year and a half ago we were still paying $2000 for a T3?

  • by pwg on 5/21/14, 10:52 PM

    Lack of true competition.

    ISP's have little true competition anymore against other ISPs, so there is very little competitive pressure to force prices down to the actual costs plus a small margin.

    Or, to put it another way, the ISP can charge $50 just because it can.

  • by sergiotapia on 5/21/14, 11:11 PM

    Because there is no competition. They are the only ones with the basketball court and the basketball to boot. Cities have tried to implement their own internet only for them to whine "anticompetitive!" and then increase their prices $10.

  • by ig1 on 5/22/14, 10:01 AM

    Because last mile bandwidth has significantly different economics to data centre and interchange bandwidth economics.

  • by NameNickHN on 5/22/14, 9:49 AM

    The reason is greed and the means is extortion. They have the ability to slow down traffic if a service isn't paying up and that gives them the tool.

  • by minimaxir on 5/21/14, 10:14 PM

    You're comparing apples and oranges.