Wednesday, June 4, 2014

Flawed analogy watch -- Comcast edition

As if there weren't enough to dislike about this deal, we now have the CEO talking to us like we're morons.
Faced with difficult questions about his company’s pending takeover of Time Warner Cable — which would combine the two largest cable internet providers in the U.S. into a company consumers will likely hate twice as much — Comcast CEO Brian Roberts made one thing very clear: his company is determined to sit directly in the middle of the tech world. ...

That means it wants to preserve a gatekeeper role. In a series of analogies, Roberts likened his company’s role to that of a postmaster, pointing out that Netflix pays hundreds of millions of dollars to mail DVDs to its customers but now expects to be able to deliver the same content over the internet for free.

“They would like it all to be free. I would like to not have to pay for cable boxes,” he said. Delivering bits over a pipe seems just a wee bit more cost-effective than paying the energy and labor costs of physical distribution, but Roberts didn’t get into that.
Where to start...

The most common model for deliveries is one where the sender pays the cost of shipping. A less common, but not unheard of model is for the receiver to cover the cost on delivery ("postage due"). ISPs basically operate under something similar to the second model. The receiver pays to get the digital packages, and pays more to get larger packages or to get them faster.

Roberts is proposing a model where both the sender and the receiver pay, which he thinks he can get away with because there is very little competition in the industry and because, based on this quote, he doesn't seem to think we're very bright.

1 comment:

  1. But it is already the case that both senders and receivers pay! I am sure that Netflix receives a regular bill from its ISP (or, if it has an in-house ISP, from the ISP it uses for transit and peering). What Roberts seems to want is to be able to charge Netflix even if Netflix is not his customer and even if Netflix's ISP is already paying (or peering with) Comcast for delivery of packets to Comcast's customers.