How the Comcast-Netflix Deal Reshapes the Internet

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March 7 (Bloomberg) –- Harvard Law School Visiting Professor Susan Crawford and Cogent Communications CEO & Founder Dave Schaeffer discuss how cable companies are changing and monopolizing the internet. They speak to Cory Johnson on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

Quietly underway messing with the basic structure of the information superhighway and those changes could allow companies like comcast and verizon decide among the winners and losers.

We have a harvard love visiting professor joining me.

Also dave schaeffer.

When we talk about how the internet works, i feel like it is very different than it was even 10 years ago when there was lots of companies.

There are fewer ways to get online now.

That is absolutely right.

For most americans, their only choice for high-capacity, high-speed internet access is their local cable anomaly.

-- monopoly.

There are fewer choices and gives those players enormous power.

They can control access for users and the networks that want to connect to comcast and time warner cable in order to reach you.

We put together some graphics to help explain this.

I want to pull these together.

The way the internet has tended to work was that whenever you wanted to go to that whoever you wanted to go to as a user, you would go online and be able to see those things and they have equal access.

As a consumer, you could use whatever you want.

Now, there was a dramatic element recently, it did not get a lot of attention where netflix truck to do with comcast to get their own fast lane ahead of their competitors and left everyone else in the dust.

One of the companies that got axed was cogent.

What happened there?

The internet is a network of networks with over 44,000 networks interconnected.

In the case of comcast and netflix, comcast has refused to upgrade connections not only to our network to every other major backbone provider for the past year and a half.

With that refusal, those connections became clogged and netflix was forced to enter into a more expensive agreement with comcast in order to bypass that congestion.

It's fairly interesting, i feel like the implications are massive, not just for companies like yours who try to accelerate use on the internet but what are the implications?

This is a titanic development.

It makes the internet much more like cable tv.

There is a gatekeeper, it is comcast or time warner cable, and they pick winners or losers and who makes it through their gates.

It's like the traffic cones on the fort lee entrance to the george washington bridge.

They are in a position to shape traffic and pick who gets to go through at a reasonable price.

It's a big deal.

I like to think of it as if ford owned the freeway and they decided that fords can only use the express lane.

The real problem here is that there is no choice.

You got ford and nobody else when you're sitting in your living room.

There are very few providers in the last mile for consumers and they are all charging a lot and they don't compete with each other.

They divide up the market and this is a major problem for the country.

Dave, at least americans have the fastest internet connections in the world, right?

That's not true.

Large parts of asia and other areas are faster.

Today, the service providers charge their customers for connectivity to the internet and have intentionally decided to limit that conductivity in order to force large content companies to effectively pay a toll.

That has dramatically reduced the functionality of the internet as well as the speeds that the customers receive.

I guess i was wrong about americans having fast internet.

At least time warner and comcast are separate companies.

And they are planning to merge and they are feeling really confident it will happen.

This will put the entire eastern seaboard under comcast control.

They will have dirty 3 million customers and they will be deciding who reaches those customers on what terms.

It's a terrible deal for the country.

We need to be on a completely different trajectory it comes to high-capacity, high-speed access.

We are paying seven times as much as people in other countries for second class, non-fiber service.

Do you see any potential for competition?

We might not have competition, may be of google fiber will show up or a dish network would give you internet over the air.

Is there any chance of that from cable providers.

? there is a tremendous amount of competition.

We are the second largest carrier of traffic and carry 20 -- 21% of world traffic.

In the local access networks, they are typically monopolies and for that reason they need to be regulated.

What has happened is the cable companies have been allowed to act in a nonregulated manner.

They over charge their customers

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