> They already do. You've missed this point. Netflix pays a Tier 1 company for their Internet connection. As a customer to Comcast I am paying them for my ISP connection. As a Netflix customer, I am paying them for access to their library. I'm a customer of both companies.
Yes, I agree. The way it works now is with settlement-based peering. That is, companies do charge each other for peering when their bandwidth costs are asymmetric. As I said, the system the free market has built works just fine. But it does allow ISPs to demand whatever fees they want to build faster pipes to particular peers.
> In your analogy which is highly flawed you've asserted that one company does more work than the other in transporting. In the real world Internet, that is not the case. Netflix has a huge pipe with their ISP to deliver the packets to the Internet. For the most part, Comcast only deals with the last mile. Other Tier 1 companies deal with the part in the middle. So neither company does more work.
It's not flawed. A typical ISP network is way more expensive than anything Netflix does. Netflix puts their servers in cheap datacenters -- they specifically put their servers wherever the costs are the very lowest. Comcast has no choice but to take their customers where they live. You cannot deny this, it is an absolute simple obvious fact. The highest costs for moving a packet between Comcast and Netflix are born by Comcast's last mile.
> Second in your analogy, the shipping company you are dealing with and paying is responsible in figuring a reasonable price in transport including paying intermediaries. If they miscalculated pricing, that's on them. They don't get to ask you for more money after you've sent the package off. The last. More importantly, the postman at the other end that is delivering the package to the recipient doesn't get to extort more money from you otherwise he will delay the delivery.
But that's just the thing. They didn't miscalculate pricing. So long as the costs are fairly divided between all the companies that did the work, their pricing is just fine. And today, that's how their pricing works. We do have settlement-based peering today.
The situation now is that content providers do pay money that winds up flowing to access providers. That's how settlement-based peering, the norm for decades, works. The ISPs didn't miscalculate, they got it right. The content providers benefit disproportionate to their costs, so it's fair they pay some of the costs of the access providers. That's what the free market set up. Nobody miscalculated. One side just wants to use the government to strong arm a better deal.
> And ISPs can't locate buildings where they want? They can't have infrastructure in places that are cheaper? Your argument falls apart because ISPs in places that have cheap bandwidth do not necessarily have better performance or cheaper Internet.
They can, but they can't move their customers. All the costs can be fairly split but the first and last miles. Comcast has datacenters that are cheap just like Netflix does. But Netflix can put the endpoint (their servers) in those datacenters. Comcast simply can't do that. Their customers are where they are. It is a fact that the access provider almost always has higher costs than the content provider.
> As another example of how flawed your argument is, during the Netflix-Comast slowdown, several people showed that running their Netflix connection through a VPN was actually faster than Comcast directly. Comcast was throttling Netflix specifically. If it was a matter of bandwidth, there would have been little difference in speed.
Comcast wasn't throttling Netflix specifically, they just had poor bandwidth to Netflix. A VPN allowed you to avoid the congested links between Netflix and Comcast.
> Two flawed premises: ISPs don't deliver across the ocean.
I never said they did. ISPs simply have much higher per-packet costs than content providers do because content providers can put the endpoint wherever it's cheapest and ISPs can't. The endpoint is their customer's home or places of business.
> And ISPs can build infrastructure where they want. In fact Google did so and they are not an ISP. In the early 2000s, Google bought up a lot of dark fiber for cheap because they wanted their own networks. The ISPs could have done so; they chose not to do so.
What the hell does that have to do with anything? Are you seriously denying that at typical Netflix->Comcast or Comcast->Netflix packet, all things considered, costs Comcast a lot more than Netflix because they have to maintain a network that goes all the way to their customer's homes and businesses?!