I guarantee you that video-over-internet is a strategic priority for the cable companies. Currently, Comcast is limited to selling video services to customers who are connected to their cable network (about 30% of the US). They would love to expand their addressable market for video services by 70%. They've invested a ton of money into their online video platform for this reason. They haven't released it because the customer experience would suck unless there is a precedent and methodology in place for them to ensure adequate interconnect bandwidth exists.
As someone who works in the industry, that's why this whole argument feels false to me. Sure, the cable companies own the infrastructure for their customers, but there's money to be made from selling services to other customers as well. Big companies like Comcast aren't as stupid as you think: their video distribution model will likely look a lot more like Netflix in 5 years, as will the other cable/telco video companies. They're not trying to set up the rules so that Netflix fails; they're trying to set up the rules to ensure they can sell their products in the marketplace as well. How do you ensure your products don't suck? You ensure everyone in the value chain is adequately compensated (at least until you can disintermediate them).
When Comcast enters the video-over-internet market, they will have to pay for interconnects to the other ISPs. But that's fine with them; because it's a marginal cost tied to revenue. You have to tie the fixed costs of expanding infrastructure to increased revenue somehow or the economic model falls apart. That means either charging service providers by the gigabyte or charging consumers. Charging consumers would have a chilling effect on Internet commerce (just look at aggregated mobile data usage stats) so they've opted to go after the service providers.
As someone who works in the industry, that's why this whole argument feels false to me. Sure, the cable companies own the infrastructure for their customers, but there's money to be made from selling services to other customers as well. Big companies like Comcast aren't as stupid as you think: their video distribution model will likely look a lot more like Netflix in 5 years, as will the other cable/telco video companies. They're not trying to set up the rules so that Netflix fails; they're trying to set up the rules to ensure they can sell their products in the marketplace as well. How do you ensure your products don't suck? You ensure everyone in the value chain is adequately compensated (at least until you can disintermediate them).
When Comcast enters the video-over-internet market, they will have to pay for interconnects to the other ISPs. But that's fine with them; because it's a marginal cost tied to revenue. You have to tie the fixed costs of expanding infrastructure to increased revenue somehow or the economic model falls apart. That means either charging service providers by the gigabyte or charging consumers. Charging consumers would have a chilling effect on Internet commerce (just look at aggregated mobile data usage stats) so they've opted to go after the service providers.