>who pays for the expansion to accommodate traffic generated by Netflix?

They are already being paid - that is the problem. They are trying to double dip.

A visual aid (not the real arrangement, but good enough for discussion:

    Netflix <-> Level3 <-> Comcast <-> Me

Netflix pays money to Level3 for an internet connection.

I pay money to Comcast for an internet connection.

Leve3 and Comcast have an agreement to connect to each other for the purpose of serving their respective customers.

The concept of "an internet connection", this thing that we're both paying for, implies the interconnects working together to deliver, in good faith, what their respective customers have paid for - i.e. access to arbitrary services at best effort speeds.

The players have already been paid everything they deserve at this point. If they feel they are not being paid enough, they should raise their prices.

Comcast, they decide they want to double dip and charge Netflix for something I am already paying for. They are no longer playing in good faith, and I argue not delivering what I pay them to do. Why? Comcast's argument carries the sneaky assertion that they deserve money from Netflix since Netflix consumes such a huge portion of their capacity.

Except that doesn't wash - it is their customers requesting those resources and consuming capacity.

They could throttle their customers instead of Netflix, and this would even be defensible, but it would get them pilloried in the marketplace. But that assumes it's a capacity issue in the first place..

But in the end, it isn't. That is a damn lie perpetrated by the ISPs. It is a politics problem. Note how, when Netflix agreed to the demand for protection money, their capacity problem with Comcast went away literally overnight? Comcast either has an army of the best and fastest network engineers in the entire world (and I invite you to speak to a Comcast user if you think that's true), or already have the gear and configurations in place and just won't switch it on.

There is no cost for expansion here. It's money grubbing, pure and simple. ISPs have always been expected to steadily grow their capacity and speeds over time, and just now Comcast decides they have an issue with it? It's BS. It's a business decision - some suit decided they could charge twice for the same thing and do no extra work.

They're not being paid already because the explosion of streaming video traffic is a relatively new and ongoing process. They expect to be paid more for moving more bits.

Now, you might expect the capacity of the network to simply increase as a matter of technological progress. But it's not that crazy of a notion to charge more for doing more. They could make their own customers pay but they're trying to shift it to Netflix, and indirectly to Netflix users. There's nothing fundamentally unfair about it.

The answer that they shouldn't charge anyone more amounts to financing the expansion by their investors (in the form of lower returns). It's not a political problem, it's an economic one. All of those companies are after money, whether in additional fees or lower costs.

The fair and forthright thing to do, if that's really the case, is to charge me more. I am their customer, Netflix is not. Comcast's job is to deliver what content I ask for.

Except, they won't do that, because an ISP who will play in good faith will come along and eat their lunch, and their plans are already absurdly expensive.

It's not as if Netflix is blasting unsolicited traffic into Comcast's network that they should somehow compensate them for the inconvenience. "Oh, So sorry! That neighborhood scamp Netflix, blasting their packets all over the place".

The fact that it's Netflix is utterly irrelevant in truth. In the end, Comcast's customers are the ones requesting the data. It's just the simple fact that it's all coming from one source starts the wheels turning, where if it was more spread out, they couldn't come after any one person in particular to seek rent.

>Now, you might expect the capacity of the network to simply increase as a matter of technological progress.

As it has been for the past couple of decades? Yes, that is exactly what I expect.

I'm not saying they shouldn't charge more. I'm saying they shouldn't piss on the internet's leg and tell them it's raining. Don't come to us with that 'But but but capacity!' argument when their behavior with Netflix clearly indicates the opposite, and less so when you're a monopolist with the second worst customer satisfaction score in the entire country, and even more less so when it's their damn problem in the first place!

On top of that, streaming video is a time-sensitive medium and others are not. The sane thing to do (again, assuming this is really a capacity issue, which I absolutely believe is 100% grade A horse manure) would be to throttle down the other, non-time-sensitive packets like torrent, http, mail traffic. Basic QoS.

If you believe this company's stated reasons for anything, you are being played for a fool. They can not be trusted.

Who pays for the expansion to accommodate traffic generated by Comcast customers requesting data from Netflix? Comcast? ...

In a world with ISP competition, an ISP that chose to purposefully neglect its peering connections, or to throttle one of the most popular services on the internet, would lose customers. Unfortunately, we don't live in that world.