Netflix Officially Petitions Against Comcast, TWC Merger

[iogbrideau]

Not only this merger should not happen, but major monopolistic companies should be divided.

That makes no difference when individual baby-Bells stay within their respective territories.

Infrastructure is a natural monopoly: any given market can only support two, maybe three economically viable providers. With each provider only raking in 33-50% of possible revenues within an area but each having to eat nearly 100% of the costs regardless of market share, having two physical infrastructures to choose from more than doubles costs.

If you want to drastically lower costs while improving service quality, you need to aim for a fully converged utility model where all service providers go over a shared infrastructure to eliminate massive cost duplication in boilerplate access stuff. Many countries with affordable high-speed broadband use some form of co-owned infrastructure to minimize unnecessary duplication.

Canada has a shared infrastructure as Bell, Rogers and Telus share their infrastructure for most of the internet and cell traffic. It's only at the end point that the infrastructure is theirs (DSL/Fiber/Cable). They save money this way, yet, we still have some of the highest prices in the world. Their excuse is the low amount of people per covered territory, but it has been proven false again and again, even with the subventions they had to improve their infrastructure, a contract with the government to provide fast internet access everywhere in Canada, which they did not respect.

 

[InvalidError]

Canada has a shared infrastructure as Bell, Rogers and Telus share their infrastructure for most of the internet and cell traffic. It's only at the end point that the infrastructure is theirs (DSL/Fiber/Cable).

And guess what? It is that first-mile that is the most capital and labor intensive part to build and maintain due to its millions of endpoints, millions of junction boxes, billions of linear copper kilometers worth of wiring, etc. The backbone only has a few hundred endpoints and maybe a million kilometers worth of fiber which hardly requires any maintenance and is shared by millions of end-users. Backbone equipment might be expensive but the number of end-users the costs get amortized on grows much faster than costs do.

Putting VDSL2 lawn fridge on that nice concrete pad on the street corner on the other hand costs over 20k$ not including the cost of the fiber and power feeds along with copper lines from there to individual subscribers and serves less than 100 subscribers for the fastest speeds. All inclusive, we are likely talking somewhere in the neighborhood of $300 per home passed.

Running a fiber cable between two COs located 5km apart might cost a million dollars but the cost is amortized across much larger subscriber pools, which brings the build cost down to less than $50 per address within the service area. When you move up to inter-metropolitan transit, build costs may rise to 50M$ but those cables are usually shared by multiple carriers and benefit millions of people so the build cost may drop to $10 per address. The further up the aggregation layers you go, the cheaper it gets.

Somewhere in the neighborhood of 80% of the costs of providing hard-line service is in the first-mile. By having competing first-mile infrastructure, most of those costs get duplicated. If you want broadband costs to go down and speeds to go up, you need a co-owned first mile to eliminate the most expensive chunk of cost duplication.

Amsterdam's CityNet seems like the best compromise between private and public ownership to me: the city owns the outside plant from their walk-in closets to individual homes, then companies can lease rack space, fiber drops and buy power to connect individual homes.

 

[unbreakable926]

The public's perception of these agreements that Netflix is making with ISPs is mind boggling to me. I have done work with wide area networks and have an understanding of interconnection and why they need to happen. These agreements with ISPs are just that, interconnection agreements, not agreements to "prioritize" their traffic, put on a "fast lane", or to not "throttle" them. When Netflix agrees to pay for interconnection with an ISP, it is simply simplifying packet transmission to their subscribers by removing CDNs (Content Delivery Networks) from the equation. Previously, Netflix was paying content delivery networks that already have interconnection with ISPs to serve their content to their subscribers. The problem with this is that their subscriber base has increased tremendously over the years and now some of the CDNs they were using were oversubscribed and could not meet SLA due to their network being insufficient.

Netflix seems to want something for nothing. They have a lot of weight to throw around nowadays since their subscriber base is so large but they simply do not meet the requirements for settlement-free peering. Looking at AT&T's settlement free peering page (http://www.corp.att.com/peering/), there is one line in particular that stands out:

Peer must maintain a balanced traffic ratio between its network and AT&T. In particular, a new peer must have: a. No more than a 2.00:1 ratio of traffic into AT&T: out of AT&T, on average each month. b. A reasonably low peak-to-average ratio.

This is an industry standard with ISPs. The data flow to and from Netflix would be weighted greatly on traffic inbound to ISPs and would not be considered a general balance.

Netflix simply wants to save money and not have to pay ISPs. You can't blame them for trying but until the standard on these agreements change, they will have to continue to pay ISPs for interconnection. The reclassification of ISPs to telecommunications providers would not have an affect on this.

 

[skit75]

I don't understand how it is OK that Netflix has to pay an ISP to "fix" already established connections that are already being payed for on both sides(Netflix on the upload side and subscribers on the download side). How is that TWC and Comcast subscribers are not fighting this fight? Understandably not all of that base are also Netflix subscribers but those who are should be blasting their elected representatives and the FCC.

Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.

How can you blame Netflix for causing the congestion? They provide a service. The consumers are causing the congestion by using the service and I pay my ISP for that access.

You've mentioned that they gain QoS under this deal. QoS can mean so many things, what do you mean by that? What are they now getting that that they weren't getting and more importantly, how is that justified? Who has Netflix circumvented in the new closed door deals and how?

It may not be Netflix's "fault" per se, however, they don't want to accept any responsibility for the popularity of their service. They want their data carried at no extra charge to them because they are not well off financially. Analysts have already shown how their stock is overvalued and they are already going to have to increase their price because the cost of the content is greater than what they bring in off sub fees.

And yes, you pay your ISP for a level of service, but by saying that you rather show your ignorance about the fact that data from providers runs over SEVERAL networks. When you have a service such as Netflix that is responsible for a full third of internet traffic when just a few years ago they had ZERO internet traffic, that means in a short amount of time their service has added tremendously to the amount of data being accessed at any one time. This is overloading the tier 1 providers such as Cogent and Level 3. Also because only 1 company is responsible for this traffic and that one company, Netflix, isn't in the best of shape financially, it would not be the most intelligent thing for networks to spend hundred of millions, if not billions, in network upgrades in a short amount of time just to benefit Netflix. That's what makes these interconnect deals so good for everyone.

What these interconnect deals mean is that Netflix takes the money they were paying the tier 1's such as Cogent and Level 3 and paying Comcast and AT&T and TWC and Verizon to directly hook up to their data centers. This bypasses the point of congestion that was causing the bad service to begin with and allows it to give you the speeds you pay for. Think of it as a highway bypass. People who are against these deals are essentially saying that they want every network to spend tons of money to upgrade their service just for Netflix's benefit.

And the QoS can be done because by having the ISP directly connected means Netflix can demand that their service be provided to their customers on those ISPs meet a certain level. Say for example that can demand from Comcast that all their 1080p programming be given the bandwidth to all of the Netflix customers on Comcast to be received at that resolution without buffering and such. Netflix can not get this from ISP's they don't have interconnect deals with because an ISP that doesn't have an interconnect deal can not guarantee in what condition that data from Netflix will arrive on the ISP's network in since it has to go over several other networks before it reaches the ISP. Now do you understand?

I want every network to upgrade its infrastructure because this IS the next utility. It has next to nothing to do with Netflix and everything to do with providing a level playing field to invite competition into similar Netflix type services. How would Netflix ever gain a true competitor if doing so involves greasing Fortune 500 companies for fast lane access?

The deals made have been done behind closed doors. Not even the FCC knows what was agreed to. I may not be an expert in this field but when all parties leave the room and all of a sudden everything just works again, it wreaks of some back alley, shady operations.

Netflix will never have a true competitor if this continues which benefits Netflix, the most. Not the other way around.

 

[qlum]

In the Netherlands we are seeing a similar merge right now between UPC and Ziggo, which seems to have been accepted as long as long as the parent company sells its paid channels under the name Film1.

However unlike the us we have net neutrality laws which would prohibit any kind of tampering with services like netflix.

 

[InvalidError]

However unlike the us we have net neutrality laws which would prohibit any kind of tampering with services like netflix.

Except there is no actual tampering going on: Netflix is attempting to push all of its content over L3. Large ISPs are uncomfortable about trusting L3 alone with such a large chunk of their traffic - no sane company should rely on a single supplier - and are refusing to upgrade peering with L3 to force Netflix to either diversify their peering or pay for direct transit. It does not get much more neutral than that.

If a large Netherland ISP decided that the one and only peer they are getting Netflix from is starting to account for an excessively large chunk of their transit mix, they might want to force Netflix to diversify and stop increasing capacity with that peer until Netflix balances traffic with some of their other peers too. Unless Netherlands' network neutrality rules are forcing ISPs to upgrade transit links, they cannot do anything about that... and I doubt they are preventing ISPs from downgrading transit links or even de-peering altogether either.

When the bulk of your traffic comes from a single source over a single transit provider, it is quite easy for business-as-usual to start looking like some form of targeted attack even though it is nothing of the sort. Simply Netflix being a victim of their own success, L3/ISPs trying to cope with that in their own diverging ways and media spinning the whole thing everywhich way to generate an on-going stream of headlines to keep those page view counts rolling.

 

[qlum]

However unlike the us we have net neutrality laws which would prohibit any kind of tampering with services like netflix.

Except there is no actual tampering going on: Netflix is attempting to push all of its content over L3. Large ISPs are uncomfortable about trusting L3 alone with such a large chunk of their traffic - no sane company should rely on a single supplier - and are refusing to upgrade peering with L3 to force Netflix to either diversify their peering or pay for direct transit. It does not get much more neutral than that.

If a large Netherland ISP decided that the one and only peer they are getting Netflix from is starting to account for an excessively large chunk of their transit mix, they might want to force Netflix to diversify and stop increasing capacity with that peer until Netflix balances traffic with some of their other peers too. Unless Netherlands' network neutrality rules are forcing ISPs to upgrade transit links, they cannot do anything about that... and I doubt they are preventing ISPs from downgrading transit links or even de-peering altogether either.

When the bulk of your traffic comes from a single source over a single transit provider, it is quite easy for business-as-usual to start looking like some form of targeted attack even though it is nothing of the sort. Simply Netflix being a victim of their own success, L3/ISPs trying to cope with that in their own diverging ways and media spinning the whole thing everywhich way to generate an on-going stream of headlines to keep those page view counts rolling.

I am no Lawyer but it may just be a grey area here, L3 is one of the biggest tier 1 networks and by not upgrading the linkage you are indirectly hindering the service of that tier 1 network provider and hindering, delaying or preventing any type of service or application is not allowed. You could argue that not upgrading or even downgrading such linkage is not allowed under these laws.

 

[wildkitten]

The problem with Netflix isn't at the ISP level.

Actualy it is with the ISP. It's been proven again and again that using VPN's or outer means to hide the source of your web traffic from the ISP improves performance of netflix and other services.
ISP's are throttling traffic because they don't want to use there money to buy more tear one bandwidth. They also want people to use there service, that's why they reject the free netflix cache boxes the would improve performance with out buying more bandwidth from a tear one provider.

No, because when you use a VPN it often changes HOW the content is delivered. I have seen many discussions about this and it often changes which tier 1 it comes in on.

And that still ignores the point that if the ISP was actively throttling then Comcast would have been busted for it because they are being actively monitored because they are under old net neutrality rules due to their merger with NBC. This is a huge point people like you actively ignore because it destroys your argument that they actively throttle.

 

[wildkitten]

Another comment about TimeWarner "not wanting to be in the ISP business", fine. Quit. Shut down. If Mr. Time-Warner is bored with it, just get out. Go fishing.

I'd love to see all the Time-Warner monopolized-territory be put on the open market rather than gift-wrapped to the worst-service-ever ComCast.

They can't just "quit". The fact you even say that shows you have no clue how business works. They have debt in which they need to pay off creditors and such as well as shareholders they have to answer to. Legally they have to sell to go out of business.

 

[wildkitten]

I don't understand how it is OK that Netflix has to pay an ISP to "fix" already established connections that are already being payed for on both sides(Netflix on the upload side and subscribers on the download side). How is that TWC and Comcast subscribers are not fighting this fight? Understandably not all of that base are also Netflix subscribers but those who are should be blasting their elected representatives and the FCC.

Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.

How can you blame Netflix for causing the congestion? They provide a service. The consumers are causing the congestion by using the service and I pay my ISP for that access.

You've mentioned that they gain QoS under this deal. QoS can mean so many things, what do you mean by that? What are they now getting that that they weren't getting and more importantly, how is that justified? Who has Netflix circumvented in the new closed door deals and how?

It may not be Netflix's "fault" per se, however, they don't want to accept any responsibility for the popularity of their service. They want their data carried at no extra charge to them because they are not well off financially. Analysts have already shown how their stock is overvalued and they are already going to have to increase their price because the cost of the content is greater than what they bring in off sub fees.

And yes, you pay your ISP for a level of service, but by saying that you rather show your ignorance about the fact that data from providers runs over SEVERAL networks. When you have a service such as Netflix that is responsible for a full third of internet traffic when just a few years ago they had ZERO internet traffic, that means in a short amount of time their service has added tremendously to the amount of data being accessed at any one time. This is overloading the tier 1 providers such as Cogent and Level 3. Also because only 1 company is responsible for this traffic and that one company, Netflix, isn't in the best of shape financially, it would not be the most intelligent thing for networks to spend hundred of millions, if not billions, in network upgrades in a short amount of time just to benefit Netflix. That's what makes these interconnect deals so good for everyone.

What these interconnect deals mean is that Netflix takes the money they were paying the tier 1's such as Cogent and Level 3 and paying Comcast and AT&T and TWC and Verizon to directly hook up to their data centers. This bypasses the point of congestion that was causing the bad service to begin with and allows it to give you the speeds you pay for. Think of it as a highway bypass. People who are against these deals are essentially saying that they want every network to spend tons of money to upgrade their service just for Netflix's benefit.

And the QoS can be done because by having the ISP directly connected means Netflix can demand that their service be provided to their customers on those ISPs meet a certain level. Say for example that can demand from Comcast that all their 1080p programming be given the bandwidth to all of the Netflix customers on Comcast to be received at that resolution without buffering and such. Netflix can not get this from ISP's they don't have interconnect deals with because an ISP that doesn't have an interconnect deal can not guarantee in what condition that data from Netflix will arrive on the ISP's network in since it has to go over several other networks before it reaches the ISP. Now do you understand?

I want every network to upgrade its infrastructure because this IS the next utility. It has next to nothing to do with Netflix and everything to do with providing a level playing field to invite competition into similar Netflix type services. How would Netflix ever gain a true competitor if doing so involves greasing Fortune 500 companies for fast lane access?

The deals made have been done behind closed doors. Not even the FCC knows what was agreed to. I may not be an expert in this field but when all parties leave the room and all of a sudden everything just works again, it wreaks of some back alley, shady operations.

Netflix will never have a true competitor if this continues which benefits Netflix, the most. Not the other way around.

Yes it is all about Netflix. If you take Netflix out of the equation then internet traffic is much less.

Think of this way. Let's say before Netflix you have for the sake of argument, 20Gbps of data across the internet. Netflix now accounting for a full third of all internet traffic, total traffic is 30Gbps with Netflix accounting for 10Gbps of it.

Basically what you are doing is demanding that network owners upgrade with no return on investment because those companies who would have to upgrade is NOT the ISP or Netflix which the consumer pays, but rather other networks.

And how do these interconnect keep a competitor out? See, the point people like you actively ignore is that this is NOT extra money they are paying. They merely change WHO they are paying. Instead of paying the tier 1 to provide content to the ISP's, they take that money and pay the ISP to connect directly to their data center. Most economists believe Netflix is actually paying LESS as a result of these interconnect deals.

And even if this were extra money, I love how people such as yourself act as if one of Netflix's minor expenses would be what would keep a competitor from starting up. If someone was going to create a competitor to Netflix they would have to have literally billions of dollars in capital behind them because to get content that could compete with Netflix content would be incredibly expensive. In fact, because Netflix can not even cover their content expenses with their subscriber revenue, that is what will keep all but content owners (such as like how HULU is owned by several TV networks) from starting a competitor.

 

[skit75]

The public's perception of these agreements that Netflix is making with ISPs is mind boggling to me. I have done work with wide area networks and have an understanding of interconnection and why they need to happen. These agreements with ISPs are just that, interconnection agreements, not agreements to "prioritize" their traffic, put on a "fast lane", or to not "throttle" them. When Netflix agrees to pay for interconnection with an ISP, it is simply simplifying packet transmission to their subscribers by removing CDNs (Content Delivery Networks) from the equation. Previously, Netflix was paying content delivery networks that already have interconnection with ISPs to serve their content to their subscribers. The problem with this is that their subscriber base has increased tremendously over the years and now some of the CDNs they were using were oversubscribed and could not meet SLA due to their network being insufficient.

Netflix seems to want something for nothing. They have a lot of weight to throw around nowadays since their subscriber base is so large but they simply do not meet the requirements for settlement-free peering. Looking at AT&T's settlement free peering page (http://www.corp.att.com/peering/), there is one line in particular that stands out:

Peer must maintain a balanced traffic ratio between its network and AT&T. In particular, a new peer must have: a. No more than a 2.00:1 ratio of traffic into AT&T: out of AT&T, on average each month. b. A reasonably low peak-to-average ratio.

This is an industry standard with ISPs. The data flow to and from Netflix would be weighted greatly on traffic inbound to ISPs and would not be considered a general balance.

Netflix simply wants to save money and not have to pay ISPs. You can't blame them for trying but until the standard on these agreements change, they will have to continue to pay ISPs for interconnection. The reclassification of ISPs to telecommunications providers would not have an affect on this.

I don't understand how it is OK that Netflix has to pay an ISP to "fix" already established connections that are already being payed for on both sides(Netflix on the upload side and subscribers on the download side). How is that TWC and Comcast subscribers are not fighting this fight? Understandably not all of that base are also Netflix subscribers but those who are should be blasting their elected representatives and the FCC.

Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.

How can you blame Netflix for causing the congestion? They provide a service. The consumers are causing the congestion by using the service and I pay my ISP for that access.

You've mentioned that they gain QoS under this deal. QoS can mean so many things, what do you mean by that? What are they now getting that that they weren't getting and more importantly, how is that justified? Who has Netflix circumvented in the new closed door deals and how?

It may not be Netflix's "fault" per se, however, they don't want to accept any responsibility for the popularity of their service. They want their data carried at no extra charge to them because they are not well off financially. Analysts have already shown how their stock is overvalued and they are already going to have to increase their price because the cost of the content is greater than what they bring in off sub fees.

And yes, you pay your ISP for a level of service, but by saying that you rather show your ignorance about the fact that data from providers runs over SEVERAL networks. When you have a service such as Netflix that is responsible for a full third of internet traffic when just a few years ago they had ZERO internet traffic, that means in a short amount of time their service has added tremendously to the amount of data being accessed at any one time. This is overloading the tier 1 providers such as Cogent and Level 3. Also because only 1 company is responsible for this traffic and that one company, Netflix, isn't in the best of shape financially, it would not be the most intelligent thing for networks to spend hundred of millions, if not billions, in network upgrades in a short amount of time just to benefit Netflix. That's what makes these interconnect deals so good for everyone.

What these interconnect deals mean is that Netflix takes the money they were paying the tier 1's such as Cogent and Level 3 and paying Comcast and AT&T and TWC and Verizon to directly hook up to their data centers. This bypasses the point of congestion that was causing the bad service to begin with and allows it to give you the speeds you pay for. Think of it as a highway bypass. People who are against these deals are essentially saying that they want every network to spend tons of money to upgrade their service just for Netflix's benefit.

And the QoS can be done because by having the ISP directly connected means Netflix can demand that their service be provided to their customers on those ISPs meet a certain level. Say for example that can demand from Comcast that all their 1080p programming be given the bandwidth to all of the Netflix customers on Comcast to be received at that resolution without buffering and such. Netflix can not get this from ISP's they don't have interconnect deals with because an ISP that doesn't have an interconnect deal can not guarantee in what condition that data from Netflix will arrive on the ISP's network in since it has to go over several other networks before it reaches the ISP. Now do you understand?

I want every network to upgrade its infrastructure because this IS the next utility. It has next to nothing to do with Netflix and everything to do with providing a level playing field to invite competition into similar Netflix type services. How would Netflix ever gain a true competitor if doing so involves greasing Fortune 500 companies for fast lane access?

The deals made have been done behind closed doors. Not even the FCC knows what was agreed to. I may not be an expert in this field but when all parties leave the room and all of a sudden everything just works again, it wreaks of some back alley, shady operations.

Netflix will never have a true competitor if this continues which benefits Netflix, the most. Not the other way around.

Yes it is all about Netflix. If you take Netflix out of the equation then internet traffic is much less.

Think of this way. Let's say before Netflix you have for the sake of argument, 20Gbps of data across the internet. Netflix now accounting for a full third of all internet traffic, total traffic is 30Gbps with Netflix accounting for 10Gbps of it.

Basically what you are doing is demanding that network owners upgrade with no return on investment because those companies who would have to upgrade is NOT the ISP or Netflix which the consumer pays, but rather other networks.

And how do these interconnect keep a competitor out? See, the point people like you actively ignore is that this is NOT extra money they are paying. They merely change WHO they are paying. Instead of paying the tier 1 to provide content to the ISP's, they take that money and pay the ISP to connect directly to their data center. Most economists believe Netflix is actually paying LESS as a result of these interconnect deals.

And even if this were extra money, I love how people such as yourself act as if one of Netflix's minor expenses would be what would keep a competitor from starting up. If someone was going to create a competitor to Netflix they would have to have literally billions of dollars in capital behind them because to get content that could compete with Netflix content would be incredibly expensive. In fact, because Netflix can not even cover their content expenses with their subscriber revenue, that is what will keep all but content owners (such as like how HULU is owned by several TV networks) from starting a competitor.

Nobody builds a business where there is no road. The road must come first.

Remove Netflix from the equation. What is the avenue to clear the way for high bandwidth consumption services which are sure to arrive in the near future? Business as usual? People such as myself are curious. I am not actively ignoring anything. How do you know the details of the agreement/deals when nobody else does?

 

[iogbrideau]

Canada has a shared infrastructure as Bell, Rogers and Telus share their infrastructure for most of the internet and cell traffic. It's only at the end point that the infrastructure is theirs (DSL/Fiber/Cable).

And guess what? It is that first-mile that is the most capital and labor intensive part to build and maintain due to its millions of endpoints, millions of junction boxes, billions of linear copper kilometers worth of wiring, etc. The backbone only has a few hundred endpoints and maybe a million kilometers worth of fiber which hardly requires any maintenance and is shared by millions of end-users. Backbone equipment might be expensive but the number of end-users the costs get amortized on grows much faster than costs do.

Putting VDSL2 lawn fridge on that nice concrete pad on the street corner on the other hand costs over 20k$ not including the cost of the fiber and power feeds along with copper lines from there to individual subscribers and serves less than 100 subscribers for the fastest speeds. All inclusive, we are likely talking somewhere in the neighborhood of $300 per home passed.

Running a fiber cable between two COs located 5km apart might cost a million dollars but the cost is amortized across much larger subscriber pools, which brings the build cost down to less than $50 per address within the service area. When you move up to inter-metropolitan transit, build costs may rise to 50M$ but those cables are usually shared by multiple carriers and benefit millions of people so the build cost may drop to $10 per address. The further up the aggregation layers you go, the cheaper it gets.

Somewhere in the neighborhood of 80% of the costs of providing hard-line service is in the first-mile. By having competing first-mile infrastructure, most of those costs get duplicated. If you want broadband costs to go down and speeds to go up, you need a co-owned first mile to eliminate the most expensive chunk of cost duplication.

Amsterdam's CityNet seems like the best compromise between private and public ownership to me: the city owns the outside plant from their walk-in closets to individual homes, then companies can lease rack space, fiber drops and buy power to connect individual homes.

Except these fridges are non existant in most of Canada, they separate directly at the electric pole. I guess this could account for even more costs though as they are smaller devices and many more to separate the networks. You only ever see these fridges that are actually in small cabins in rural areas mostly with BellAliant (which is basically Bell).

 

[InvalidError]

Except these fridges are non existant in most of Canada, they separate directly at the electric pole.

Nonexistent? In both Montreal and Longueuil, I could probably take pictures of 20+ remotes tacked to junction boxes near sidewalks within a one hour bicycle ride... those things are all over the place. To offer trouble-free 50/10, Bell needs to bring these things within ~500m from the homes they want to reach.

Nowhere near as big as AT&T's but not exactly small either when there are 2-3 tacked on the same JWI.

 

[christinebcw]

At our place (Land O' Avalanches), these aren't fridges - they're Sunken Safes. "C'mon, boys, just try and take me out! Ha! Missed me again!"

 

[razor512]

While ISP's are throttling netflix (especially verizon fios ass netflix is slow 24/7 instead of being slow at peak hours), netflix uses a very inefficient distribution methodd that is inefficient due to their DRM.

They are so scared of people viewing content without paying that they do not buffer more than a few seconds of content, and thus rely on a very consistent connection that requires multiple connections for the same content. The internet was originally designed around having multiple requests for the same exact content to be cached in order to better manage overall load. A user streaming netflix will generate a load on half of the US based ISP's and backbones instead of having local caching.

 

[jdwii]

Netflix just start advertising people to use a VPN on your site or make one for your customers its really getting to be the only option left

 

[wildkitten]

The public's perception of these agreements that Netflix is making with ISPs is mind boggling to me. I have done work with wide area networks and have an understanding of interconnection and why they need to happen. These agreements with ISPs are just that, interconnection agreements, not agreements to "prioritize" their traffic, put on a "fast lane", or to not "throttle" them. When Netflix agrees to pay for interconnection with an ISP, it is simply simplifying packet transmission to their subscribers by removing CDNs (Content Delivery Networks) from the equation. Previously, Netflix was paying content delivery networks that already have interconnection with ISPs to serve their content to their subscribers. The problem with this is that their subscriber base has increased tremendously over the years and now some of the CDNs they were using were oversubscribed and could not meet SLA due to their network being insufficient.

Netflix seems to want something for nothing. They have a lot of weight to throw around nowadays since their subscriber base is so large but they simply do not meet the requirements for settlement-free peering. Looking at AT&T's settlement free peering page (http://www.corp.att.com/peering/), there is one line in particular that stands out:

Peer must maintain a balanced traffic ratio between its network and AT&T. In particular, a new peer must have: a. No more than a 2.00:1 ratio of traffic into AT&T: out of AT&T, on average each month. b. A reasonably low peak-to-average ratio.

This is an industry standard with ISPs. The data flow to and from Netflix would be weighted greatly on traffic inbound to ISPs and would not be considered a general balance.

Netflix simply wants to save money and not have to pay ISPs. You can't blame them for trying but until the standard on these agreements change, they will have to continue to pay ISPs for interconnection. The reclassification of ISPs to telecommunications providers would not have an affect on this.

I don't understand how it is OK that Netflix has to pay an ISP to "fix" already established connections that are already being payed for on both sides(Netflix on the upload side and subscribers on the download side). How is that TWC and Comcast subscribers are not fighting this fight? Understandably not all of that base are also Netflix subscribers but those who are should be blasting their elected representatives and the FCC.

Why would it be fought? No costs have gone up for the consumer and costs did not go up for Netflix. They are not paying extra for these interconnect deals, they merely changed who they were paying. In fact, it's likely they are paying less and can get a quality of service agreement because of that direct connection that they can not get with an ISP they don't have a direct connection with, which means a guaranteed level of service for those consumers on those ISP's that have the direct connection.

How can you blame Netflix for causing the congestion? They provide a service. The consumers are causing the congestion by using the service and I pay my ISP for that access.

You've mentioned that they gain QoS under this deal. QoS can mean so many things, what do you mean by that? What are they now getting that that they weren't getting and more importantly, how is that justified? Who has Netflix circumvented in the new closed door deals and how?

It may not be Netflix's "fault" per se, however, they don't want to accept any responsibility for the popularity of their service. They want their data carried at no extra charge to them because they are not well off financially. Analysts have already shown how their stock is overvalued and they are already going to have to increase their price because the cost of the content is greater than what they bring in off sub fees.

And yes, you pay your ISP for a level of service, but by saying that you rather show your ignorance about the fact that data from providers runs over SEVERAL networks. When you have a service such as Netflix that is responsible for a full third of internet traffic when just a few years ago they had ZERO internet traffic, that means in a short amount of time their service has added tremendously to the amount of data being accessed at any one time. This is overloading the tier 1 providers such as Cogent and Level 3. Also because only 1 company is responsible for this traffic and that one company, Netflix, isn't in the best of shape financially, it would not be the most intelligent thing for networks to spend hundred of millions, if not billions, in network upgrades in a short amount of time just to benefit Netflix. That's what makes these interconnect deals so good for everyone.

What these interconnect deals mean is that Netflix takes the money they were paying the tier 1's such as Cogent and Level 3 and paying Comcast and AT&T and TWC and Verizon to directly hook up to their data centers. This bypasses the point of congestion that was causing the bad service to begin with and allows it to give you the speeds you pay for. Think of it as a highway bypass. People who are against these deals are essentially saying that they want every network to spend tons of money to upgrade their service just for Netflix's benefit.

And the QoS can be done because by having the ISP directly connected means Netflix can demand that their service be provided to their customers on those ISPs meet a certain level. Say for example that can demand from Comcast that all their 1080p programming be given the bandwidth to all of the Netflix customers on Comcast to be received at that resolution without buffering and such. Netflix can not get this from ISP's they don't have interconnect deals with because an ISP that doesn't have an interconnect deal can not guarantee in what condition that data from Netflix will arrive on the ISP's network in since it has to go over several other networks before it reaches the ISP. Now do you understand?

I want every network to upgrade its infrastructure because this IS the next utility. It has next to nothing to do with Netflix and everything to do with providing a level playing field to invite competition into similar Netflix type services. How would Netflix ever gain a true competitor if doing so involves greasing Fortune 500 companies for fast lane access?

The deals made have been done behind closed doors. Not even the FCC knows what was agreed to. I may not be an expert in this field but when all parties leave the room and all of a sudden everything just works again, it wreaks of some back alley, shady operations.

Netflix will never have a true competitor if this continues which benefits Netflix, the most. Not the other way around.

Yes it is all about Netflix. If you take Netflix out of the equation then internet traffic is much less.

Think of this way. Let's say before Netflix you have for the sake of argument, 20Gbps of data across the internet. Netflix now accounting for a full third of all internet traffic, total traffic is 30Gbps with Netflix accounting for 10Gbps of it.

Basically what you are doing is demanding that network owners upgrade with no return on investment because those companies who would have to upgrade is NOT the ISP or Netflix which the consumer pays, but rather other networks.

And how do these interconnect keep a competitor out? See, the point people like you actively ignore is that this is NOT extra money they are paying. They merely change WHO they are paying. Instead of paying the tier 1 to provide content to the ISP's, they take that money and pay the ISP to connect directly to their data center. Most economists believe Netflix is actually paying LESS as a result of these interconnect deals.

And even if this were extra money, I love how people such as yourself act as if one of Netflix's minor expenses would be what would keep a competitor from starting up. If someone was going to create a competitor to Netflix they would have to have literally billions of dollars in capital behind them because to get content that could compete with Netflix content would be incredibly expensive. In fact, because Netflix can not even cover their content expenses with their subscriber revenue, that is what will keep all but content owners (such as like how HULU is owned by several TV networks) from starting a competitor.

Nobody builds a business where there is no road. The road must come first.

Remove Netflix from the equation. What is the avenue to clear the way for high bandwidth consumption services which are sure to arrive in the near future? Business as usual? People such as myself are curious. I am not actively ignoring anything. How do you know the details of the agreement/deals when nobody else does?

Yes but the tier 1's don't want to spend hundreds of millions of dollars or more for what is essentially one company that isn't even in good financial shape.

I don't know the details, and you are right, no one does. Doesn't that strike you a little odd that is if these deals are so bad for Netflix they would be out showing everyone about how they are being gouged? But the fact is Netflix doesn't want to explain anything.

But the fact is, because they are not using the tier 1's to get their content to the ISP, they are not paying the tier 1's to do so to those ISP's who they have interconnect deals with.

http://fortune.com/2014/02/24/inside-the-netflix-comcast-deal/

"Naturally, many of these same people are also implying that because Netflix ( NFLX 0.11% ) has to pay Comcast ( CMCSA -0.07% ) , consumers will foot the bill for this, as Netflix will have to charge more for their service. This could not be further from the truth. Those stating this have no clue how Netflix delivers their content today or what costs they already incur. If they did, they would know this is not a new cost to Netflix, it’s simply paying a different provider, and it should be at a lower cost. It should actually be cheaper for Netflix to buy direct from Comcast, and they also get a service level agreement (SLA), which also improves quality and that’s a good thing. Given that Netflix has many options to buy transit from many different transit providers, why would they pay more? They wouldn’t.'

These deals actually do what people who scream for ISP's to fix the problem with Netflix want done. The problem is, these people think that the problem is on the ISP side, that the ISP must be actively throttling to stick it to Netflix. The problem with this line of thinking (I use the term loosely as just a little thought would make it apparent few ISP's would want to actively throttle Netflix) gets dispelled when it's pointed out that Comcast, the one who had the biggest issue with Netflix, is operating under the old net neutrality rules till 2018 and is actively monitored, monitoring which would show any throttling and that they would get in trouble for, because of the deal they struck with the FCC to get the NBC merger through.

 

[wildkitten]

While ISP's are throttling netflix (especially verizon fios ass netflix is slow 24/7 instead of being slow at peak hours), netflix uses a very inefficient distribution methodd that is inefficient due to their DRM.

They are so scared of people viewing content without paying that they do not buffer more than a few seconds of content, and thus rely on a very consistent connection that requires multiple connections for the same content. The internet was originally designed around having multiple requests for the same exact content to be cached in order to better manage overall load. A user streaming netflix will generate a load on half of the US based ISP's and backbones instead of having local caching.

Prove that first line. Explain how Comcast was throttling Netflix when Comcast is under the old net neutrality rules and is actively monitored.

 

[InvalidError]

Netflix just start advertising people to use a VPN on your site or make one for your customers its really getting to be the only option left

If all of Netflix's subscribers used VPNs, Netflix would likely run into transit issues due to all those VPN sessions coming from networks Netflix has no cheap transit from/to.

 

[christinebcw]

"Active monitoring"? Yeah. Riiiight... someone fills in a multiple-choice answer and mails it to some Gov't PO box every quarter.

 

[skit75]

I have not seen the deals either but I have some familiarity with the NDA's that come along with them. I would bet neither party can legally disclose the deal. It is more likely they don't have a choice.