Netflix Hoping For Free Network Access From ISPs

sabri writes: Netflix soared on Wall Street today after their earnings announcement. They also stated that they hope to get more free network access arrangements (aka "free peering"). Fortune reports: "Netflix hopes the Charter peering pledge could serve not only its own interests, but establish an industry-wide practice for internet TV. Hastings said he hopes free peering will spare the emerging industry from the sort of battles that continue to plague the cable TV industry industry, in which stations go dark whenever distributor and content owner haggle over a 'retransmission' price."

Comments

Huh?

[Anonymous Coward]

sort of battles that continue to plague the cable TV industry industry

There's industries of cable TV industries?

Wouldn't apply to Netflix

[PKFC]

Free peering typically means that each carrier sends and receives about the same amount of data - they each benefit equally from the peering. How much data is inbound to Netflix? About 1/10000th what comes out.

That said, why isn't Netflix's traffic upload "paid for" when they pay their data centre ISP? or is that too perfect world?

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Free peering typically means that each carrier sends and receives about the same amount of data - they each benefit equally from the peering. How much data is inbound to Netflix? About 1/10000th what comes out.

That said, why isn't Netflix's traffic upload "paid for" when they pay their data centre ISP? or is that too perfect world?

So what? Netflix pays their ISP, who probably pays a Tier1-ISP for the transferred Data.

Netflix Customers pay Netflix (who pays thier ISP) and their own ISP for transferred Data.

ISP's who violate Net Neutrality basically want Netflix Customers (with "Flatrates") to shoulder those costs indirectly, by forcing Netflix to raise its prices via extortion ("Oh you want to reach your Customers with the Bandwidth those Customers paid for? Would be a shame if there was Congestion!"). Basically double dipping.

Who'd have guessed that customers want to use the allotted Bandwidth they paid for?

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Addendum:
Netflix wants free peering & Rackspace because they lessen the load on the ISP's Network via custom Proxies.

Basically: "Your Customers get faster Netflix while the needed external Bandwidth is reduced."
"You get the Hardware & Software & Maintenance for this for free if you put this Box in your internal Network."

Re:Wouldn't apply to Netflix

[Anonymous Coward]

and Netflix wants to NOT have to pay for upload bandwidth, even though they give nothing in return.

I've never understood what makes them so popular, really.

Re: Wouldn't apply to Netflix

[Anonymous Coward]

Exactly how I view it! I pay Internet so why should Netflix pay to reach me? That's fucked up!

Has Net neutrality changed the pouring extortion at all? Or is Netflix still paying Comcast?

Re:Wouldn't apply to Netflix

[Anonymous Coward]

That said, why isn't Netflix's traffic upload "paid for" when they pay their data centre ISP?

Because Netflix needs to also pay me, Brian L. Roberts.

or is that too perfect world?

No, in a perfect world, everyone pays me, Brian L. Roberts, both for the bandwidth and the content, both coming and going, over and over again.

Re: Wouldn't apply to Netflix

[Anonymous Coward]

That should read, "has net neutrality changed the peering arrangements with Comcast and Netflix?" Netflix and I both pay for connectivity, so it is unclear to me why they would pay peering to ISPs (other than extortion to make Comcast's bottom line).

Re:Wouldn't apply to Netflix

[Greyfox]

Something along the lines of "Give us free pairing or we'll tell your customers that Netflix isn't available with your internet service." Netflix gets access, you get to... have customers.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

That said, why isn't Netflix's traffic upload "paid for" when they pay their data centre ISP? or is that too perfect world?

Why isn't Netflix's traffic "paid for" (again) when the customer requesting the traffic pays their ISP for service?

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Something along the lines of "Give us free pairing or we'll tell your customers that Netflix isn't available with your internet service." Netflix gets access, you get to... have customers.

You're funny. Listen, I'm Brian L. Roberts. I've spent a lifetime cutting deals with local governments to ensure that when you have a choice of Comcast as your ISP then your choice is between Comcast or nothing. Pay me, or you get nothing!

Re:Wouldn't apply to Netflix

[BradleyUffner]

and Netflix wants to NOT have to pay for upload bandwidth, even though they give nothing in return.

I've never understood what makes them so popular, really.

Netflix has always, and will always, pay for their own internet connection and bandwidth. What this is about is people in the middle without any direct customer relation to Netflix or the end user, wanting Netflix to pay them too.

Re:Wouldn't apply to Netflix

[0123456]

What this is about is people in the middle without any direct customer relation to Netflix or the end user, wanting Netflix to pay them too.

Which is normal, when two ISPs connect, and one sends far more data than it receives.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

No, the residential ISP has 3 options. a) pay Level-3 for more bandwidth to give their customers what they're trying to download. b) peer directly with Netflix and not pay Level-3, or c) fuck the customer, I want more money

Re:Wouldn't apply to Netflix

[Anonymous Coward]

ISPs are in the business of selling data.

Netflix want to provide them data for free.

Seems reasonable.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Double dipping. It's the American way!

I'm still disgusted with American mobile carriers actually having the nerve to charge for incoming calls.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Don't know. But the ultimate solution is for Netflix to simply stake claim to some last mile assets. If they did whatever type of financing is best to purchase Charter I don't think too many shareholder interests would object. Their market cap can now support it.

It's the next logical step given Verizon's and Att's complacency, especially with Google and Ting now starting their fiber rollout, and municipal broadband making rumbles across the country.

Re: Wouldn't apply to Netflix

[Charliemopps]

I work for an ISP. The way it works is, the 2 isp's have a free peering agreement... Every month or 3 they compare traffic and true up. You ate up 100gig more than we did? You party us X. And vice versa.

What happened with Netflix is they colluded with level3 to try and force the ISPs to not charge them for that disparity or otherwise set that peering agreement up in such a way that made it favorable to Netflix. Level3 tried to charge insane rates to connect to them. Generally the isp's would trade trunks... Let's say ATT and Sprint... Each would have the same number of trunks from each other. In the end, those agreements come out as a 'wash' for both sides
  No one makes or losses money. Netflix bet that their traffic was so important that the isp's would start to lose customers over Netflix access and would give in. What Netflix didn't count on was the fact that residential broadband isn't very profitable to begin with, and the customers that uses Netflix are like the fat guy that shows up at the all you can eat buffet... The owners don't want him there anyway. The isp's then, likely colluded, to muscle Netflix out. Netflix played their card too soon. If they waited 10yrs or so they might have been successful.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Netflix isn't forcing data on the ISP. The ISP's paying customers (us) are requesting it. Therefore, it is the ISP's job to do the best they can to provide that data. This means free peering. Charging Netflix for a service that I am already paying for is double-dipping.

This net neutrality thing is not a story of the ISPs wronging Netflix or vise-versa. It is a story of the ISPs wronging us, their customers. By refusing to have standard peering agreements they are degrading the service that we pay for and are therefore not acting in good faith on our contracts. This is why I think that in order for this to be solved a customer would need to sue the ISP, not Netflix.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

They wanted to hook directly in to Comcast/Verizon/etc and send all of their video for free. That is their end game. They have publicly stated it many times.

Re: Wouldn't apply to Netflix

[Anonymous Coward]

Roughly: Netflix pays to get access via it's ISP. Normally this would be ok. ISP connection to other ISP is crappy for various reasons. So Netflix gets a direct connection to other ISP. In my book, makes Netflix a customer with two ISPs except it wants the second connection for free. Is Netflix paying too much for the first ISP for the service it's getting? Time for another ISP.

Re:Wouldn't apply to Netflix

[Shatrat]

No, it really isn't. This is about Retail ISPs who also sell video (cable companies) wanting to limit access to Netflix for their customers without doing something obviously like rate limiting/filterering at the gateway router. The 'people in the middle' like Level3 and Cogent are bypassed completely when Netflix peers with an ISP, which saves both Netflix and the ISP money. Hint: I work for an ISP, we don't sell video, we peer with Netflix everywhere we are able as well as install their caching appliances in our offices to reduce our transit and backhaul costs.

Re:Wouldn't apply to Netflix

[Shatrat]

This is an antiquated and stupid convention that really only applies to transit carriers. Netflix pays their wholesale ISPs for transit. Retail ISPs pay their wholesale ISPs for transit. Peering allows them both to save that money. The ratio doesn't mean anything because every single bit originates from a paying customer of the Retail ISP. The only Retail ISPs that don't want to peer with Netflix are the ones who also sell video content.

Re:Wouldn't apply to Netflix

[Lumpy]

Just wait. you will have an extra $4.99 FEE added to your isp bill for "netflix access fee"

Honestly, It's time the FCC smacks ISP's hard and demand they go completely common carrier and force them to stop being assholes.

I pay for my bandwidth, you cant bitch if I actually use what I pay for.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Hint: I work for an ISP, we don't sell video, we peer with Netflix everywhere we are able as well as install their caching appliances in our offices to reduce our transit and backhaul costs.

Hint, you work for a podunk ISP that is willing to bend backwards and offer free services to corporations posting record earnings just to scrape by your own living. Direct peering, colocation, these are and have always been paid services at any ISP serving more than a few basements. Netflix wants it for free because they're Netflix and they insist that they are the 500 lb. gorilla.

Re:Wouldn't apply to Netflix

[Lumpy]

Really? so they get free internet for their servers? Do you not have a clue at all as to how things work?

Let me guess, you think that netflix is in a van driving around leeching off of open wireless access points.

Re:Wouldn't apply to Netflix

[SuiteSisterMary]

If this were two counties, the term used would be 'imbalance of trade.' Countries have gone to war over this.

Peering is two ISPs bartering bandwidth, rather than writing each other cheques for similar amounts each month. What is Netflix offering to barter with? They want to dump tons of data onto the ISP; what does the ISP get in return?

Re: Wouldn't apply to Netflix

[Anonymous Coward]

The Value add of a Robust Internet experience that doesn't suck.

Re:Wouldn't apply to Netflix

[halltk1983]

You're right, they should definitely increase their costs and reduce their profits to mildly inconvenience Netflix, and greatly inconvenience their customers, just to satisfy the whiny demands of an anonymous commenter on Slashdot, instead or actually benefiting everyone.

Re: Wouldn't apply to Netflix

[drinkypoo]

What Netflix didn't count on was the fact that residential broadband isn't very profitable to begin with, and the customers that uses Netflix are like the fat guy that shows up at the all you can eat buffet... The owners don't want him there anyway.

The ISPs that are against these customers are only fooling themselves. Streaming is here to stay, and it's only going to become more popular. Now, this part of this message is for those of you out there who run an ISP, or work for one: If your network can't handle all your customers streaming at once, then you'd better upgrade it soon, or you're not going to exist. Get used to the idea, because it's reality.

Re:Wouldn't apply to Netflix

[Dcnjoe60]

What this is about is people in the middle without any direct customer relation to Netflix or the end user, wanting Netflix to pay them too.

Which is normal, when two ISPs connect, and one sends far more data than it receives.

That's the point. It shouldn't be normal. As a consumer, you pay your ISP for x amount of bandwidth. It shouldn't matter that those bits are used for receiving video or text files. You are already paying your ISP for the data you use. With regards to Netflix, they pay their ISP for the bandwidth they are a sending. Would anybody seriously contend that Netflix should pay extra for the data that you are already paying for? No, of course not, so why should the consumer pay for the data that Netflix is already paying for?

Netflix is an easy target, but think this through. Amazon does a tremendous amount business on the internet. Should consumers pay a surcharge for the privileged of shopping there? What about Google? It is the leading search engine. Should there be surcharges to access it? Does it cost an ISP more to send a packet containing video versus a packet containing data? No. So why should they be allowed to charge more for it?

Re:Wouldn't apply to Netflix

[squiggleslash]

Always found the idea that the sender pays a little awkward as a peering funding mechanism, given the receiver almost always initiates the transaction, and ideally should (that is, they wouldn't be initiating it if they didn't) be benefiting from the transaction as much as the sender.

I believe the arrangement is more of a compromise, based on an understanding that the sender probably has more control over how compact the message they send is, and so an attempt to discourage over-use of bandwidth rather than an attempt to get one party to pay the full costs of the other.

To that end, if Netflix has no benefit whatsoever to needlessly transmitting content at sizes larger than strictly necessary (and it doesn't - each additional megabyte has very real costs for most businesses transmitting it, not to mention the problems the end user has if their network is saturated with redundant data), then there's no good reason to charge them anything at all.

Re:Wouldn't apply to Netflix

[halltk1983]

Happy customers that are already paying them to access Netflix's videos?

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Only works because there is no consumer competition. If there were, many people would opt out of net neutrality. Grandma doesn't watch nor need Netflix. She needs Amazon, and AOL mail.
Why no consumer competition = government regulations, monopolies, and cronyism. Exactly what Net Neutrality is. Paid for by the bigger gorilla. Had the ISPs be bigger, state would have went with them.

Re:Wouldn't apply to Netflix

[Bengie]

Free peering typically means that each carrier sends and receives about the same amount of data

That only applies to transit providers where the data needs to get hauled. Residential ISPs are the endpoint, and as long as Netflix is dropping off the data near the customer, it's ALWAYS in the ISP's best interest to get free bandwidth than to pay their transit provider for access. Your logic falls flat on its face with the simple example that my ISPs sends me way more data than I send it, so it should pay me.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Agreed. I work for an ISP and we do all of the free peering we can at any IX we are at. That is a massive offload from our more expensive uplinks to less expensive. It gives the customers a better experience at the same time. Never once have we complained or ever cared that Akamai sends us 1000x the traffic that we send them, that is what they exist for, to distribute content. We exist to get that content to the end users. If a free peering agreement both saves us money and allows us to accomplish that better what is to not like?

Re: Wouldn't apply to Netflix

[Anonymous Coward]

You are forgetting that Netflix ALSO wants rackspace in their regional datacenters. This alone helps reduce load on those ISP networks because the content is closer to the end user, and doesn't have to jump across 1 or more tier-1 providers.

Re:Wouldn't apply to Netflix

[Bengie]

Bandwidth is *free, transit is not.

*Purchase 100Gb/100Gb at your local Internet Exchange for $5k/month. Assuming the national **average of 10Mb/s, a $30/month bill, and a fairly standard 20:1 oversubscription ratio, that 100Gb will bring in $6mil/m of revenue. That's a 0.083% overhead cost, leaving you with 99.916% for whatever else.

**Some ISPs are much worse, like Comcast, Verizon, etal of the past, going past 20:1 and charging closer to $70/month and still unable to stream 3Mb/s videos. If you adjust for these target values, 100Gb will bring in $70mil/m of revenue, bringing that $5k/month down to 0.007% overhead, leaving them with 99.993% margin for other costs and profits.

Bandwidth is cheap, transit is not.

Re: Wouldn't apply to Netflix

[theskipper]

But the fat guy was promised all you can eat for a certain price (which he paid). Is he not then entitled to what was agreed upon?

Put another way, are you asking for sympathy for the restaurant that advertises a potentially money-losing offer, regrets it, but continues to offer it to new customers anyway?

Re:Wouldn't apply to Netflix

[JazzLad]

Double dipping is one thing, they want triple dipping.

Dip 1: Netflix pays their ISP
Dip 2: I pay my ISP
Dip 3: Netflix also pays my ISP.

Re:Wouldn't apply to Netflix

[allanjude8027]

The problem is that the internet is not symmetrical. Eyeball ISPs will always have 100+:1 download vs upload ratios. So they can't ask for 1:1 peering ratios. I'd say the ISP benefits from the peering with netflix, they get happy customers, netflix doesn't soak their transit, and they get more control over where netflix enters their network. Peering + local caches can reduce the 'cost' of netflix to the ISP to just some switch ports.

Re: Wouldn't apply to Netflix

[PraiseBob]

What Netflix didn't count on was the fact that residential broadband isn't very profitable to begin with

That doesn't line up with what I've heard- "The cable distribution giants like Time Warner Cable and Comcast are already making a 97 percent margin on their “almost comically profitable” Internet services, according to Craig Moffet, an analyst at the Wall Street firm Bernstein Research. "

Re:Wouldn't apply to Netflix

[Agripa]

Free peering with Netflix assuming that they meet the requirements other than traffic parity has the advantage of removing their traffic from the ISP's expensive transit links.

Re:Wouldn't apply to Netflix

[Agripa]

Did you miss the part were peering with Netflix relieves their transit requirements? If it is less expensive to peer with Netflix (and/or host their caching appliances) than to pay for the transit required to support them, why wouldn't this make sense?

Re:Wouldn't apply to Netflix

[Anonymous Coward]

With regards to Netflix, they pay their ISP for the bandwidth they are a sending.

That they do. And Level3 did a great job undercutting the competition because they intentional skimp out of balancing their peering deals. Netflix paid for the cheap Internet, and they're getting exactly the service that this cheap Internet provides. They knew exactly what they were getting into and they hoped that they could muscle deals that would give them special treatment like free direct peering, CDN and colocation.

Funny how Netflix had none of these problems when they had their contract with Akamai. Proper services cost more. That might eat into their record profits.

Re:Wouldn't apply to Netflix

[VernonNemitz]

For some time I've been wondering if we should create some sort of "Internet Broadcast Protocol" (IBP). It could be based on the fact that there are usually a lot of network-node-computers in-between the source of a broadcast, and the recipients. The broadcaster would only output single streams of data to its nearest nodes, and each node would duplicate the data as many times as needed to pass on the data to some farther-away nodes, and so on, until each ISP duplicates the data for all its own customers that happen to be receiving the broadcast. The overall effect is a huge savings of bandwidth usage, because the broadcaster doesn't have to send out ten million separate streams for ten million recipients. There are only single streams between nodes, until the ISPs are reached.
Of course that wouldn't directly apply to Netflix, either, because it receives feedback from its subscribers, to pause streams. and different customers are going to pause streams at different moments in the overall flow. Perhaps an IBP can distinguish between a live feed and a recording, such that at the ISP-level of recipients, the ISP server would store the whole stream of recordings only, and it would respond to pause/resume requests. The ISP server retains the stored stream only as long as there are overlapping requests from its customers, for that recording/stream. A fair number of details for an IBP would still need to be worked out, such as ensuring one node doesn't receive the same stream from a multiplicity of other nodes, and places like Netflix get informed when an ISP is responding "in lieu of" Netflix, because some customer requested a stream that is currently being stored on an ISP server because other customers of both the ISP and Neflix are also receiving that stream. Netflix would need to know in order to properly deal with copyright royalties.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Dip 1: Netflix pays their ISP

They pay a cheap rate for an ISP that promised a direct highway but dumped that highway onto a shitty gravel road. Netflix knew this going in, but it meant that they would make more money.

Dip 3: Netflix also pays my ISP

Netflix bitches and moans that they are singled out because they have to pay for CDN, colocation and direct peering services because they're not being singled out to received said services for free.

The real dips are the people that actually believe that Netflix is some kind of victim here. This was always a calculated move to cut their costs hoping that ISPs would be so desperate to push their bits that they would kowtow to whatever demands Netflix made.

Re: Wouldn't apply to Netflix

[Anonymous Coward]

Are you intentionally being obtuse? Are you technically challenged?

Streaming HD video puts a lot more stress on the quality of a network than shopping. A wireless connection is not likely going to experience shopping issues like they will with video issues.

Everything works by over subscription, you're NOT paying a fair share for 24/7 traffic. Businesses with guaranteed traffic pay a lot more per month with less speed than equivalent residential user.

So streaming video changes the oversubscribed ratio.

Re:Wouldn't apply to Netflix

[davester666]

because the companies that manage the internet connections for millions of people have realized they can make a good bundle of extra money by selling access to those people, and not just settling for the chump change they make those millions of people pay to access to the 'internet'.

Anyway, this article is basically about how Netflix doesn't care how the merger of these companies screw over anybody else, as long as they can use the merger to make more money.

Re:Wouldn't apply to Netflix

[_Sharp'r_]

For some time I've been wondering if we should create some sort of "Internet Broadcast Protocol" (IBP).

You mean we should come up with something exactly like IP Multicast, from RFCs 988, 1054 & 1112?

Re:Wouldn't apply to Netflix

[citizenr]

Free peering typically means that each carrier sends and receives about the same amount of data - they each benefit equally from the peering. How much data is inbound to Netflix? About 1/10000th what comes out.

This is very easy to fix on Netflix side, just add 20 lines of code to make every client FLOOD /dev/urandom back at Netflix server. Problem solved, lets peer for free nao mmkay?

Re: Wouldn't apply to Netflix

[Anonymous Coward]

Do the math. Everyone cannot stream HD video simultaneously. You're an idiot for thinking this and ignoring reality.

The costs would be astronomical and you'd need more interconnects and hardware where this makes no sense.

Re: Wouldn't apply to Netflix

[Anonymous Coward]

Owner can live with it if there's only a few fat guys, but not when it goes from 10% of his customers to 70%. That's the fucking difference, Netflix is using up the majority of North American bandwidth.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

For some time you've been wondering this, but you've never thought to read the proceedings of the IETF (RFCs and drafts)?

Because if you had, you'd have realised what you've described is exactly IP Multicast and has been an internet standard for nearly three decades.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

I don't think you can hold your ISP responsible if Netflix chooses to undersubscribe their transit providers to try and blackmail your ISP into hosting their servers at your ISP's expense.

This is what Netflix is doing. They are buying "not enough" transit, then, when the service is shitty on some ISP that buys "enough" transit for their network, delivers shitty Netflix service because Netflix end of the transit equation is lacking, Netflix cries wolf and blames your ISP, saying they should (entirely at their own expense) provide free hosting for Netflix OpenConnect boxes.

This is exactly equivalent to me buying consumer VDSL, then trying to host a streaming video service from my home, and then telling all my customers it is their ISP cheating them, when infact, it is me being cheap and refusing to upgrade my connection. Then I make a generous (for myself) offer to my customers ISP, that I will give them 'free' servers, and 'all' they have to do is provide power, rackspace, air conditioning, monitoring and backhaul for them at their expense. When they don't take my "generous" offer (of free hosting for myself), I accuse them of being unfair and not respecting net neutrality.

This is not how the internet is supposed to work. You don't get free colocation just because you are a popular site. You don't get free transit just because you're popular. No, no, no.

Re: Wouldn't apply to Netflix

[ThatsMyNick]

Now, this part of this message is for those of you out there who run an Video streaming service, or work for one: If your network can't handle all your customers streaming at once, then you'd better upgrade it soon, or you're not going to exist. Get used to the idea, because it's reality.

FTFY. I am sure netflix is scared because they can hardly serve a percentage of the customers at the same time, and they are probably never going to be able to serve all of them at the same time.

Re:Wouldn't apply to Netflix

[Anonymous Coward]

Fuck netflix, and their crappy cheapskate shady peering extortion tactics.

Their service sucks, the catalog is small, and since they changed the player to Silverlight the player doesn't work on Windows (tearing slideshows with audio don't count).

I unsubscribed when they changed to Silverlight, as I signed up for streaming movies, not streaming slideshows.

Why the fuck should my ISP provide free colo to deadbeats who won't pay for adequate transit? I don't have any problem watching actual movies (not slideshows) with kodi over my VPN to an unnamed eastern european country, so the problem is clearly not my ISP.

Re:Wouldn't apply to Netflix

[VernonNemitz]

Thanks to the both of you; I had not known. Getting into the specs of Internet protocols is not my normal "thing". For me this protocol notion was simply a daydream, not something I was in any position to pursue, and here seemed to be a good place to describe it.

Re:Wouldn't apply to Netflix

[bbn]

The only problem is that multicast is not actually deployed on the internet, so you can only use it locally. Sure some ISPs use it for their own TV streaming, but third parties are locked out from using it.

Re: Wouldn't apply to Netflix

[bbn]

I work for an ISP. The way it works is, the 2 isp's have a free peering agreement... Every month or 3 they compare traffic and true up. You ate up 100gig more than we did? You party us X. And vice versa.

I own an ISP. This is not the way it works at all.

Peering policy is actually a rather complex topic. How it works depends on what kind of ISP you are and your size. Small ISPs want to peer no matter what. Large ISPs typically do not want to peer at all. The balanced peering requirement is a poor excuse to say no to peering.

As a small ISP we want to peer with all and everything. This is because any byte transmitted over a free peering is a byte that did not have to go via our paid transit circuit. It does not really matter in what direction that byte is going.

As a residential ISP the majority of our traffic is download. The transit cost is determined by the larger of upload and download. If we can get rid of some download, we will save good money. Netflix is offering to bring some of that download to us for free.

It is very asymmetric and it is a very good deal for both companies. It is a win-win.

So why do large ISPs not want to do this? Because they can get away with forcing everyone to pay to deliver traffic to them. It is no longer a win for them if they think they can get Netflix to be a paying customer. Nor if they already have free peering with the big transit providers, because then they are already getting the stream for free.

Why do mid sized ISPs not want to peer with small ISPs? If the mid sized ISP has a peering agreement with the transit provider of the small ISP, they are already getting the traffic for free. So there is no gain for them. On the other hand, the mid sized ISP might believe the smaller ISP could become a transit customer and you never peer with your customers or potential customers.

But instead of coming clear and tell the real reason, you will typically get the balanced peering requirement quote instead.

In truth balanced peering is not really possible nor desirable for a residential ISP. Only other residential ISP would have balance with us but there will be very little traffic. Just a little bit of bittorrent etc. As a residential ISP we need to peer with content providers, hosting companies and the like.

Re: Wouldn't apply to Netflix

[drinkypoo]

I am sure netflix is scared because they can hardly serve a percentage of the customers at the same time, and they are probably never going to be able to serve all of them at the same time.

You've got it all twisted. Netflix would be overjoyed to have that problem. It won't be all Netflix, though. They're enjoying this moment, but that's all it is.

Re: Wouldn't apply to Netflix

[ThatsMyNick]

I doubt Netflix will be happy about it. Let say Netflix has 1m customers right now and they all show up at a particular time to start watching movies. Netflix cant handle it, customers gets pissed, it would be their worst nightmare, really. No all you can eat plan really provisions for everyone to be able to use the service at the same time (or all the time).

Re: Wouldn't apply to Netflix

[drinkypoo]

I doubt Netflix will be happy about it. Let say Netflix has 1m customers right now and they all show up at a particular time to start watching movies. Netflix cant handle it,

Netflix's hardware can handle it. The network links 'twixt Netflix and ISP can't. Who will get blamed when push comes to shove? Where there is competition, it will be the ISP.

Re:Wouldn't apply to Netflix

[SuiteSisterMary]

Happy customers are paying to move traffic across their ISP's network.

ISPs agree to swap traffic in kind.

Netflix has nothing to swap in kind, so they need to pay.

Re:Wouldn't apply to Netflix

[halltk1983]

So you're saying that netflix should make their applications return random garbage from the customer's machines to their servers in an equal amount used to deliver the video, so that the ISPs have an equal amount of traffic going back to netflix? This doesn't sound like it will end well for the ISPs which dedicate a lot fewer channels to upstream. Perhaps netflix should enable it for a couple weeks to show the ISPs what "fair trade" traffic would look like.

Re:Wouldn't apply to Netflix

[Lumpy]

You seem to not understand that an ISP is a imbalance by design. 99.976% of all Home internet users only Consume and never ever upload.

I am paying for the bandwidth, the ISP can stop being greedy whiny bitches.

Re:Wouldn't apply to Netflix

[SuiteSisterMary]

No, that would be stupid, and it's unfortunate that you feel the need to resort to ridiculous hyperbole.

I'm saying that Netflix, like everybody else, needs to pay for wanting to access a given ISP's network. Seeing as how they can't pay with in-kind transit, like, say, other ISPs that both give *and take* traffic, they need to pay with cash.

Re:Wouldn't apply to Netflix

[SuiteSisterMary]

You're on ISP A. You want to download from some random site. Random site is on a server hosted by ISP B.

Your buddy is on ISP B. He wants to download from another site. Said site is hosted on ISP A.

See how that works? ISP A is pulling data from ISP B, and ISP B is pulling data from ISP A. Therefore, rather than cut each other identical cheques, they swap data.

Now, you want to pull data from Netflix. Netflix does not want to pull data from your ISP. Therefore, Netflix cannot pay for data with data; they need to pay with cash.

Re:Wouldn't apply to Netflix

[halltk1983]

But simply having their application return the same amount of traffic as it downloads would be cheaper for them to implement, since it would only be a few lines of code, and it would resolve the bandwidth mismatch at the peering point. It would hurt the users a bit as they tried to figure out why their video quality is suffering as the ISPs network chokes out.

It's a completely valid technical solution to an artificial problem, because it points out that by not balancing the traffic you're benefiting the ISP. Since almost all the traffic is downstream to the users, they can focus on providing higher downstream speeds without having to deliver higher upstream speeds. This enables bigger numbers on their advertisements. "50 mbps SUPER SPEED ULTRA FAST FAST* (*2 mbps upload)".

Re:Wouldn't apply to Netflix

[Bengie]

CDNs are free, SLAs are not. Get with the program, bandwidth is free.

Yeah, I'm dreaming too

[NotDrWho]

My dream is that I win the lottery.

(which is even more impressive considering that I'm not dumb enough to buy lottery tickets)

Laugh

[koan]

Coming soon, higher prices and commercials.

Free peering - thin end of the wedge

[Demonoid-Penguin]

Extrapolation - if your business makes money off the intertubes...

It make use of free peering.

You make money on someone else's back.

You owe [insert company name here] money

[Conclusion] Either the highway robbers, um, [insert company name here], um gatekeepers, um people who are not, emphasis on not, double charging, get a fair, percentage of your take - or it's just not fair.

Re:Free peering - thin end of the wedge

[drinkypoo]

Here's the problem with that idea: Customers want to use Netflix. Sure, there's little competition in most markets, but where there is, the ISP which provides Netflix will win and the ISP that makes them hard to use will fail. Competition is slowly creeping across America (thanks, Google!) so the ISPs are going to have to decide which side of their bread is buttered, and act accordingly.

Re:Free peering - thin end of the wedge

[Archangel Michael]

I have said, and will continue to say, that the problem with Netflix vs MegaCableCo is one of the last mile monopoly and "franchise" agreements with local municipalities. You fix this problem, and the whole Net Neutrality is fixed, without any further laws being needed.

The time has come to have a planned infrastructure that allows consumer choice beyond limited franchise agreements. Build Fiber infrastructure, to a common backhaul COLO Facility which allows multiple vendors to vie for their customers there. Introducing competition, because you remove the last mile from the equation is the ONLY viable solution, that doesn't involve politics and stupid politicians who have been bought by MegaCableCo lobbyists.

Re:Free peering - thin end of the wedge

[dave420]

Countries which have setups just as you describe have far more competition in their ISPs, lower prices, and better service.

Google ran their own fiber

[omnichad]

Back when Google was a significant chunk of the Internet's bandwidth, they started running their own fiber. With Netflix at their likely peak, they should use some of their excess money to start rolling out their own fiber network. If they do it right, they'll be in the market for peering arrangements that are mutually beneficial, and they'll have something to fall back on when the studios decide to cut out their middleman.

Re:Google ran their own fiber

[Anonymous Coward]

and they'll have something to fall back on when the studios decide to cut out their middleman

I don't think that's a major worry. For things like this a "middle-man" is good. When you have a separate app and interface for every single different studio (worrying about which ones work on Roku, FireTV, AppleTV, Chromecast, etc) it just makes the experience frustrating. Heck until recently it was aggravating enough with Netflix itself having different UI's on my FireTV vs my PS3.

Not to mention that the whole point of "cable-cutting" was to get rid of that $100 per month cable bill (or satellite in my case) and pare it down to a nice $10 per month Netflix bill. If I'm going to instead have to pay $5 to $10 a month to 2 dozen different studios then the whole problem of the giant cable-bill has just been recreated.

Re: Google ran their own fiber

[Anonymous Coward]

Google bought a bunch of firesale global crossing fiber for pennies on the dollar.

Netflix is not so lucky to be able to do that or they would.

Re:Google ran their own fiber

[drinkypoo]

Where is Google supposed to run this fiber? The last time someone did a haul across the continent, they literally had to work for the company which owned the right-of-way (the railroad) in order to pave the way for the deal (leasing the right-of-way) for the company which did the deed, that is to say, Qwest. You might remember Qwest as the only company whose CEO refused to bend over, install a tap for the NSA on the internet backbone, and not tell us about it. You might also remember that he got reamed by the legal system under some specious circumstances immediately thereafter.

TL;DR: Google can't possibly run their own C2C fiber net, and even if they did, it would be just as bad as everything else.

Re:Google ran their own fiber

[nine-times]

With Netflix at their likely peak, they should use some of their excess money to start rolling out their own fiber network.

I don't know that really makes sense, unless they want to get into that business. They can just continue paying for an ISP and hosting, and let their ISP/host work out whether they want to roll out new fiber. I think that if Netflix has a bunch of excess money, the smart move would be to continue investing in new original content, and expand their licensing. The more content that they have that people want to see, the better position they'll be in.

they'll have something to fall back on when the studios decide to cut out their middleman.

The studios are always going to have a middleman or two. Considering how much difficulty they've had in cutting out middlemen, I don't think Netflix has much to worry about there. This concern is also mitigated by expanding their original content.

Re:Google ran their own fiber

[omnichad]

Google has already run their own fiber network. I'm saying it's time for Netflix to follow. I didn't say Google covered the whole country, but it's enough to be able to offer Gigabit Internet in a few of the cities they've crossed.

The Open Edge Content Delivery Network, perhaps?

[fredan]

TOECDN was made for this.

Seems a step in the right direction

[Anonymous Coward]

But what is really needed is a clear definition of what you buy when you by Internet connectivity from an ISP.

This trend seems to indicate that the customer already paid for transport from the ISP to his house.
(Download speed is afterall, the major thing the ISP is advertising for sale.)

So if Netfix can get it to the ISP, then the ISP should take it settlement free.

This isn't like balance of trade between countries, this is about doing what you have already been paid to to.

net

[tobomobo]

With stock price soaring, VPNs and smart DNS services are in swimming in chocolate, at least judging by https://www.bestvpnz.com/best-...