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Netflix Hoping For Free Network Access From ISPs

Posted by samzenpus on from the working-together dept.

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."

5 of 85 comments (clear)

  1. Wouldn't apply to Netflix by PKFC · · Score: 3, Interesting

    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?

    1. Re: Wouldn't apply to Netflix by Charliemopps · · Score: 4, Interesting

      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.

    2. Re:Wouldn't apply to Netflix by Dcnjoe60 · · Score: 3, Interesting

      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?

    3. Re: Wouldn't apply to Netflix by bbn · · Score: 3, Interesting

      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.

  2. Google ran their own fiber by omnichad · · Score: 4, Interesting

    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.