Slashdot Mirror
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."
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.
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.