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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."
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?
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.
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.
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