Having worked for an ISP I'd like to add some points. (Sorry if they have been covered already!)

1. Netflix is a big company, they make money from their customers (the service isn't free so I'll assume there is profit). Therefore if the traffic associated with this service is so high that it significantly affects the ISP's then ISP should get a cut of this profit to improve their capacity so that Netflix can still deliver their service to customers. If not then price of the internet connection will need to rise as the usage does.

2. ISP's are always struggling with costs of bandwidth. Peering costs are not really the issue, the costs for the access network are, i.e. BTw.

3. With the current model it is hard to build a CDN that works efficiently. The CDN needs to be in the access network, as close to the customer as possible to save costs. More like a web cache in a corporate company. For residential connections this needs to be in the exchange. Therefore Netflix should be installing servers in each exchange and offer direct peering to BTw and LLU operators from there, not just Telehouse etc.

4. Innovation isn't restricted by this issue as many think it is. Innovation whatever it is won't use much bandwidth in comparison until such time that it become the norm.

5. It shocks and annoys me that Which? are now campaigning for guaranteed speed on residential connections. They seem to completely forget that residential connections are only affordable because they are contended, best effort and have no SLA. If a residential customer needs a connection with guarantees then they should buy the correct product, a leased line.

I think as far as your number 1 is concerned it can be looked at the other way. Netflix do not create any traffic on the Internet. The traffic is only generated by an ISP customer accessing the content. Therefore I would say it is the ISP customer that should pay for the traffic rather than Netflix.

On you number 3 I agree - if they want to get really good performance then they need to invest in CDNs. But that is likely to be extremely expensive with the number of exchanges in the country - and you would get into a position of a digital divide where the big exchanges have CDNs and therefore good service and the small ones don't because it is uneconomical.

Bad form replying to myself but another article on the reg shows Apple looking at a deal with Comcast.

So, stupid question. What happens when everyone is paying Comcast for special treatment? If Comcast haven't increased their capacity sufficiently and all providers are paying for special treatment then they will essentially be back to net neutrality (ie everyone is special and therefore no-one is) and Comcast will be raking in the profits.

Netflix is right.

If Netflix pays a broadband isp for bandwidth then that isp is been paid twice, netflix eg. isnt plusnet's customer. Netflix just sends its traffic out to the internet and at that points its no longers its responsibility.

The answer is simple.

If Broadband isp's find they cant pay for enough capacity out of revenue, then either accept reduced profits or increase prices. Or decrease usage limits, burst speed limits.

A morale isp doesnt let its links get congested. Meaning in a net neutral situation netflix works fine as is.

So to confirm you dont blame the isp for letting its links get congested?

indeed, netflix dont dump data, comcast, at&t's own customers request it since these customers pay comcast and at&t for conenctivity these isps have already been paid for the traffic.

What it comes down to is they got the maths wrong and want netflix to bail them out. Netflix already will be paying for their traffic with their own upstream provider.

Edited by Chrysalis (Mon 24-Mar-14 09:15:32)

Considering this is pure speculation at the moment it would be difficult to comment on how the system would work.

If it's simply a case of the Apple TV providing Comcast customers with channels they get on their normal cable box and that content was provided and hosted by Comcast it would be no different to the way their cable box currently works with regards to live and on demand content.

Similar to the Virgin Media cable box.

In reply to a post by ian72:

Just reading this on the BBC.

Netflix are complaining that ISPs are making them pay for net neutrality.

What I can't see is if the ISP by default is actively slowing their traffic or if it is being degraded because of it having to contend on an equal basis with other traffic.

If it is because of contention then what Netflix is actually doing is paying for their traffic to have special priority essentially lowering the priority of other traffic. In that case it isn't they are having to pay so that they can get net neutrality but they are paying so that they actually stop net neutrality (they are big enough to afford it and because their traffic is high priority it will negatively impact the small innovators they are saying should be supported).

Okay. Kinda. Comcast were running Netflix over intentionally congested transit links. Transit isn't something that should ever congest, transit providers usually specify in agreements that the pipes should never max out, Comcast were engineering traffic so that Netflix sucked, and refused to allow Netflix settlement free peeing or to install their CDN on the Comcast network.

Now, selective peering is something that's happened for a while. Pulling content from a CDN hosted on an ISP network is something common to many of us - Google have You Tube caches on some networks, Akamai have caches all over the place on ISP networks, and Google peer directly all over the place.

The issue in the USA is that places like LINX, open peering LANs are in relatively short supply, they just work differently.

Netflix are paying to connect directly to the Comcast network at a number of different peering points, where previously they were connecting via a handful of congested transits via intermediaries. They are, apparently, also going to be paying less for this than they were for the IP transit to get to Comcast previously.

Comcast most definitely degraded Netflix traffic intentionally, as an MSO they were trying to slow down cord cutting. They appear to have finally gotten with the programme here, and for all their jumping up and down Netflix aren't going to be too depressed by all this. They will save money in the medium term and will be able to deliver a higher quality service to a massive subscriber base.

The losers here are really the people who were selling the IP transit.

I doubt that this will set a precedent really. Netflix is the #1 bandwidth application in North America and should be considered a special case. This does not violate network neutrality, if anything IMHO it corrects an anomaly where Netflix's neutral access to the Comcast network was being violated by Comcast's traffic engineering policies.

Yes, Netflix were held to ransom, however they aren't paying more, they are just paying Comcast directly now for the bandwidth. It leaves a bad taste however I don't think the Internet is going to come crashing down as a result.

In reply to a post by Ignitionnet:

Okay. Kinda. Comcast were running Netflix over intentionally congested transit links. Transit isn't something that should ever congest, transit providers usually specify in agreements that the pipes should never max out, Comcast were engineering traffic so that Netflix sucked, and refused to allow Netflix settlement free peeing or to install their CDN on the Comcast network.

I'm interested in who pays for CDNs to be hosted on an ISPs network. For instance, BT Sport host a CDN on Sky for Sky Broadband customers. It seems to me both parties benefit from this arrangement since it results in less transit charges for IP transit.

Is there any exchange of money here, or do Sky just allow BT Sport to host a CDN on their network for free since it benefits both parties?

In reply to a post by Oliver341:

I'm interested in who pays for CDNs to be hosted on an ISPs network. For instance, BT Sport host a CDN on Sky for Sky Broadband customers. It seems to me both parties benefit from this arrangement since it results in less transit charges for IP transit.

Is there any exchange of money here, or do Sky just allow BT Sport to host a CDN on their network for free since it benefits both parties?

I couldn't speak for that particular deal but in the case of the Netflix and Akamai caches I've seen on ISP networks no money changed hands, the hosting was free.

The BT Sport deal could just as easily have been tied into the cash BT paid Sky to appear on the satellite EPG.