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Netflix Confirms Deal For Access To Verizon's Network

timothy posted about 4 months ago | from the you-scratcha-my-back dept.

Businesses 135

An anonymous reader writes "Netflix [on Monday] confirmed that it has reached a deal to gain itself access to Verizon's network. This deal is similar to the one that Netflix already made with Comcast and should improve streaming video quality for Verizon customers. Readers should note that Netflix is paying Verizon and Comcast only to gain access to its networks by by-passing third-party transit providers like Cogent and Level 3. If the FCC's new proposal passes, ISPs like Verizon and Comcast could also charge Netflix for faster direct connections to its customers over the last mile."

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As long as the US doesn't reign in on monopolies (0)

Anonymous Coward | about 4 months ago | (#46866969)

monopolists will continue using their position of power.

Re:As long as the US doesn't reign in on monopolie (2, Funny)

Anonymous Coward | about 4 months ago | (#46867015)

Have you ever lived anywhere else? The US is the best thing going, dude. I speaks from experience.

Re:As long as the US doesn't reign in on monopolie (2)

Roxoff (539071) | about 4 months ago | (#46867081)

What's that I smell?

In this case, it's garbage. i live in the UK, and I had five different options for providers for my Internet connection. If one was throttling my connection, I'd go elsewhere. The only reason Verizon and Comcast get away with this is because they have a cosy little cartel, and together hold Netflix to ransom.

Re:As long as the US doesn't reign in on monopolie (1)

drinkypoo (153816) | about 4 months ago | (#46867175)

94,060 square miles vs 3,794,101 square miles. 661.9 people per square mile vs. 88.6 people per square mile. Even if you account for something like half of the country being owned by the federal government and thus more or less uninhabited, it's still never a surprise when we have less competition in a particular market.

Re:As long as the US doesn't reign in on monopolie (0)

Anonymous Coward | about 4 months ago | (#46869659)

USA's metro density is almost the same as Japan's.

Re:As long as the US doesn't reign in on monopolie (2)

Curunir_wolf (588405) | about 4 months ago | (#46867745)

What's that I smell?

In this case, it's garbage. i live in the UK, and I had five different options for providers for my Internet connection. If one was throttling my connection, I'd go elsewhere. The only reason Verizon and Comcast get away with this is because they have a cosy little cartel, and together hold Netflix to ransom.

And how's the competition in broadcast television providers working out for you?

Re:As long as the US doesn't reign in on monopolie (0)

Anonymous Coward | about 4 months ago | (#46867773)

And how's the competition in broadcast television providers working out for you?

All two of them?

Re:As long as the US doesn't reign in on monopolie (1)

Richard_at_work (517087) | about 4 months ago | (#46867923)

At last count, we have five broadcasters - over the air, Sky, Virgin, BT, and Freeview - so it seems to be working out just fine.

Re:As long as the US doesn't reign in on monopolie (1)

petermgreen (876956) | about 4 months ago | (#46868755)

Well the BBC is paid for by the TV license which is essentially a tax.

Nevertheless we have channels on the free to air terrestrial service operated by a wide range of companies and more available on pay services from several vendors using various technologies (one sattelite, one cable and a number of IPTV afaict).

Re:As long as the US doesn't reign in on monopolie (0)

Anonymous Coward | about 4 months ago | (#46867097)

Oh hai Tom Wheeler.

Re:As long as the US doesn't reign in on monopolie (1)

kruach aum (1934852) | about 4 months ago | (#46867121)

You are fucking insane. You pay exorbitant prices for terrible service, especially compared to where I live (The Netherlands) and have lived (South Korea).

Re:As long as the US doesn't reign in on monopolie (0)

alen (225700) | about 4 months ago | (#46867171)

your country is about the size of a neighborhood in NYC
south korea is the size of a small state in the USA

Re:As long as the US doesn't reign in on monopolie (1)

sosume (680416) | about 4 months ago | (#46867219)

By your reasoning the US would have to be way cheaper. Still, I get 300/300 mbps, cable tv and telephone for 60 euro/month. Which is about 80 USD. No fast or slow lanes.

Re:As long as the US doesn't reign in on monopolie (2)

CrimsonAvenger (580665) | about 4 months ago | (#46867341)

By your reasoning the US would have to be way cheaper.

Umm, no. It's way more expensive to run miles of fibre per customer than yards of fibre per customer. Small areas are always cheaper to do than large areas.

Note that one key element of cost of any service is population density, not population. 6000 people within a miles of each other is cheaper and easier to provide service to than 6000 people within 100 miles of each other.

Re:As long as the US doesn't reign in on monopolie (5, Insightful)

smooth wombat (796938) | about 4 months ago | (#46867515)

Note that one key element of cost of any service is population density, not population.

So what's the excuse for high prices and slow speeds in places such as New York, Los Angeles, San Francisco, Atlanta, etc? Those would certainly qualify as population dense.

The fact of the matter is the FCC, just like Congress and local governments, has been bribed to allow near monopolies to exist rather than enforcing existing laws regarding competition. As a result the U.S. continues to fall further and further behind the rest of the industrialized world in broadband penetration, speed and obviously, price.

Currently we are ranked lower than places in the former Soviet Union for both speed and price, and well behind places such as Taiwan and Hong Kong. You can keep using the excuse of population density and large land area, but the reality of the situation is we have only 3 (maybe 4) providers in this country who have tacitly agreed not to compete with each other, the end result being what we have now: low speeds for high prices.

Link one for reference [journalistsresource.org]

Link two for reference [geekwire.com]

Link three for reference [nytimes.com]

Note that all of the above links are from November-December of 2013, less than six months ago so the information is up to date.

Re:As long as the US doesn't reign in on monopolie (2)

alen (225700) | about 4 months ago | (#46867807)

NYC is fairly fast. time warner's slow speeds are 15/1. FIOS is 15/5
time warner is upgrading their network here and my 15/1 will go up to 50/5 some time this year with no extra cost

the low average speed is people out in rural areas who can't get high speeds. they move out there and then complain why no one wants to spend $50,000 to run fiber to their home for $50 a month in revenue

Re:As long as the US doesn't reign in on monopolie (1)

smooth wombat (796938) | about 4 months ago | (#46867943)

15/5 is shit. The speed should have been doubled years ago and the price should be substantially lower. For 15/5 Verizon wants to charge me $75/month and I'm hardly in the boondocks. For that speed the price should be $45.

My points still stand. We have slow speeds and high prices in this country as a direct result of no competition.

Re:As long as the US doesn't reign in on monopolie (1)

alen (225700) | about 4 months ago | (#46868571)

yeah, verizon spent over $100 billion to deploy FIOS and run fiber backbones to their cell towers. all the money was paid by issuing debt.
your monthly price has to reflect the cost of paying it off along with paying interest on it

and they still have to send broadcast TV through their network which limits the speed of the internet. cord cutters are still around 5% of the total market

Re:As long as the US doesn't reign in on monopolie (1)

CheshireDragon (1183095) | about 4 months ago | (#46869181)

I don't understand why people are paying shit prices and getting slow speeds.
I have FiOS and I pay 80$/mo for 50/25 that usually runs at 64/34. I think that's fairly reasonable. I could upgrade to 150/50 for something like 130$/mo, but I don't need those obnoxiously high speeds when I can D/L a full 1.2GB movie in 3min on my current connection. Oh and I live just outside Dallas, TX if geographical location is going to be brought into it.

Re:As long as the US doesn't reign in on monopolie (0)

Anonymous Coward | about 4 months ago | (#46869197)

75/35 verizon fios is $95 a month in Baltimore County, MD. I have no idea where you are but you're getting shafted.

Re:As long as the US doesn't reign in on monopolie (1)

Anonymous Coward | about 4 months ago | (#46869033)

15/5 is a complete and total joke. I live in a small city (only about 60,000, in Canada - which by the way, far less densely populated) - and I have a 50/30 mbps connection - with 250/30 readily available if I felt the need. With no usage caps, or purposely slowing down netflix or any of the other BS that goes on with US connections.

You only think that 15/5 is decent because you have no other real options and don't know any better.

Re:As long as the US doesn't reign in on monopolie (1)

Bengie (1121981) | about 4 months ago | (#46869811)

$50k to run fiber to a single house, but $700/house to run fiber to a bunch of houses at the same time. Funny how that works.

Re:As long as the US doesn't reign in on monopolie (1)

NotDrWho (3543773) | about 4 months ago | (#46868327)

Umm, no. It's way more expensive to run miles of fibre per customer than yards of fibre per customer.

That doesn't explain the shitty prices and service in urban areas in the U.S., only the rural ones.

Re:As long as the US doesn't reign in on monopolie (1)

Bengie (1121981) | about 4 months ago | (#46869803)

Running fiber is about 10% of the total cost. You may want to try a different argument. Comcast spent $10k/customer upgrading their copper network over the past 5 years, even if you were out in the wilderness with 1 house per square mile, the cost of running fiber is still only about $3.5k-$5k. Actually, it's more expensive to run cables in high density populations because of the lack of actual ground. Much more expensive to dig up concrete than to poke a hole in some grass.

The optimal density is near that of a suburb for around $1.8k/house, not some 80 story apartment building. On average, it costs about $2.5k to hook up a house, but only $700 to pass it with fiber. "Passing" a house just means you run fiber to the property, but you don't send anyone over to actually plug everything in. And the price difference between dedicated and shared fiber is about 1%. Many ISPs doing fiber use dedicated fiber to the house, but multiplex them together at the CO to increase port densities and reduce power costs, but it's relatively simple for one of these ISPs to quickly switch a given customer over to a dedicated active Ethernet port without making any other changes.

Re:As long as the US doesn't reign in on monopolie (0)

Anonymous Coward | about 4 months ago | (#46867261)

That's not the point, just because there is a geographical reason that the US is a corrupt oligarchy ruled by monopolies and cartels, it doesn't mean it isn't worse than smaller countries.

Re:As long as the US doesn't reign in on monopolie (2)

Lord Lemur (993283) | about 4 months ago | (#46867797)

This argument is 50% true / 50% bullshit. If you carveout a slice of our fine nation from Boston to DC, you get a population density of about 930 people per square mile. Granted, this isn't by any means close to the whole country, but it is very dense as european nation size land masses go. It provides 1/5th of our GDP, 17% of our population and only 2% of our landmass (about 76Kmiles square). This part of the nation has horrible internet access relative to similarly wealthy and dense nations that didn't subsidise while deregulating telecoms. It is also less compeditive, with fewer entrants, and more expensive for similar teir of service. Perhaps instead of giving the telco's more control over their network we should, idk, what are the successful nations doing. Let's copy them.

Re:As long as the US doesn't reign in on monopolie (0)

Anonymous Coward | about 4 months ago | (#46867583)

The US (ie Big Government) is going to reign in who, exactly?
 
You're asking for a big government solution to an already big government problem.
 
And I'm not saying that deregulation is a solution. I'm just saying that your "solution" is to have more government doing what the government already does. Don't you see the problem here? It strikes me like education in the States. We pay more than any other country per student for public schooling. When that schooling fails to live up to the standards we would like to see what is the solution? Throw more money at it?
 
Get your head out of the sand. The government is just as corrupt (if not more so) than and of these "monopolies" you're cawing on about. You're asking the wolves to regulate other wolves by adding more wolves to the pack. What you're asking for isn't a solution.

scumbag companies that want more and more! (0)

Anonymous Coward | about 4 months ago | (#46866989)

its like a never ending battle. the ISP probably just paid of the FCC..

last mile access (1)

jaredmauch (633928) | about 4 months ago | (#46867007)

Now is the time if you care to have everyone you know stand-up for *decreased* regulation in the last mile and locally, not more. The cost of building high speed access to your location is not in the long-haul but the local access network. Long-haul costs are at their lowest point ever, but getting to the major locations is always the expensive part. Labor costs, including engineering and permits make the cost of installing fiber or other technology insignificant.

I get a deal to kill Beta? (0, Offtopic)

Anonymous Coward | about 4 months ago | (#46867013)

Beta is killing Slashdot, after all.

Triple dipping? (5, Insightful)

Dancindan84 (1056246) | about 4 months ago | (#46867025)

If the FCC's new proposal passes, ISPs like Verizon and Comcast could also charge Netflix for faster direct connections to its customers over the last mile."

So the ISPs would be able to charge their customers for access (which is often tiered), companies like Netflix for access and then companies like Netflix AGAIN for faster access. The go to excuse that they use is that they're infrastructure can't support giving everyone everything, but they took billions from the government to build out infrastructure and then never did it. Oh, I guess that makes it quadruple dipping?

Re:Triple dipping? (1)

Dancindan84 (1056246) | about 4 months ago | (#46867039)

Gah!
s/they're/their

Re:Triple dipping? (1)

CrimsonAvenger (580665) | about 4 months ago | (#46867277)

What's really sad about that mistake is that you only made it the once. The first time you used "their", you did it correctly.

Re:Triple dipping? (0)

Anonymous Coward | about 4 months ago | (#46867229)

Easy solution: take a page from Obamacare and requre ISPs to spend 80% of their revenue on network infrastructure or refund the difference.

Re:Triple dipping? (-1)

Anonymous Coward | about 4 months ago | (#46867239)

whine harder online, you might accomplish something...

(lol no you won't)

Re:Triple dipping? (0)

Anonymous Coward | about 4 months ago | (#46869009)

It accomplished influencing my opinion on the issue. What else did you think Dancindan84 was going for?

Re:Triple dipping? (1)

Anonymous Coward | about 4 months ago | (#46867291)

If the FCC's new proposal passes, ISPs like Verizon and Comcast could also charge Netflix for faster direct connections to its customers over the last mile."

So the ISPs would be able to charge their customers for access (which is often tiered), companies like Netflix for access and then companies like Netflix AGAIN for faster access. The go to excuse that they use is that they're infrastructure can't support giving everyone everything, but they took billions from the government to build out infrastructure and then never did it. Oh, I guess that makes it quadruple dipping?

Well, yeah.

Governments gave those cable companies the monopolies in the first place. Now those governments work with the cable companies to the benefit of both.

It's called fascism.

Nice, ain't it?

I have a great idea! Let's give that government MORE tax revenue to use against us! And while we're at it, let's turn over an entire1/6 of the country's economy to that government by putting it in charge of health care.

The more we put government in charge of , the more we ask the government to "solve our problems", the more we put power into the hands of a fascist oligarchy. It's called regulatory capture [wikipedia.org] .

The result we see here is a perfect example of that.

Re:Triple dipping? (1)

vux984 (928602) | about 4 months ago | (#46868161)

Governments gave those cable companies the monopolies in the first place. Now those governments work with the cable companies to the benefit of both.

It's called fascism.

In what universe is that "fascism"?
It's just plain old corruption and greed.

Re:Triple dipping? (1)

Charliemopps (1157495) | about 4 months ago | (#46867609)

You have no idea what you're talking about. I get tired of having to correct people on this subject.

The cost to support your internet connection is directly related to the population density in the area you live in. Live in NYC? It's a lot cheaper to provide you service. Live in Rural Montana? The federal government just subsidized many telcos to provide internet to customers like this and it averaged $350,000 PER PERSON to get them internet. No, I'm not kidding either.

We live in a rich country where people can afford to not live packed together like sardines. There's a downside to this, and its that people that live outside city limits are expensive to provide public services to. By rural I mean, where your cable television footprint ends... this is a good measure because cable companies are not required to provide service to everyone like telcos are.

Go to Europe and Asia and you have 2 major factors that make internet a lot cheaper to provide. First, the population density is a lot higher. It's pretty rare to find areas where you only have 100 people running off 1 remote, mostly because their rural population is too poor for internet or telephone. Second, most of those countries do not require their telcos to provide you with access. If its too expensive to provide service, they just don't do it. In the US it is very rare for a customer to be refused service. There are situations, for example a lot of telcos wont provide service in certain parts of the mexican border because it's considered too dangerous to send technicians there. Or if providing access would require taring up a major road, etc... but again, it's very rare.

Netflix was completely irresponsible in the way they designed and maintained their service. They were approached by every major ISP in the country with plans to help alleviate the problems they were causing in the ISPs last mile. The could have allowed people to cache movies. They could have made peering agreements. They could have done hundreds of things, but netflix flat out refused to work with the carriers. Yes, the carriers need to find ways to improve their networks. But carriers are damned near bankrupt in this country because they are under heavy regulation by the feds. Their competition is not. AT&T has spent the last 15 years selling off nearly every rural customer they have. Do you think they'd do that if it was such a profitable business and all those government subsides were just free money?

If you live in a metropolitan area, you're basically subsidizing the customers that live in rural areas. Also, you get a huge discount on your bill to accept the fact that 100% of your bandwidth will not be available 100% of the time. The kind of service you're expecting is called a T3. Get a T3 and viola, your internet will work exactly how you're expecting your DSL/Cable to work. Now look up the price. That's what it'll cost you. It's a very competitive market, so those prices aren't inflated for profit, the carrier likes only makes a few dollars a month at those rates. Good luck.

Re:Triple dipping? (2)

Dancindan84 (1056246) | about 4 months ago | (#46868043)

Older article, but talks about how ISPs are making huge margins while actually reducing their capital investments:
http://arstechnica.com/tech-po... [arstechnica.com]

Two more recent articles looking at the margins ISPs make:
http://techcrunch.com/2011/07/... [techcrunch.com]
http://gigaom.com/2011/05/12/n... [gigaom.com]

True revenue and profit reports aren't easy to get ahold of for the big ISPs. Yes, I'm sure the profits are higher in higher density areas. No, I never made any comparisons to prices paid in North America vs. Europe and Asia. The fact remains that the big ISPs took huge amounts of money SPECIFICALLY to provide broadband to rural areas. They can't then turn around and say they couldn't do it because the cost was prohibitive due to population density. They knew the populations when they took the money. You make a statement like the big providers are going bankrupt and tell me I have no idea what I'm talking about, without providing any sources?

Re:Triple dipping? (2)

JWW (79176) | about 4 months ago | (#46868457)

The margins that the big ISPs operate at are obscene.

The "EVIL" oil companies make billions on tiny margins, around 8%.

The are article quotes nearly 40% margins for the big ISPs. This is a sign of a monopoly market, of collusion, of protective government regulation, basically is a sign that the big ISPs are really really fucking evil.

It a true market a 40% margin would not stand.

The FCC needs to either work for the citizens of this country and make the internet common carrier, or they might as well disband. Outside of making the internet common carrier, almost every action they are taking is as bad than doing nothing at all.

Re:Triple dipping? (1)

SteveFoerster (136027) | about 4 months ago | (#46869617)

But if they disbanded they wouldn't be able to keep serving their true constituency so ably.

Re:Triple dipping? (1)

JWW (79176) | about 4 months ago | (#46870583)

Thats too true.

Re:Triple dipping? (1)

Charliemopps (1157495) | about 4 months ago | (#46870615)

Again, you have NO IDEA what you are talking about. Every single ISP on that list is a cable company. Who are almost completely unregulated. They briefly mention AT&T and Verizon but have no data. I can't speak for the cable industry, I'm sure there are very good reasons for what their rates are set to or they'd be destroying telcos even faster than they already are.

I've worked for 3 major Telcos in my life including AT&T, they all lose money on DSL. Where they make their money is in services... IP phones, installs, managed software etc... residential broadband loses money every time. The only reason they invest in it at all is because it leads customers to use the ISPs other services. AT&T wants to divest themselves of all their rural customers. I wouldn't be surprised if they dumped their consumer services at some point and moved towards only supplying Wireless and trunking services. If you think your bill is high now, wait until the only service you can get is through a cellular hotspot. That's what's coming if better technology doesn't come along soon.

This is a complex, tough issue that hundreds of thousands of engineers have been working on for more than a decade. It will get solved by smart techs and good management, not by you spouting conspiracy theories regarding technologies you have no experience with. If there actually was a simple solution to this, any one of AT&Ts competitors would have opened up shop and put them out of business years ago. Oh wait, that's right, you keep going on and on about their monopoly. They have no monopoly. They have an agreement with the local city government that they will maintain the local loop for them. In the past it meant they were the only phone company, now it means they're required to maintain a 60 year old network of failing copper wires that no-one wants to use. There is no real monopoly any longer and those agreements are seen as a nose by everyone in the industry.

Re:Triple dipping? (0)

Anonymous Coward | about 4 months ago | (#46868255)

You do not that netflix offers free proxy boxes for ISP to put in their network so that their customers connect to the proxy instead of over the ISP's internet connection.

Re:Triple dipping? (2)

Arker (91948) | about 4 months ago | (#46868385)

"You have no idea what you're talking about. I get tired of having to correct people on this subject."

You should quit 'correcting' people because you are wrong.

The vast majority of your post is simply distraction - some of what you say is true but it's not relevant.

"Netflix was completely irresponsible in the way they designed and maintained their service. They were approached by every major ISP in the country with plans to help alleviate the problems they were causing in the ISPs last mile."

And there is the crux of your error. Netflix simply provided a service. The ISPs customers then wanted to use that service via the connection they already paid for. And that use *reveals* - does not create, mind you, but *reveals* - the fact that the ISPs are overselling and under-delivering.

And they have been for decades. The big ones have taken massive subsidies to build infrastructure, pocketed the money, but refuse to actually build the infrastructure.

And now they are using the crappy state of their infrastructure as an excuse to shake down third parties.

And you are defending this? Seriously?

I hope you are getting paid a lot for this, because your personal integrity will not recover.

Re:Triple dipping? (1)

Meeni (1815694) | about 4 months ago | (#46868947)

It's Europe, not Africa.

Re:Triple dipping? (1)

umafuckit (2980809) | about 4 months ago | (#46868225)

Their infrastructure probably can't support what they're selling. In recent months my FiOS connection has become a mess. The Speakeasy speed test suggests I'm still getting the peak download speed I paid for, but I have suspicion these data are being cached and that's why it looks fast. General browsing has become very laggy. e.g. Google maps is very frustrating to use. Traceroute sees a lot of time outs to maps.google.com I haven't bothered contacting them because I'm moving in a month. When I cancel my service I plan on telling them that the slow speeds are the reason I'm doing so. At this point I really can't be bothered to talk to their tech support.

Where's my rate cut? (5, Insightful)

Mr D from 63 (3395377) | about 4 months ago | (#46867029)

As a customer, where is my rate cut?

Monopolies aside, a great problem with the proposed changes is that ISPs can charge whatever they want for connection fees and don't have to disclose. That allows them to shut out anyone they desire. Way too much power.

Sadly, a customer class action suit might be the only chance for Net Neutrality.

Re:Where's my rate cut? (1)

Anonymous Coward | about 4 months ago | (#46867075)

As a customer of Verizon FiOS, I'm happy that something is happening. Netflix delivery has been horrible for the last few months. My choices are either Comcast or Verizon and Verizon doesn't give me any gruff over my usage pattern like Comcast did.

While I hate this and wish Verizon would just be declared a common carrier, if the choices are either Netflix pays to get to my house or Netflix service sucks...I'd choose the former.

Re:Where's my rate cut? (3, Interesting)

Dancindan84 (1056246) | about 4 months ago | (#46867133)

And unfortunately that's going to be the downfall of net neutrality. Too many people who would prefer to have equal access to everything... until they can't watch their show without it buffering. The big ISPs know that the will to fight is low enough they can do what they want and get away with it.

Re:Where's my rate cut? (5, Interesting)

Jason Levine (196982) | about 4 months ago | (#46867247)

It's even worse than that. The big monopolies know that the "bad connection issues" aren't likely to blow up in their faces - or, if they do, customers will be powerless to do something about it. If you're Joe User and Netflix won't stream, chances are you'll blame one of two entities: Netflix or your ISP.

If you blame Netflix, you can put pressure on Netflix by threatening to leave. After all, there are competing services such as Amazon Prime. (You can argue that said services might not be as good as Netflix, but they are still alternatives.) So Netflix would feel pressure to do whatever it takes to get the connection "working" again, even if it meant paying the ISP's fast lane bribery fee.

If you blame your ISP, you can try to threaten to leave, but your ISP will just laugh at you. Most Americans have only one or two ISPs in their area. If you leave the one and the other does the same thing, what option do you have? And if you only have access to one ISP, what option do you have? You can ditch all Internet access, but the ISPs know you won't do that. So you're forced to grumble and complain online, but still pay whatever the ISP demands you pay for the level of service they deign to provide you.

The ISPs are essentially playing a game of chicken with Netflix except the ISPs are in an armored SUV and Netflix is riding a bicycle.

Re:Where's my rate cut? (0)

Anonymous Coward | about 4 months ago | (#46868317)

In my case the competitor was comcast. I was starting to seriously consider dumping verizon specifically because netflix had worked out their connection problems with comcast. That improvement gave comcast a distinct advantage over verizon for me.

I'm happy that Verizon is now going to be on the same footing RE: netflix, as it means I don't have to make that choice (I generally prefer Verizon).

Any chance Netflix is working on a deal with AT&T so my streaming will be more reliable when I'm away from home?

Re:Where's my rate cut? (1)

interkin3tic (1469267) | about 4 months ago | (#46869359)

In the case of netflix and amazon, they're sorta the same entity. [networkworld.com] Hulu is probably the one they fear, since they are backed by the networks and "content producers" who are interested in regaining the distribution side of things. And, bonus, Hulu is part owned by comcast. I'm obviously not in any board room discussions, but who wants to bet that if netflix and amazon don't pay up, their customers will suddenly find that netflix and amazon are nothing but buffering while Hulu offers everyone a free month of mega super duper high-def hulu plus.

One could further conjecture that the Hulu conspiracy players would be fine if ALL streaming companies including Hulu took a hit, as they'd like nothing more than to stop the cord cutting momentum and get people back on cable.

The geek gets shoved asside again. (1)

westlake (615356) | about 4 months ago | (#46868647)

Too many people who would prefer to have equal access to everything... until they can't watch their show without it buffering.

What you are really saying is that the way most people use their broadband Internet service is changing ---- and triple AAA streaming media content from Netflix and others has priority.

Re:Where's my rate cut? (1)

Mr D from 63 (3395377) | about 4 months ago | (#46867197)

As a customer of Verizon FiOS, I'm happy that something is happening.

I don't disagree, and am not opposed to schemes where the biggest content providers pay some of the cost of infrastructure. But a large part of your poor NETFLIX performance was intently "allowed to happen" by Verizon in the first place, even though you were paying them for quality service. Regulations for connection fees should require a set pricing structure.

Last mile content differentiation should never be allowed as long as the customer is paying for a certain quality of access.

Re:Where's my rate cut? (1)

CanHasDIY (1672858) | about 4 months ago | (#46867327)

But a large part of your poor NETFLIX performance was intently "allowed to happen" by Verizon in the first place, even though you were paying them for quality service.

That's the part that pisses me off about this entire situation - I, the customer, am paying X amount of dollars for Y amount of bandwidth; I am not paying them to spy on me, or throttle my connection, or limit what parts of the internet I can reasonably access, nor did I ever ask for or authorize such activity. Classic bait-and-switch, except nobody gets their ass handed to them for it.

Re:Where's my rate cut? (0)

Anonymous Coward | about 4 months ago | (#46867639)

" you were paying them for quality service."

Read Verizon's ToS. Internet speeds are not guaranteed.

Re:Where's my rate cut? (2)

L4t3r4lu5 (1216702) | about 4 months ago | (#46867855)

That's the part that pisses me off about this entire situation - I, the customer, am paying X amount of dollars for Y amount of road use; I am not paying them to spy on me, or get caught in traffic, or limit how many vehicles I want to put on the road for that one flat fee, nor did I ever ask for or authorize such activity. Classic bait-and-switch, except nobody gets their ass handed to them for it.

The problem is that you're not expected to be able to use your whole bandwidth all the time, and you were never supposed to. Yes, they needed to tell you that and they didn't, but ultimately that is the way the network is designed. If you want a constant 20Mb downstream, go lease a bonded line. You're looking at $15,000 PCM.

Re:Where's my rate cut? (1)

CanHasDIY (1672858) | about 4 months ago | (#46868061)

Methinks, through really, really bad analogy, thou hast missed my point.

You didn't seriously compare public roads to private services, did you?

Re: Where's my rate cut? (0)

Anonymous Coward | about 4 months ago | (#46867105)

Man, if only verizon's customers had paid for access to netflix's content. Oh....wait.

Re:Where's my rate cut? (1)

Roxoff (539071) | about 4 months ago | (#46867169)

As a customer, the download rate you'll be getting has nothing to do with infrastructure quality or how much you pay, it's determined by some cosy little deal between your ISP and a movie provider. You have no freedom to enter a contract knowing what you're buying from your ISP - so it sounds like a class action suit could do very well.

But then again, the network infrastructure is owned by the ISP - they can charge what they like for it and to whoever they like. What you really need is competition, at least one other network infrastructure provider. That'd kick the protectionist blackguard ISP to change their stupid policy over throttling.

Lol (0)

Anonymous Coward | about 4 months ago | (#46867209)

They will INCREASE your fees now that they have "faster connection to Netflix" LMAO Fuck Verizon

Re:Where's my rate cut? (1)

The New Guy 2.0 (3497907) | about 4 months ago | (#46867237)

Sorry, this is making the server better. Rate goes up when that happens.

Re:Where's my rate cut? (0)

Anonymous Coward | about 4 months ago | (#46868601)

Agreed.

Strategy - flip it to the end user (0)

Anonymous Coward | about 4 months ago | (#46867173)

I believe the strategy will be to provide the end user with the tools to know which feeds are speed up and which are slowed down. Then mobilize the end users to demand their suppliers not effectively throttle the services the end user is paying to access.

IE if the end user gets a tiered service where access to one of the services they pay for is not on par with the others the end user should get a discount.

Then a service like netflix can do competitive analysis: In detroit roadrunner users get this level of service and comcast users get that level of service.

Not news. Netflix bought net connection like us (5, Interesting)

raymorris (2726007) | about 4 months ago | (#46867179)

The fact that Slashdot is treating this as news seems to be confusing some people. Netflix just bought bandwidth from Verizon service, just like a million other people do. You pay for your connection, Netflix pays for theirs.

As the summary mentions, but apparently not clearly enough, this has nothing whatsoever to do with net neutrality. Netflix was getting a connection from Cogent (like I do). Now they are getting a connection from Verizon.

Since they use a lot of bandwidth to alot of places, they buy connections from several ISPs, again just like I do, and everyone else who runs popular web sites. That's how it's done and how it's always been done. The only thing new is that Netflix is whining about paying their bills.

Re:Not news. Netflix bought net connection like us (4, Insightful)

kaiser423 (828989) | about 4 months ago | (#46867373)

Pretty succinct summary, but it ignores some of the subtleties. Netflix was paying Cogent, and then Verizon and Comcast basically clogged that interconnect either by neglecting it, not upgrading it, or what have you, making the Cogent connection useless and used it as a bargaining chip in negotiations. Being able to degrade your competitors is typically a regulatory issue, hence the call for net neutrality. It obviously wasn't a technical issue given that the ISPs were able to triple their speeds overnight. I don't think that there's a problem if Netflix wants to buy bandwidth directly from the ISP if it's cheaper/better. But, given that the ISP can essentially force Netflix's hand by making all other competitors service substantially worse, it seems more like rent seeking than a competitive marketplace.

Re:Not news. Netflix bought net connection like us (2, Interesting)

alen (225700) | about 4 months ago | (#46867631)

yeah, cogent agreed to deliver a lot of data from netflix knowing they didn't have the bandwidth on the ISP sides of their networks to actually deliver it
and if you read the news last year, they refused to upgrade those connections and cried network neutrality

Re:Not news. Netflix bought net connection like us (1)

dloyer (547728) | about 4 months ago | (#46867511)

Wrong.

This is about monopoly pricing and you will pay the price.

Verizon already charges consumers the most they can. They have maximized the revenue flow from consumers.

Now they want to charge content providers for access to their users. A whole new source of incremental revenue.

This has nothing to do with the cost of providing service. This is all about maximizing revenue. There is NO benefit to the consumer other than Verizon will provide the service they already paid for. Consumer bills will not be reduced since the consumer is already willing to pay it. But the cost of services like Netflix will increase. So there will be a net increase in wealth transfer from consumers to the shareholders of Verizon and ATT.

It will mean that content providers will no longer be able to buy bandwidth from one source. They will need to make deals with every ISP. It is exactly like every road becoming a toll road.

The actual cost of data center to data center bandwidth is shockingly low. I buy bandwidth for our data center and the stated arguments from Verizon to justify the new toll rings hollow. The new charges are not to upgrade equipment. That costs very little. It is just a new revenue source.

Re:Not news. Netflix bought net connection like us (1)

alen (225700) | about 4 months ago | (#46867617)

if you sell so much content like netflix does it only makes sense to connect directly to ISP's instead of having your content fight for space with all the other content on the tier 1 networks
and netflix had no business pushing out super hd if cogent or any other partner couldn't deliver it

the benefit to consumers is Netflix (2)

raymorris (2726007) | about 4 months ago | (#46868445)

When Netflix pays their hosting bill, like every other web site does, the benefit to consumers is that they can watch Netflix. Netflix was trying to be the only web site in the world who doesn't pay their bandwidth bill, without having their service cut off for nonpayment.

Initially, Netflix tried what a lot of new webmasters try - buying bandwidth from the cheapest, crappiest provider there us, Cogent. Cogent IS cheap. They are cheap because they don't consistently deliver the bandwidth they promise, and what they promise is low quality (high jitter, medium-high latency). Like most people running web sites, Netflix has discovered that if you want high quality, reliable bandwidth, you need to get it from someone other than Cogent.

Now Netflix is doing what we, and most successful web sites, have always done - buy bandwidth from other companies as well Cogent. You set up your routers to use Cogent when their connection to the destination happens to be good at the moment. If Cogent isn't fast to that destination at the moment, you route the packets via a better, more expensive provider.

Re:the benefit to consumers is Netflix (2)

Bengie (1121981) | about 4 months ago | (#46869973)

Netflix couldn't purchase from anyone other than Cogent, Verizon refused to accept Netflix traffic from anyone else. Even Level 3 tried to help out and Level 3 said Verizon wanted to charge more for peering than transit. Verizon was purposefully trying to price gouge Netflix.

Re:Not news. Netflix bought net connection like us (0)

Anonymous Coward | about 4 months ago | (#46867645)

This is like you having to pay Amazon and Google in addition to your actual ISP to see content hosted on their servers.

No, it's like Amazon paying their bill,which they (1)

raymorris (2726007) | about 4 months ago | (#46868195)

This is about Netflix switching which provider they use, and Netflix paying their provider for bandwidth. It's exactly like Amazon paying their own bandwidth bills, which they do.

Netflix decided to sell a service which requires a lot of bandwidth - HD video. Now they are crying about paying their bill. I set up the servers for one of the first video sites on the internet back in the 1990s. All that bandwidth was expensive. We paid our bandwidth bill. Fortunately, our calculations were correct - though we paid alot more for bandwidth than the picture sites did, we also got a lot more users, which brought more revenue.

Re:Not news. Netflix bought net connection like us (3, Interesting)

JerryLove (1158461) | about 4 months ago | (#46868019)

I'm not sure you've entirely grocked the idea of an "Internet" and are confusing it with an "Intranet".

Verizon has advertized that I can buy X amount of internet connection, and then (deliberately) failed to create the upstream connections to deliver on that promise. Netflix, one of those up-stream providers who pays Cogent for access to the internet, is now having to pay Verizon for access to its intranet which, according to my earlier statement, is supposed to be internet.

Now we all realize that bandwidth upstream isn't infinite. If everybody and their brother decided to attach to my server at home, they cannot expect that only their paid-for internet connection would determine their connection speed (as mine would come into play), and even at a peering level, congestion is an inevitability at some point.

But the goal of Verizon, in servicing its customers, is *supposed* to be doing the best it can to provide promised internet badnwith to locations that its customers are tyring to reach. We know they will not succeed perfectly.

The issue is when Verison begins to, for the sake of profit, selectively limit peering. They are no longer attempting to fulfill their promise to give me internet access at a given bandwidth. It is this willfulness that moves us from "the way the thing works" to our gripe with the way the major ISPs are operating.

Let me put this in a different context. If TWC suddenly solved all its problems with NetFlix in my area, and if the public at large was aware of this, there would be a migration from Verizon to TWC. At that point, Verizon would suddenly improve its peeing with Netflix.

The only reason they did not, is because they are duopoly and so did not have to. That's pretty-much the bright-line test for whether there is abuse.

ISPs should be common carrier.

web hosting isn't free (0, Troll)

raymorris (2726007) | about 4 months ago | (#46868315)

Check the IETF standards discussions for IPv6 and HTTP back in the 1990s. You might see that I've been groking (and designing) this internet thing for a while.

Where you're being tricked is that you don't realize Netflix is basically just asking for free web hosting. Free hosting for the highest bandwidth site in the world. Netflix is NOT a peer of Verizon, so their attempt to call their upstream connection "peering" is misleading.

You pay Verizon to connect YOU to the internet. Netflix wants to pay nobody to connect them to the internet. They wanted Verizon to provide them with free bandwidth by providing multi-gigabit connections for free. Sorry Netflix, if you want gigabits of upstream bandwidth you have to pay for it, just like the rest of us.

Re:web hosting isn't free (1)

JerryLove (1158461) | about 4 months ago | (#46868443)

Check the IETF standards discussions for IPv6 and HTTP back in the 1990s. You might see that I've been groking (and designing) this internet thing for a while.

Openeing your response by poinding the table is not a good sign. (I started in the 1980s, so I win)

Where you're being tricked is that you don't realize Netflix is basically just asking for free web hosting. Free hosting for the highest bandwidth site in the world. Netflix is NOT a peer of Verizon, so their attempt to call their upstream connection "peering" is misleading.

You pay Verizon to connect YOU to the internet. Netflix wants to pay nobody to connect them to the internet. They wanted Verizon to provide them with free bandwidth by providing multi-gigabit connections for free. Sorry Netflix, if you want gigabits of upstream bandwidth you have to pay for it, just like the rest of us.

Actually: I pay Verizon for a connection to NetFlix. It's not something Verizon is being asked to provide for free.

Cogent (which has one of the highest-ranked connectivity degrees on the Internet) is who Verizon is failing to peer sufficiently with. They are not providing me the connectivity to the internet which I am paying them to provide. They likely would be falling over themselves to do so (perhaps going so far as to offer NetFlix that free access you assert) were they losing customers to other services that did offer such connectivity... but because of the duopoly, there's no competition for them to lose to.

For comparison: See Google Fiber's performance with NetFlix.

Let's take this to an extreme. Verizon cuts off all communication to everyone not paying them directly. That includes all other backbones (like Cogent, AT&T, UUNET, etc in the US and all foreign sites). All sites not directly paying Verizon from everywhere around the world stop working entirely.

Is that "internet access"?

What's the difference between "not working because of no connection" and "functionally not working because of deliberately insufficient connection"? Practically none.

Where can I find that package? (0)

raymorris (2726007) | about 4 months ago | (#46868569)

>> You pay Verizon to connect you to the internet.
> Actually: I pay Verizon for a connection to NetFlix.

Verizon sells Netflix service? Where can I find that service plan on their web site? I only see internet service.

> I started in the 1980s, so I win

If you've been running networks for more than a month, you know Cogent IS the cheapest, crappiest, upstream you can buy. Netflix discovered WHY Cogent IS the cheapest - that Cogent doesn't consistently provide top quality. You and I have known that for 20 years.

Re:Where can I find that package? (1)

Arker (91948) | about 4 months ago | (#46868983)

Yeah I have been in the game since the 80s also, and I think you are full of roasted excrement. If the service degradation had been a technical rather than a political issue then why is it that customers all across the country reported the issue was resolved when they rerouted through a VPN hmm? Cogents fault my arse.

We pay for Internet access, not intranet access. No one wants the latter - compuserve and prodigy and the like are not what we want. That it is what the ISPs would prefer to give us anyway, of course, but they know we wont buy it if we have a choice.

This is a move to take away that choice - to kill the internet and replace with a series of walled gardens that can be more effectively 'monetized.' Without even having to coax the customers into signing new contracts!

If this is legal law is dead.

Re:Not news. Netflix bought net connection like us (1)

Monoman (8745) | about 4 months ago | (#46869267)

I have no problem if Netflix wants to pay for direct connections to ISPs. I do have a problem if they are forced to do it because the ISPs are tweaking their networks in such a way that Netflix is forced into the agreement.

I"m not saying that is what happened.

Re:Not news. Netflix bought net connection like us (1)

Bengie (1121981) | about 4 months ago | (#46869911)

Except people pay their ISPs for transit to access the Internet, Netflix is paying not to access the Internet, but only Verizon, and even then, Netflix still shoulders the burden of making sure they do so locally. Verizon won't even handle distance over their own network. No one pays for the kind of crap unless they have an SLA to uphold that they're selling to someone else.

Re:Not news. Netflix bought net connection like us (0)

Anonymous Coward | about 4 months ago | (#46870459)

VZ's customers are paying for VZ to at least carry traffic on VZ's network.
Netflix is providing all transit and delivering the traffic on a Silver Platter to VZ's network.

For traffic so delivered, why should the destination network ask for payment from the packet source?
    Because they can, because of the comfortable duopoly.

There are at least two solutions to this:
      1) Make clear rules for who pays who for what happens where. Enforce with common carrier regs.
      2) Separate access from ISP's like Great Britain. Use ISP competition to create reasonable rules.

I can explain this two ways.... (1)

The New Guy 2.0 (3497907) | about 4 months ago | (#46867221)

BAD: This is a violation of Net Neutrality because it's giving Netflix right-of-way on other people's ISP links.
GOOD: Netfilx is now placing servers even closer to users, so they have to travel less distance in network terms to get to the users.

Re:I can explain this two ways.... (1)

Bengie (1121981) | about 4 months ago | (#46870097)

Netfilx is now placing servers even closer to users, so they have to travel less distance in network terms to get to the users.

They're not actually. Verizon and Comcast have only agreed to open up for peering, which was already being done by the CDNs. The data did not get any closer, they just cut out the middle man and jacked up the rates. Usually the opposite happens.

OMG, the data belongs on the backbone networks (1)

alen (225700) | about 4 months ago | (#46867307)

when i watch netflix, i want my streams crossing every tier 1 network there is. i even do automated traceroutes while i watch a show.

a 2 or 3 hop traceroute? that's like a porn trailer without a money shot

Total protonic reversal? (1)

SteveFoerster (136027) | about 4 months ago | (#46869655)

I thought crossing the streams was bad?

So what's the big deal again? (2)

bickerdyke (670000) | about 4 months ago | (#46867311)

This seems to be nothing more than a peering agreement between Netflix Network and Verizon Network. And as usual, if the flow of data is not roughly symmetric, money is flowing the opposite way.

Although I think that if one of the networks isn't a transport network but a content providers own network, the usual term is "multihoming"

Netflix is no Saint Theresa (2, Insightful)

GovCheese (1062648) | about 4 months ago | (#46867367)

This is no threat to neutrality. This isn't even a neutrality issue. The carriers WERE neutral. Everyone else's traffic got the same shitty treatment, or good treatment if that was the case. But all traffic was treated equally and that is the goal of neutrality. However, peering relationships typically allow your traffic to pass if you allow my traffic to pass. But any carrier of Netflix is going to cause an imbalance and Netflix's PR wing decided to conflate the issue into one of neutrality, which is rather clever on their part. But you would be wrong to listen to them, and most of the media. Net neutrality is a laudable goal, but the core of this Netflix bru-ha-ha isn't a neutrality issue.

Re:Netflix is no Saint Theresa (0)

Anonymous Coward | about 4 months ago | (#46867513)

Yes and no.

Way back when, ISP's pushed and pulled about the same number of bits across the net. The idea was that paying for what you pushed was better than paying for what you pulled. At the time, it made a lot of sense.

The internet has changed. ISP's are now more specialized. Consumers pull far for than we push. These two things together mean the old rules don't make as much sense anymore.

Consumer ISP's sell on bits sent to the client.
Companies making the biggest changes to how the game works buy based on what they are pushing out.

The ISP makes money both ways, and is now going to make even more based on giving preferential treatment.

Does seem fair to you?

If not, it does fall into net neutrality.

Re:Netflix is no Saint Theresa (1)

alen (225700) | about 4 months ago | (#46869725)

yeah, but looking at netflix's financials they pay so little for networking services compared to their other expenses it's not even a rounding error for AT&T and Verizon. and word is comcast gave netflix a cheaper rate than cogent so it's not like they are tolling anyone to make a lot of money. figure comcast collect a few million of $$$ from netflix per year

this was more about not backing down and forcing netflix to be a good corporate citizen

Re:Netflix is no Saint Theresa (0)

Anonymous Coward | about 4 months ago | (#46867957)

Are you a paid shill or just incredibly stupid?

Re:Netflix is no Saint Theresa (1)

GovCheese (1062648) | about 4 months ago | (#46868933)

Either Netflix must connect via a provider that will have to pay a fee to the 1st Tier for their imbalanced peering relationship caused by the Netflix traffic, or they can directly connect with the providers that carry the content to the consumer. Either way, fees are incurred and yes, passed on to the consumer. This is an issue of "routing" and peering not an issue of neutrality. Incidentally, if they went with the former, the Tier 1 provider may incur fees themselves if they deliver more than they accept from whomever they are peering with. And that too would be passed on to the consumer via Netflix. One might suggest that anyone who believes the Tier 1 carriers are non-profit entities is uneducated. Netflix made the probably correct judgment that peering directly with Comcast would cost them less than whatever it would cost to pay the transit fee to the 1st Tier. Or would you rather the greater cost be passed onto you?

Nice business you have here, be a shame... (1)

paiute (550198) | about 4 months ago | (#46867421)

Yes, Netflix. Pay then for backbone access. Then pay them for last mile connections. That's probably enough to satisfy Comcast. Why would they want to find more ways to make you pay? Why would they want to squeeze every last cent out of you? That would put you out of business. Surely they don't mean to do that.

Fuck You Netflix (0)

Anonymous Coward | about 4 months ago | (#46867437)

Thanks to Netflix all these asshole ISPs are going to start demanding money from everyone.

Thanks Netflix.

Netflix price increase (2)

DigiShaman (671371) | about 4 months ago | (#46867459)

And the cost of doing this will be passed down to the consumer. Netflix confirmed that it will be raising its prices for streaming customers by 1 to 2 dollars for new customers only (depending on country). I can only imagine once this trial balloon proves viable, the rate increase will be for existing customers too. Obviously they don't want to lose existing customers now, hence the hold off. Also, a price increase is due thanks to inflation; so there is always that.

Turn around. (2)

Richy_T (111409) | about 4 months ago | (#46867881)

Verizon subscribers, you just became the product.

This sets an unfortunate precedent. I can't really blame Netflix for wanting to keep their business going but this is going to open the floodgates.

What's All this Net Neutrality Stuff? (0)

Anonymous Coward | about 4 months ago | (#46868637)

Perhaps an idea with roots in the end to end principal.
        (Dumb, general purpose network connecting smart, special purpose ends.)

This is the idea that made the Internet different than anything we have had before.
This is what lets a little guy making a new app flourish without building a special network for it.

We shouldn't need to rethink this idea because an over-the-top app makes money.
Perhaps we need to rethink how things work when 'flourish' means an app consumes 30% of the total B/W.
Likely areas to address are who does what, how it works technically, and how is it paid for.

From a technical standpoint, providing universal connections to random traffic loads is hard.
Netflix brings concentrated correlated loads which change depending on users desires.
Supporting these loads is even harder.

One way is to provide specific paths for the loads as they crop up.
This is random peering and we can see that it is a path away from a general purpose network.

In theory, one way to get back to the general network is a single, zero cost exchange point.
Any connection has two end hosts. Each host is responsible for getting his traffic to/from the exchange point.
In practice, a worldwide network can't run on a single exchange point, so this won't work.
But it gives a hint as to a path to something that might work.

Another second possible solution is a limited number of exchange points with the following rules.
  Each isp is responsible for carrying traffic from the nearest exchange point to it's customer.
  Each isp is responsible for carrying traffic from their customer to the far end exchange point.
This solution both defines a technical and payment structure.
If bandwidth and congestion rules were added, it would also define what Internet service is to an end customer.

A third and practical set of rules is to add random peering to the second solution.
If a pair of ISP's agree to address some load by peering outside an exchange point,
      then this is fine, but it doesn't change the responsibility to meet at the exchange point.
This would set the starting point for peering negotiations to what it costs each ISP to get to the exchange point.

I wonder if this might be a sufficient architectural framework to permit common carrier regulation of peering.

lucky me (1)

slashmydots (2189826) | about 4 months ago | (#46870439)

Yay, now they can spend less on content licensing for stuff I actually want to see in favor of them streaming things I don't want to see EVEN FASTER. Yay! Oh wait, I'm not a Verizon customer so actually they're just plain wasting my money with no benefit. Awesome. Why don't they really piss me off and add ads too to pay for the priority bandwidth. Ads for Verizon even. That'd complete the cycle of stupidity pretty nicely.

By the way, I'm deeply confused. Netflix does not send data above 3 megabits. I have a 15 megabit connection. Time Warner can throttle it 75% and it won't make a difference. So who cares.

Re:lucky me (1)

robot256 (1635039) | about 4 months ago | (#46870603)

To resolve your confusion: Time Warner won't throttle *your* bandwidth, they will throttle *Netflix's* bandwidth getting into their network. So even though you have 15Mbps from Time Warner, and they're only trying to push you 3Mbps, if 2 million Time Warner customers all try to get 3Mbps from Netflix through a single 10Gbps pipe, most of them will be sorely disappointed. Netflix would then have to pay Time Warner for a 100Gbps pipe.

And to be straight about this, none of it is about hardware cost. ISPs could perfectly well let Netflix co-locate at Netflix's (presumably smaller) expense and get faster speeds inside their networks without added interconnects. They just don't want to.

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