Not Neutrality

It’s been a busy month for those of us who love streaming video and are suspicious of the cable or telco companies that function as our broadband providers.

First, there was the announcement that Comcast is acquiring Time Warner Cable to increase its position as the largest provider of multichannel video and broadband Internet in the United States. Second, Netflix released the second season of House of Cards over President’s Day weekend led to some quality of service issues for Verizon customers in the Washington, DC area. It was such a popular story that it was the basis of a sales pitch for a Roku Streaming Media player, warning that the days of streaming video might be numbered. Third, over the weekend, a Comcast announced that it had struck an interconnection agreement with Netflix. All of this news comes within the context of a DC district court ruling that the FCC lacks the authority to enforce net neutrality rules over wired Internet service providers.

Dan Rayburn, who writes for the insightful Streaming Media blog, takes issue with the coverage of the Netflix-Comcast deal.

Many of these same people are also implying that because Netflix has to pay Comcast, consumers will foot the bill for this as Netflix will have to charge more for their service. This could not be further from the truth. Those stating this have no clue how Netflix delivers their content today or what costs they already incur. If they did, they would know this is not a new cost to Netflix, it’s simply paying a different provider, and it should be at a lower cost. It should actually be cheaper for Netflix to buy direct from Comcast, and they also get an SLA, which also improves quality and that’s a good thing.

Netflix and Comcast: Get a Room

I’m still trying to figure this out, but it appears that with this agreement, Netflix connects its own routers with Comcast’s. That obviates the need for Netflix to use and pay a third-party content delivery network, such as Cogent or Level3, to route its traffic directly to the ISP. Instead, Netflix will have a direct connection to the Comcast’s pipes and to its broadband customers.

One of the crazy facts about the Internet is that is very much like the telegraph network of a century and a half ago. Yes, both disrupted our conceptions of space and time, but they also share two technical details: both are based on a binary code, and both rely on relays for interconnection. Almost every single transaction you do on the Internet is converted to binary, grouped together as a stream, and then broken up into packets[1]. It then goes through a series of routers that transit your packets to your intended destination. In the days of the telegraph, your message would transit from one telegraph office to another until it finally arrived at its final destination. Messages were priced according to length and distance because you were using up more resources than someone sending a short message to the next town.

A popular Internet service such as Netflix doesn’t have just one server to distribute all of its video content. It has dozens of them. They are located in places that are nearest to their customers. The aim is to minimize not only the distance each data packet has to travel but to also minimize the number of hops. Netflix contracts with companies that provide this service, each is known as a CDN. It appears that this deal merely cuts out the “middle man,” a third-party CDN that transits the data in this case, and allows Netflix connect directly to Comcast’s routers and have access to its customers all the way to the final mile without a third-party intermediary. Comcast subscribers should have a better experience streaming video from Netflix.

Is This Neutral?

With this deal, Netflix on Comcast will be better than Netflix on Verizon. Netflix on Comcast will also be better than another comparable video service (YouTube?) on Comcast that doesn’t have an interconnection agreement. But it should not impact upstart content providers. One of the major concerns of net neutrality is whether smaller players will have their traffic treated equal to the major players. In this case, it appears that the answer is no.

That argument however doesn’t consider Netflix’s size and its footprint on broadband networks. If it truly accounts for nearly a third of all Internet traffic in the US during primetime, it has few, if any, peers. Netflix has joined a new tier of Internet content providers, something like:

  1. Websites, blogs, and commercial services hosted on one server. If you’ve ever paid for a web hosting account, chances are you did this. You can get away with doing this because you are not serving much content and can stay within the bandwidth limits of your hosting plan. A dedicated server would be next option once you outgrow your shared hosting account.
  2. Websites, blogs, and commercial services hosted across different servers. Once a website becomes even more popular, it could outgrow that one server, and will have to shift its content across a number of servers. Many sites pay a CDN for the trouble of locating servers across different locations because it can be expensive— think rent and utility bills.
  3. Netflix. It is in a class by itself, connecting directly to the ISPs network. It has outgrown the third-party CDN model and struck a deal with the ISP itself. It is both a content provider and a Tier 2 network.

Again, I’m still trying to understand all of this, but it appears that net neutrality is still important even if it doesn’t apply to this case. Content providers in the first category above are safe because their volume of bandwidth is relatively low and won’t overwhelm ISP networks. Content providers in the second category should also be safe should they not overwhelm ISP networks. However, content distributors might have cause for concern if too many of their customers are like Netflix and begin overwhelming their peer networks. It’s just hard to determine what the line might be and how much it will cost to join this elite class of an upper-tier network. It’s also hard to predict if peer agreements effectively constitute preferential treatment.


  1. This is largely metaphorical. Forgive me if my use of this terminology is imprecise.  ↩

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