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Netflix Hoping For Free Network Access From ISPs 85

Posted by samzenpus from the working-together dept.
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."
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Netflix Hoping For Free Network Access From ISPs

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  • Wouldn't apply to Netflix (Score:4, Interesting)

    by PKFC ( 580410 ) <pkfc&hotmail,com> on Thursday July 16, 2015 @08:18AM (#50123899)

    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?

    • Re:Wouldn't apply to Netflix (Score:4, Informative)

      by Anonymous Coward on Thursday July 16, 2015 @08:25AM (#50123927)

      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?

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        Addendum:
        Netflix wants free peering & Rackspace because they lessen the load on the ISP's Network via custom Proxies.

        Basically: "Your Customers get faster Netflix while the needed external Bandwidth is reduced."
        "You get the Hardware & Software & Maintenance for this for free if you put this Box in your internal Network."

        • For some time I've been wondering if we should create some sort of "Internet Broadcast Protocol" (IBP). It could be based on the fact that there are usually a lot of network-node-computers in-between the source of a broadcast, and the recipients. The broadcaster would only output single streams of data to its nearest nodes, and each node would duplicate the data as many times as needed to pass on the data to some farther-away nodes, and so on, until each ISP duplicates the data for all its own customers t

          • For some time I've been wondering if we should create some sort of "Internet Broadcast Protocol" (IBP).

            You mean we should come up with something exactly like IP Multicast [wikipedia.org], from RFCs 988, 1054 & 1112? [ietf.org]

            • Re: (Score:3)

              by bbn ( 172659 )

              The only problem is that multicast is not actually deployed on the internet, so you can only use it locally. Sure some ISPs use it for their own TV streaming, but third parties are locked out from using it.

      • Re: Wouldn't apply to Netflix (Score:5, Interesting)

        by Charliemopps ( 1157495 ) on Thursday July 16, 2015 @09:04AM (#50124129)

        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.

        • 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 ISPs that are against these customers are only fooling themselves. Streaming is here to stay, and it's only going to become more popular. Now, this part of this message is for those of you out there who run an ISP, or work for one: If your network can't handle all your customers streaming at once, then you'd better upgrade it soon, or you're not going to exist. Get used to the idea, because it's reality.

          • Now, this part of this message is for those of you out there who run an Video streaming service, or work for one: If your network can't handle all your customers streaming at once, then you'd better upgrade it soon, or you're not going to exist. Get used to the idea, because it's reality.

            FTFY. I am sure netflix is scared because they can hardly serve a percentage of the customers at the same time, and they are probably never going to be able to serve all of them at the same time.

            • I am sure netflix is scared because they can hardly serve a percentage of the customers at the same time, and they are probably never going to be able to serve all of them at the same time.

              You've got it all twisted. Netflix would be overjoyed to have that problem. It won't be all Netflix, though. They're enjoying this moment, but that's all it is.

              • I doubt Netflix will be happy about it. Let say Netflix has 1m customers right now and they all show up at a particular time to start watching movies. Netflix cant handle it, customers gets pissed, it would be their worst nightmare, really. No all you can eat plan really provisions for everyone to be able to use the service at the same time (or all the time).

                • I doubt Netflix will be happy about it. Let say Netflix has 1m customers right now and they all show up at a particular time to start watching movies. Netflix cant handle it,

                  Netflix's hardware can handle it. The network links 'twixt Netflix and ISP can't. Who will get blamed when push comes to shove? Where there is competition, it will be the ISP.

        • But the fat guy was promised all you can eat for a certain price (which he paid). Is he not then entitled to what was agreed upon?

          Put another way, are you asking for sympathy for the restaurant that advertises a potentially money-losing offer, regrets it, but continues to offer it to new customers anyway?

        • What Netflix didn't count on was the fact that residential broadband isn't very profitable to begin with

          That doesn't line up with what I've heard- "The cable distribution giants like Time Warner Cable and Comcast are already making a 97 percent margin on their “almost comically profitable” Internet services, according to Craig Moffet, an analyst at the Wall Street firm Bernstein Research. "

        • Re: Wouldn't apply to Netflix (Score:4, Interesting)

          by bbn ( 172659 ) <baldur.norddahl@gmail.com> on Friday July 17, 2015 @04:05AM (#50126525)

          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.

          I own an ISP. This is not the way it works at all.

          Peering policy is actually a rather complex topic. How it works depends on what kind of ISP you are and your size. Small ISPs want to peer no matter what. Large ISPs typically do not want to peer at all. The balanced peering requirement is a poor excuse to say no to peering.

          As a small ISP we want to peer with all and everything. This is because any byte transmitted over a free peering is a byte that did not have to go via our paid transit circuit. It does not really matter in what direction that byte is going.

          As a residential ISP the majority of our traffic is download. The transit cost is determined by the larger of upload and download. If we can get rid of some download, we will save good money. Netflix is offering to bring some of that download to us for free.

          It is very asymmetric and it is a very good deal for both companies. It is a win-win.

          So why do large ISPs not want to do this? Because they can get away with forcing everyone to pay to deliver traffic to them. It is no longer a win for them if they think they can get Netflix to be a paying customer. Nor if they already have free peering with the big transit providers, because then they are already getting the stream for free.

          Why do mid sized ISPs not want to peer with small ISPs? If the mid sized ISP has a peering agreement with the transit provider of the small ISP, they are already getting the traffic for free. So there is no gain for them. On the other hand, the mid sized ISP might believe the smaller ISP could become a transit customer and you never peer with your customers or potential customers.

          But instead of coming clear and tell the real reason, you will typically get the balanced peering requirement quote instead.

          In truth balanced peering is not really possible nor desirable for a residential ISP. Only other residential ISP would have balance with us but there will be very little traffic. Just a little bit of bittorrent etc. As a residential ISP we need to peer with content providers, hosting companies and the like.

    • Re: (Score:2)

      by Greyfox ( 87712 )
      Something along the lines of "Give us free pairing or we'll tell your customers that Netflix isn't available with your internet service." Netflix gets access, you get to... have customers.

    • Re: (Score:1)

      by Anonymous Coward

      That said, why isn't Netflix's traffic upload "paid for" when they pay their data centre ISP? or is that too perfect world?

      Why isn't Netflix's traffic "paid for" (again) when the customer requesting the traffic pays their ISP for service?

    • Re: (Score:1)

      by Anonymous Coward

      Netflix isn't forcing data on the ISP. The ISP's paying customers (us) are requesting it. Therefore, it is the ISP's job to do the best they can to provide that data. This means free peering. Charging Netflix for a service that I am already paying for is double-dipping.

      This net neutrality thing is not a story of the ISPs wronging Netflix or vise-versa. It is a story of the ISPs wronging us, their customers. By refusing to have standard peering agreements they are degrading the service that we pay for and ar

    • Re: (Score:3)

      by Shatrat ( 855151 )

      This is an antiquated and stupid convention that really only applies to transit carriers. Netflix pays their wholesale ISPs for transit. Retail ISPs pay their wholesale ISPs for transit. Peering allows them both to save that money. The ratio doesn't mean anything because every single bit originates from a paying customer of the Retail ISP. The only Retail ISPs that don't want to peer with Netflix are the ones who also sell video content.

    • Re: (Score:2)

      by Lumpy ( 12016 )

      Just wait. you will have an extra $4.99 FEE added to your isp bill for "netflix access fee"

      Honestly, It's time the FCC smacks ISP's hard and demand they go completely common carrier and force them to stop being assholes.

      I pay for my bandwidth, you cant bitch if I actually use what I pay for.

      • If this were two counties, the term used would be 'imbalance of trade.' Countries have gone to war over this.

        Peering is two ISPs bartering bandwidth, rather than writing each other cheques for similar amounts each month. What is Netflix offering to barter with? They want to dump tons of data onto the ISP; what does the ISP get in return?

        • Happy customers that are already paying them to access Netflix's videos?

          • Happy customers are paying to move traffic across their ISP's network.

            ISPs agree to swap traffic in kind.

            Netflix has nothing to swap in kind, so they need to pay.

            • So you're saying that netflix should make their applications return random garbage from the customer's machines to their servers in an equal amount used to deliver the video, so that the ISPs have an equal amount of traffic going back to netflix? This doesn't sound like it will end well for the ISPs which dedicate a lot fewer channels to upstream. Perhaps netflix should enable it for a couple weeks to show the ISPs what "fair trade" traffic would look like.

              • No, that would be stupid, and it's unfortunate that you feel the need to resort to ridiculous hyperbole.

                I'm saying that Netflix, like everybody else, needs to pay for wanting to access a given ISP's network. Seeing as how they can't pay with in-kind transit, like, say, other ISPs that both give *and take* traffic, they need to pay with cash.

                • But simply having their application return the same amount of traffic as it downloads would be cheaper for them to implement, since it would only be a few lines of code, and it would resolve the bandwidth mismatch at the peering point. It would hurt the users a bit as they tried to figure out why their video quality is suffering as the ISPs network chokes out.

                  It's a completely valid technical solution to an artificial problem, because it points out that by not balancing the traffic you're benefiting the I

        • Re: (Score:2)

          by Lumpy ( 12016 )

          You seem to not understand that an ISP is a imbalance by design. 99.976% of all Home internet users only Consume and never ever upload.

          I am paying for the bandwidth, the ISP can stop being greedy whiny bitches.

          • You're on ISP A. You want to download from some random site. Random site is on a server hosted by ISP B.

            Your buddy is on ISP B. He wants to download from another site. Said site is hosted on ISP A.

            See how that works? ISP A is pulling data from ISP B, and ISP B is pulling data from ISP A. Therefore, rather than cut each other identical cheques, they swap data.

            Now, you want to pull data from Netflix. Netflix does not want to pull data from your ISP. Therefore, Netflix cannot pay for data with data; th

    • Comment removed based on user account deletion

    • Re: (Score:3)

      by Bengie ( 1121981 )

      Free peering typically means that each carrier sends and receives about the same amount of data

      That only applies to transit providers where the data needs to get hauled. Residential ISPs are the endpoint, and as long as Netflix is dropping off the data near the customer, it's ALWAYS in the ISP's best interest to get free bandwidth than to pay their transit provider for access. Your logic falls flat on its face with the simple example that my ISPs sends me way more data than I send it, so it should pay me.

      • Re: (Score:1)

        by Anonymous Coward

        Agreed. I work for an ISP and we do all of the free peering we can at any IX we are at. That is a massive offload from our more expensive uplinks to less expensive. It gives the customers a better experience at the same time. Never once have we complained or ever cared that Akamai sends us 1000x the traffic that we send them, that is what they exist for, to distribute content. We exist to get that content to the end users. If a free peering agreement both saves us money and allows us to accomplish tha

    • The problem is that the internet is not symmetrical. Eyeball ISPs will always have 100+:1 download vs upload ratios. So they can't ask for 1:1 peering ratios. I'd say the ISP benefits from the peering with netflix, they get happy customers, netflix doesn't soak their transit, and they get more control over where netflix enters their network. Peering + local caches can reduce the 'cost' of netflix to the ISP to just some switch ports.

    • Re: (Score:2)

      by Agripa ( 139780 )

      Free peering with Netflix assuming that they meet the requirements other than traffic parity has the advantage of removing their traffic from the ISP's expensive transit links.

    • because the companies that manage the internet connections for millions of people have realized they can make a good bundle of extra money by selling access to those people, and not just settling for the chump change they make those millions of people pay to access to the 'internet'.

      Anyway, this article is basically about how Netflix doesn't care how the merger of these companies screw over anybody else, as long as they can use the merger to make more money.

    • 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.

      This is very easy to fix on Netflix side, just add 20 lines of code to make every client FLOOD /dev/urandom back at Netflix server. Problem solved, lets peer for free nao mmkay?

  • My dream is that I win the lottery.

    (which is even more impressive considering that I'm not dumb enough to buy lottery tickets)

  • Laugh (Score:1)

    by koan ( 80826 )

    Coming soon, higher prices and commercials.

  • Extrapolation - if your business makes money off the intertubes...

    It make use of free peering.

    You make money on someone else's back.

    You owe [insert company name here] money

    [Conclusion] Either the highway robbers, um, [insert company name here], um gatekeepers, um people who are not, emphasis on not, double charging, get a fair, percentage of your take - or it's just not fair.

    • Here's the problem with that idea: Customers want to use Netflix. Sure, there's little competition in most markets, but where there is, the ISP which provides Netflix will win and the ISP that makes them hard to use will fail. Competition is slowly creeping across America (thanks, Google!) so the ISPs are going to have to decide which side of their bread is buttered, and act accordingly.

      • I have said, and will continue to say, that the problem with Netflix vs MegaCableCo is one of the last mile monopoly and "franchise" agreements with local municipalities. You fix this problem, and the whole Net Neutrality is fixed, without any further laws being needed.

        The time has come to have a planned infrastructure that allows consumer choice beyond limited franchise agreements. Build Fiber infrastructure, to a common backhaul COLO Facility which allows multiple vendors to vie for their customers there.

        • Re: (Score:2)

          by dave420 ( 699308 )
          Countries which have setups just as you describe have far more competition in their ISPs, lower prices, and better service.

  • Google ran their own fiber (Score:5, Interesting)

    by omnichad ( 1198475 ) on Thursday July 16, 2015 @09:13AM (#50124165) Homepage

    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.

    • Re: (Score:1)

      by Anonymous Coward

      and they'll have something to fall back on when the studios decide to cut out their middleman

      I don't think that's a major worry. For things like this a "middle-man" is good. When you have a separate app and interface for every single different studio (worrying about which ones work on Roku, FireTV, AppleTV, Chromecast, etc) it just makes the experience frustrating. Heck until recently it was aggravating enough with Netflix itself having different UI's on my FireTV vs my PS3.

      Not to mention that the whole point of "cable-cutting" was to get rid of that $100 per month cable bill (or satellite in my

    • Where is Google supposed to run this fiber? The last time someone did a haul across the continent, they literally had to work for the company which owned the right-of-way (the railroad) in order to pave the way for the deal (leasing the right-of-way) for the company which did the deed, that is to say, Qwest. You might remember Qwest as the only company whose CEO refused to bend over, install a tap for the NSA on the internet backbone, and not tell us about it. You might also remember that he got reamed by t

      • Google has already run their own fiber network. I'm saying it's time for Netflix to follow. I didn't say Google covered the whole country, but it's enough to be able to offer Gigabit Internet in a few of the cities they've crossed.

    • With Netflix at their likely peak, they should use some of their excess money to start rolling out their own fiber network.

      I don't know that really makes sense, unless they want to get into that business. They can just continue paying for an ISP and hosting, and let their ISP/host work out whether they want to roll out new fiber. I think that if Netflix has a bunch of excess money, the smart move would be to continue investing in new original content, and expand their licensing. The more content that they have that people want to see, the better position they'll be in.

      they'll have something to fall back on when the studios decide to cut out their middleman.

      The studios are always going to have a middleman or two.

  • With stock price soaring, VPNs and smart DNS services are in swimming in chocolate, at least judging by https://www.bestvpnz.com/best-... [bestvpnz.com]

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