A Blog by Jonathan Low


Feb 20, 2014

Netflix Traffic Slowdown is First Battle in Net Neutrality War

What an awesome coincidence! It's the onset of the first big battle of the net neutrality war between service providers and broadband carriers over the payment of additional fees, but its also the 100th anniversary of the start of World War I.

What is the connection and why should we give a hoot? You'll probably be sorry you asked, but as you may or may not recall, the US entered World War I when the neutrality of its ocean-borne commerce was violated by German warships. How cool an analogy is that?

OK, it may be a stretch for some (the US didnt enter the war till three years after it started, etc), but the point remains. Verizon and other broadband - eg communications infrastructure providers - are intent on charging companies like Netflix extra fees for the additional traffic their 'heavy' transmissions require. Netflix, ever the aggrieved party, and its customers have been experiencing significant delays in download times as the carriers first strike is to try to force Netflix to pay the fees. Needless to say, those costs will eventually be passed on to customers, causing some to look for alternatives.

Netflix's case is hurt somewhat by the fact that some of the big TV networks and other content providers have already started paying some fees. However, the larger point is that net neutrality is being actively violated. As most public policy disputes are usually settled these days, the 'merits' of the case will probably be decided in favor of the side with the most well-paid lobbyists. But anyone who thought the concept of net neutrality was safe will find that notion is being blown to smithereens. JL

Drew Fitzgerald and Shalini Ramchandran in the Wall Street Journal:

Netflix has been at odds with Verizon Communications Inc.  and other broadband providers for months over how much Netflix streaming content they will carry without being paid additional fees.
Netflix Inc. subscribers have seen a lot more spinning wheels lately as they wait for videos to load, thanks to a standoff deep in the Internet.
The online-video service has been at odds with Verizon Communications Inc.  and other broadband providers for months over how much Netflix streaming content they will carry without being paid additional fees.
Now the long simmering conflict has heated up and is slowing Netflix, in particular, on Verizon's fiber-optic FiOS service, where Netflix says its average prime-time speeds dropped by 14% last month. The slowdown comes as Netflix is rolling out the new season of its Emmy-winning series "House of Cards."
The dispute involves the plumbing behind parts of the Internet that are invisible to consumers. As more people stream movies and television, that infrastructure is getting strained, intensifying the debate over who should pay for upgrades needed to satisfy America's online-video habit.
Those considerations likely will play a role as federal regulators weigh the merger of Comcast Corp.  and Time Warner Cable Inc.,  two of the country's largest broadband providers.
Netflix wants broadband companies to hook up to its new video-distribution network without paying them fees for carrying its traffic. But the biggest U.S. providers—Verizon, Comcast, Time Warner Cable and AT&T Inc.  —have resisted, insisting on compensation.
Until the standoff gets resolved, the bulk of Netflix's traffic continues to flow across Internet intermediaries, including low-cost carrier Cogent Communications  Group Inc. People familiar with Cogent's and Netflix's thinking say the cable and telephone companies are delaying upgrading existing connections. Executives at major broadband providers, meanwhile, privately blame the traffic jam on Netflix's refusal to distribute its traffic more efficiently.
Netflix said it carefully plans its routing to make sure customers have the best experience possible. Verizon said it treats all Internet traffic equally.
Neither side is budging, people familiar with the matter said, leading to growing congestion.
The bottleneck has made Netflix unwatchable for Jen Zellinger, an information-technology manager from Carney, Md., who signed up for the service last month. She couldn't play an episode of "Breaking Bad" without it stopping, she said, even after her family upgraded their FiOS Internet service to a faster, more expensive package.
"We tried a couple other shows, and it didn't seem to make any difference," she said. Mrs. Zellinger said she plans to drop her Netflix service soon if the picture doesn't improve, though she will likely hold on to her upgraded FiOS subscription.
She and her husband thought about watching "House of Cards," but she said they probably will skip it. "We'd be interested in getting to that if we could actually pull up the show," she said.
Netflix acknowledges the sluggish performance, though spokesman Joris Evers said that "generally our members are able to watch Netflix, albeit perhaps at a lower quality and with potentially some startup delays at the busiest times of day."
Verizon has a policy of requiring payments from networks that dump more data into its pipes than they carry in return. "When one party's getting all the benefit and the other's carrying all the cost, issues will arise," said Craig Silliman, Verizon's head of public policy and government affairs.
The Internet has historically been built on arrangements in which big networks agree to swap each other's traffic without charge, based on the assumption that it will all even out over time. But, America's heavy use of video services like Netflix and Amazon.com Inc., as well as expanded online offerings from TV channels like ESPN, is making these old arrangements less tenable.
Netflix's carriers send far more traffic to broadband providers' networks than they take back, sometimes accounting for a third of all North American peak Internet traffic, according to Internet traffic-management company Sandvine Corp. 
Much of that traffic has flowed via Cogent's network, and it has jumped recently. Within the past four to six months, Netflix traffic through Cogent's connections to one major broadband provider has at least quadrupled, one person familiar with the matter said.
Over the past three months, starting around the time Netflix made super-high-definition video available to all its subscribers, the average speeds of the company's prime-time video streams have slowed for Verizon, AT&T, Time Warner Cable and Comcast subscribers, according to Netflix's data.
"I do believe the problem is getting worse," Cogent Chief Executive Dave Schaeffer said in an interview.
Either side could take steps to relieve some of the congestion, according to Sandvine technology chief Don Bowman. Verizon could hook up more connections to better handle the traffic coming from Cogent. Netflix could also route video around the jam by distributing it to other Verizon access points.
Verizon spokeswoman Linda Laughlin dismissed the notion that either network is involved in a standoff. "To us, this is routine business," she said. "It's not like we don't talk to each other. We're talking to each other all the time."
The pendulum has been swinging toward the carriers in such disputes. In recent years several big Web companies, including Google Inc.,  Microsoft Corp.  and Facebook Inc.,  have begun paying major U.S. broadband providers for direct connections that bring faster and smoother access into their networks. Netflix, so far, has held out.
Last month, a court ruled in favor of Verizon's suit to block the Federal Communications Commission's "net neutrality" rules.
While the business disputes between Verizon and Netflix at the heart of the Internet aren't governed by those rules, which require equal treatment of traffic flowing along the "last mile" to customers, the ruling made clear carriers like Verizon face few limits on the terms they can seek at the negotiating table.
Netflix is already eyeing the coming federal review of Comcast's acquisition of Time Warner Cable as an opportunity to push for new requirements on traffic-swapping deals, people familiar with the matter have said.
Regardless of which side gives in, "it's going to cost people money," said Sandvine's Mr. Bowman. "They're just waiting to see who blinks first."


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