Thursday, April 24, 2014

The Case Against ISP Tolls

As the person at Netflix responsible for content delivery, I spend a lot of time thinking about Netflix’s Open Connect CDN and its interconnection with ISPs. We are proud of the performance we’ve achieved through our hundreds of Open Connect partners around the globe.

In fact, Netflix has a mutually beneficial relationship with nearly every ISP in every market where we provide service. But this is less the case for the largest ISP in the U.S., Comcast, which is trying to become even larger by acquiring Time Warner Cable.

Netflix agreed to pay Comcast for direct interconnection to reverse an unacceptable decline in our members’ video experience on the Comcast network. These members were experiencing poor streaming quality because Comcast allowed its links to Internet transit providers like Level3, XO, Cogent and Tata to clog up, slowing delivery of movies and TV shows to Netflix users.

For a content company such as Netflix, paying an ISP like Comcast for interconnection is not the same as paying for Internet transit. Transit networks like Level3, XO, Cogent and Tata perform two important services: (1) they carry traffic over long distances and (2) they provide access to every network on the global Internet. When Netflix connects directly to the Comcast network, Comcast is not providing either of the services typically provided by transit networks.


Comcast does not carry Netflix traffic over long distances. Netflix is itself shouldering the costs and performing the transport function for which it used to pay transit providers. Netflix connects to Comcast in locations all over the U.S., and has offered to connect in as many locations as Comcast desires. So Netflix is moving Netflix content long distances, not Comcast.

Nor does Comcast connect Netflix to other networks. In fact, Netflix can’t reach other networks via Comcast’s network.

For all these reasons, Netflix directly interconnects with many ISPs here in the U.S. and internationally without any exchange of fees.

In sum, Comcast is not charging Netflix for transit service. It is charging Netflix for access to its subscribers. Comcast also charges its subscribers for access to Internet content providers like Netflix. In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other.

It is true that there is competition among the transit providers and CDNs that transport and localize data across networks. But even the most competitive transit market cannot ensure sufficient access to the Comcast network. That’s because, to reach consumers, CDNs and transit providers must ultimately hand the traffic over to a terminating ISP like Comcast, which faces no competition. Put simply, there is one and only one way to reach Comcast’s subscribers at the last mile: Comcast.

There cannot be an “intensely competitive” market when Comcast alone sets the terms and conditions for access to Comcast subscribers. Comcast can simply refuse to provide capacity to any network at any time, constraining the ability for Comcast users to use the services they want. Comcast’s ability to constrain access to Netflix can be clearly seen in the following chart, which shows how Netflix performance deteriorated on the Comcast network and then immediately recovered after Netflix started paying Comcast in February.


We do a great deal of work at Netflix to provide our users with great video quality whenever they chose to use our service. Comcast already controls access and sets the terms of access to a substantial portion of people who connect to the Internet in the United States. We're very concerned that a combined Comcast-TWC will place toll taking above consumer interests and will use their combined market power to the detriment of a vibrant and efficient Internet. That’s why Netflix opposes the merger.

Ken

Ken Florance is vice president of content delivery at Netflix

Monday, April 14, 2014

Netflix ISP Speed Index for March

We have just added March data to the Netflix ISP Speed Index, our monthly update on which Internet Service Providers (ISPs) provide the best Netflix streaming experience during primetime.

This month’s rankings are a great illustration of how performance can improve when ISPs work to connect directly to Netflix. In the US, the average speed on the Comcast network for Netflix streams is up 65 percent from 1.51Mbps in January to 2.5Mbps in March.

We’re also seeing early improvements on Telenor-owned ISPs in Norway, Sweden and Denmark after Telenor agreed to directly connect its network to Netflix.

We are dedicated to delivering a great streaming experience and invest in continually improving that experience. Part of that investment is working with ISPs to make Netflix delivery easy and to avoid congestion. We see consistently better speeds for customers served by ISPs that directly connect their network to Netflix using our Open Connect content delivery network.


A few additional data points from the February update of the Netflix ISP Speed Index:
  • We have expanded the ISP Speed Index with six more countries in Latin America: Costa Rica, Ecuador, Jamaica, Panama, Peru and Uruguay. Consumers there now also have a simple way to see which ISPs provide the best Netflix streaming experience. The data also allows easy country-to-country comparisons: Uruguay tops the region while Costa Rica is last of the 11 ranked nations. 
  • In Sweden, Com Hem has taken the top slot, unseating Own It for the first time.
The Netflix ISP Speed Index is based on data from the more than 44 million Netflix members worldwide who view over 1 billion hours of TV shows and movies streaming from Netflix each month. The listed speeds reflect the average performance of all Netflix streams on each ISP's network and are an indicator of the performance typically experienced across all users on an ISP network. A faster network generally means a better picture quality, quicker start times and fewer interruptions.

Note: the average performance is below the peak performance due to many factors including the variety of encodes Netflix uses to deliver the TV shows and movies as well as the variety of devices members use and home network conditions. These factors cancel out when comparing across ISPs.

Joris

Joris Evers is part of the corporate communications team at Netflix

UPDATE: Blog was corrected at 11:45AM to reflect accurate average Comcast speed in January. It was 1.51Mpbs.