Some are calling the Comcast-Netflix deal the first "pay-to-play deal" as it tiptoed in over the weekend, much to the dismay of net neutrality fans. It comes just one month after a court struck down the Federal Communication Commission’s net neutrality rules and only days since the FCC proposed a new set of regulations.
The problem is that this isn't a net neutrality issue. It’s not pay-to-play either. In reality, it's just business as usual.
Let’s dispel some other myths, shall we?
Comcast has an entire business devoted to “wholesale dedicated IP transit,” which means it will sell this kind of access to anyone that wants to purchase it. While details on the specifics are sparse, Netflix is apparently buying what Comcast calls "non-transit" access. That gives Netflix direct access to Comcast's subscriber network, but it doesn't use Comcast's network for routing general Internet traffic — that's Comcast's "full transit" option.
Netflix’s deal with Comcast is simply the first completed one we've heard about. Verizon and T-Mobile are also working on similar non-transit or interconnect deals. It's standard operating procedure, but not one that consumers know much about, which is one of the reasons there's so much confusion.
If you’re on Comcast, you will notice a difference. This multi-year deal cuts out middle-man Cogent — a multinational ISP that often handles network traffic for other major networks and content providers — and simplifies the route from Netflix’s content servers to your set-top box.
Yes, if you agree that the "fast one" is faster, higher quality House of Cards streaming. It’s true, the issue of how partners and competitors handle traffic management and balancing — the all important “peering” — is a Gordian knot we're not going to untangle here. The bottom line is that not everyone gets along, agrees or even plays nice with others.
When I started looking into this topic last year, I found two companies — Verizon and Cogent — at odds over which one would shoulder the lion’s share of the Netflix traffic burden. Ostensibly, they should have been carrying it equally. Netflix actually works with Cogent to help deliver its content to a variety of providers, but it also started to shift that burden off Cogent and to its own Open Connect CDN.
In this agreement, however, Netflix’s newest partner, Comcast, is avoiding third-party frustrations and making what equates to a straight line between Netflix content and Comcast customers. Obviously, the agreement probably doesn't please Cogent. The company wouldn’t comment on the deal and instead directed me to recent comments by Cogent CEO Dave Schaeffer, who is clearly more focused on broader Internet governance.
During a recent earnings call he told investors that he believes the FCC may ultimately designate Internet companies part of "Title II," which would move them from ungovernable information services into the telecom bucket, where the FCC has real oversight. It’s an interesting side note, but since this issue has no real relation to net neutrality, such oversight is unlikely to change how companies like Comcast sell transit options.
The FCC’s now-dead rules never addressed this kind of situation. It promised it would “prohibit broadband Internet access service providers from favoring or disfavoring lawful content, applications or services accessed by their subscribers, but would allow broadband providers to engage in reasonable network management.”
A deal to shorten the length of pipe delivering content from point A to point B is not about favoritism, per se. It’s about finding a way to effectively manage — for one ISP, at least — a service that now accounts for a significant portion of North American Internet traffic.
Yes, and they probably already are. The problem is that such deals are rarely, if ever, publicized. Comcast’s decision to send out a press release on such a commonplace deal (albeit with a major content player) seems ill-conceived. Considering how widely publicized customers dissatisfaction with Netflix performance on the service has been and the fact that Comcast has been pilloried for bandwidth throttling, Comcast was probably itchy for some good press. (Though I'm not sure they accomplished that goal.) In any case, the decision more or less forced the other providers to reveal their own plans.
The fact of the matter is anyone who has to deliver large amounts of content and data across the Internet simply must engage in peering and transit agreements. Otherwise the burdens and costs become unmanageable. Google, owner of the bandwidth-hogging YouTube and one of the world’s biggest information databases, for example, peers like crazy and for obvious reasons. Amazon, which hosts a vast number of websites on its AWS service has peering agreements, as does Microsoft and Hulu.
What it all boils down to is that Netflix is now paying Comcast instead of Cogent for bandwidth. Secondly, Comcast customers may soon see better Netflix performance. And perhaps what we've truly learned is that no one moves anything on the Internet for free. If you have a small site, you pay to have it hosted on a service like Yahoo Domains. If your traffic becomes too much for a small business provider, you may have to move to a bigger service and start paying for transit. And if you grow that big, it’s likely you can afford to pay something. In other words, the relationship between growth and ability to pay is likely symmetrical — though that’s not an absolute.
As for net neutrality, it remains a question mark. The old rules are dead; the FCC has new proposals in the works. But whatever comes of all that, it will have little to no bearing on agreements like this.
Additional reporting by Chris Heald