Verizon Public Policy on Netflix

Sun Jul 13 16:53:53 UTC 2014

On Sun, Jul 13, 2014 at 9:09 AM, <nanog at brettglass.com> wrote:

> At 11:39 PM 7/12/2014, Steven Tardy wrote:
>
> >How would "4U of rent" and 500W($50) electricity *not* save money?
>
> Because, on top of that, we'd have huge bandwidth expenses.

I know I'm just a dumb troll, but
don't you have the same bandwidth
demands already from your users
pulling down netflix content today?

If your users don't use netflix, then this
is a moot point, and we can end the
discussion now.  If your users *do* use
netflix currently, then you already have
this bandwidth demand on your network,
and finding ways to reduce or offload it
would be an improvement.

> And Netflix
> would refuse to cover any of that out of the billions in fees it's
> collecting
> from subscribers. We can't raise our prices (that would not only cost us
> customers but be unfair to many of them; it would be forcing the
> non-Netflix
> users to subsidize Netflix). We simply need Netflix to pay at least some
> of its
> freight.
>

Why not follow a model that other networks use
(if you've ever bought transit in Asia, you've no
doubt come across this -- you get a price of $x/mbps
for transit; but if you're exchanging traffic with China
ASes, that traffic is billed at $x*6/mbps.)  Simply inform
your users that due to the heavy demands netflix places
on your infrastructure, you'll need to add a streaming
surcharge onto their monthly bill to cover the costs,
and then let the market solve your problem.  Either
users really do want netflix badly enough to pay
the surchage and cover your costs, or they opt
to find a different provider (in which case their
heavy bandwidth usage is no longer impacting
your network, so problem solved), or they decide
they really didn't need netflix that badly (in which
case the heavy bandwidth usage also goes away,
and your problem is solved).

> >If your ISP isn't tall enough for Netflix, Akamai has a lower barrier of
> entry.
> >Have you let Akamai give you a local cache? why or why not?
>
> Akamai refused to do so when we approached them. The Akamai rep was rather
> rude
> and dismissive about it; we were too small to be worthy of their attention.
>
> It's important to note that the growth of rural ISPs is limited by
> population.
> Even if we did not have rapacious cable and telephone monopolies to compete
> with, our size is naturally limited by the number of possible customers.
> Each
> of those customers is every bit as valuable as an urban customer, but
> Netflix
> won't even give us the SAME amount per customer it gives Comcast, much less
> more (it costs more to serve each one). And Netflix is particularly out of
> line
> because it is insisting that we pay huge bandwidth bills for an exclusive
> connection just to it. It is also wasting our existing bandwidth by
> refusing to
> allow caching.
>

See, this is why I think it was a bad move for
any content player to bow to $cableco's demands;
it's a slippery slope.  Once you negotiate with one
extortionist, the next blackmailer asks for even
more money.  The only answer is to never negotiate
with...er, sorry, tuned into the wrong psychic channel
there for a moment.

>
> If Netflix continues on its current course, ALL ISPs -- not just rural
> ones,
> will eventually be forced to rebel. And it will not be pretty.
>

And the rebellion will take what form, exactly?
Cutting off netflix and other alternative content
sources, leaving people with the predetermined
slop fed to them over the airwaves and by their
franchise-agreement-granted-monopoly cable
company?  Seems like exactly what the cable
companies want.  It's good they've managed
to recruit an army of foot soldiers to lead the
vanguard of the attack without even having to
pay them--they can sit back and keep their
hands relatively unbloodied as the battle unfolds.

>
> Our best hope, unless Netflix changes its ways, is for a competitor to come
> along which has more ISP-friendly practices. Such a competitor could easily
> destroy Netflix via better relations with ISPs... and better performance
> and
> lower costs due to caching at the ISP.
>

That won't happen, because allowing content to
be freely cached at the edge without control is
tantamount to giving the content away without
restriction; and no level of premium content is
going to come with a license like that.  Like it
or not, no content creator is going to give up
all rights to their content like that; it's not a
(currently) viable business model.

You might just as well ask why George Lucas
continues to charge money for showings of
his movies (oh, right--better make that Bob
Iger now, sorry.  ^_^;)  Content creation is
a business, and needs to make money to
stay in business.  Until that end of the equation
changes, allowing content to be freely
cached, replicated, and distributed just
isn't going to happen, and to expect
otherwise is hopelessly unrealistic.

> --Brett Glass
>
>
Matt