Verizon Public Policy on Netflix

Owen DeLong owen at delong.com
Wed Jul 16 23:33:23 UTC 2014


On Jul 13, 2014, at 16:00 , Brett Glass <nanog at brettglass.com> wrote:

> At 10:25 AM 7/13/2014, Charles Gucker wrote:
> 
>> ALL ISPs are in the business of providing access to
>> the Internet.    If you feel the need to rebel, then I suggest you
>> look at creative ways to increase revenue from your customers, 
> 
> My customers do not want me to "creatively" find ways to extract
> additional money from them so as to cover expenses that Netflix
> should be covering. Nor do they want me to subsidize Netflix
> subscribers from the fees from non-Netflix subscribers. They
> want to pay a fair price for their Internet that does not include
> paying ransom to third parties.

Why should Netflix be covering those expenses? Your customers
asked for the content from Netflix. They paid you to deliver it and they
paid Netflix for the content.

You are in the delivery business.

Now, if you didn't charge your customers at all and charged all the
content providers, instead, a la the way it is done with various shipping
companies where $BOX_STORE pays the shipping company to deliver
their product and bills the customer separately for shipping (or builds the
cost of shipping into the price), then no problem.

However, that's not what you want.

You want to double dip. You want to charge your customers to deliver
the bits they ask for from Netflix (and everyone else), then turn around
and ask Netflix (and possibly others) to also pay you for the same delivery.

It would be like FedEx or OnTrac taking money from Amazon for a shipment
and then showing up at my house and asking me to pay extra or they won't
give me my package.

> We currently provide that: we guarantee each subscriber a certain 
> minimum capacity  to the Internet exchange at 1850 Pearl Street 
> in Denver (to which Netflix does not directly connect) with a certain 
> maximum duty cycle. But we can't guarantee the performance of a specific
> third party service such as Netflix. If Netflix wants us to do that, 
> it is going to have to pay us, as it pays Comcast. That's only fair,
> because we would be doing something special just for it -- something
> which costs money.

OK, so what's the problem? If I were Netflix, I probably wouldn't pay you,
either. I'd suggest to any customers we had in common that they seek out
a provider that was willing to build a better network.

> If Netflix tries to use its market power to harm ISPs, or to smear
> us via nasty on-screen messages as it has been smearing Verizon, ISPs have
> no choice but to react. One way we could do this -- and I'm strongly

Sorry, but explaining to the user that the reason their content isn't working as
well as it should is because there is insufficient bandwidth from their ISP to
Netflix is a simple statement of fact, not a smear campaign.

Don't like it, build a network better suited to your customer's demands.

> considering it -- is to start up a competing streaming service that
> IS friendly to ISPs. It would use the minimum possible amount of
> bandwidth, make proper use of caching, and -- most importantly --
> actually PAY Internet service providers, instead of sapping their
> resources, by allowing them to sell it and keep a portion of the fee.

Go for it!  If you can compete with Netflix on price and quality of content
and user experience, you might succeed and you might even put them out
of business. That's great for everyone. I suspect, instead, that you'll get a
pretty quick lesson in economics, but I encourage you to try because it
can't possibly harm me if you do so and there's good upside for me if you
somehow succeed.

> This would provide an automatic, direct, per-customer reimbursement
> to the ISP for the cost of bandwidth. ISPs would sign on so fast
> that such a service could BURY Netflix in short order.

ISPs might sign on, but what about their customers? Why would the
customer want to pay what that service is likely to cost?

Or do you think you can bury Netflix without customers signing up?

Owen



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