Verizon Public Policy on Netflix

Rogan Schlassa roganschlassa at
Thu Jul 17 00:38:21 UTC 2014


This is so simple.

ISP offers xxMbps and should deliver that to the customer.

Dear customer. If you cannot stream full quality, upgrade .

Dear ISP stop promising xxMbps if you advertise a port cap lower than
theoretical port bandwidth. Basically fraud.
On Jul 16, 2014 7:19 PM, "Owen DeLong" <owen at> wrote:

> On Jul 14, 2014, at 06:46 , Miles Fidelman <mfidelman at>
> wrote:
> > Jay Ashworth wrote:
> >
> > [ As you might imagine, this is a bit of a hobby horse for me; Verizon's
> behavior about municipally owned fiber, and it's attempts to convert post-
> Sandy customers in NYS from regulated copper to unregulated FiOS service
> leave a pretty bad taste in my mouth about VZN. ]
> >
> > Jay,
> > Quite agree with you on this stuff.  I used to spend a good part of my
> time working with municipalities on planning fiber builds - so VZ's
> behavior on those matters leave a pretty bad taste in my mouth too.  But..
> that's kind of a different issue, wouldn't you say?
> >
> > Am I obtuse or does it all boil down to:
> >
> > 1. If both Netflix customers, and Netflix all connected to a single
> network - customers would be paying for their access connections, and
> Netflix would be paying for a pipe big enough to handle the aggregate
> demand.
> >
> > 2. The issue is that customers connect to one network (actually multiple
> networks, but lets stick with Verizon for now), and pay Verizon; Netflix
> buys aggregate capacity into other networks; with one or more transit
> networks in the middle.
> Well, there are multiple possibilities here...
> In case A, it's pretty obvious that CUST $->ACCESS_NETWORK$->TRANSIT_A and
> It's not entirely clear what the economics would be between
> TRANSIT_A<->TRANSIT_N, but most likely settlement free peering.
> In case B, it's fairly obvious CUST $->ACCESS_NETWORK and it's less clear
> wehter:
>         B1:     ACCESS_NETWORK$->TRANSIT<-$NETFLIX      (transit
> double-dip)
>         B2:     ACCESS_NETWORK$->TRANSIT and Transit is settlement free
> with Netflix (Access pays transit)
>         B3:     TRANSIT<-$NETFLIX and Access is settlement free with
> Transit (Netflix pays transit)
> I'm sure in the real world there are likely examples of all three
> scenarios.
> In case C, we arrive at what I think most of the argument is actually
> about. Obviuosly, CUST$->ACCESS_NETWORK.
> The question is whether there should also be ACCESS_NETWORK<-$NETFLIX,
> which is what Brett is claiming should happen and what at least one very
> large ACCESS_NETWORK has been able to achieve at least temporarily. In my
> opinion, this case is a case of Access Double Dip where the access network
> is being paid by both the customer and the supplier for the same delivery.
> As I said, this would be like paying for a product from $BOX_STORE and
> having $BOX_STORE bill me for shipping, and pay $CARRIER for deliver only
> to have $CARRIER show up at my door asking for even more money before they
> will fork over my package.
> > 3. Somebody has to pay for what's in the middle (ports into transit
> networks, bandwidth across them).  Those are additional costs, that
> wouldn't exist if everyone were connected to the same network.
> I don't think that's really part of the argument here.
> > 4. Both parties can make reasonable claims about why the other guys
> should pay.
> Not really, IMHO. (See above and below)
> > 5. $LARGE_ACCESS_NETWORKs are big enough to say "Netflix pays" - with
> Netflix making a visible stink about it.
> LARGE_ACCESS_NETWORK may be able to force Netflix to pay, but that's not
> the same as saying Netflix _SHOULD_ pay. It's more like recognizing that
> market power and a large customer base can often force an economic decision
> that is contrary to what _SHOULD_ happen by any other rational evaluation.
> > 6. Netflix is important enough to end users, that Netflix can tell the
> little guys "you pay."  And yes, they're making it a little easier by
> providing the CDN boxes.
> Perhaps, but that's not really what is happening here if you look at it in
> more detail. I don't deny that Netflix _COULD_ do this, just as
> $LARGE_ACCESS_NETWORKs _HAVE_ apparently done this to Netflix. However, so
> far, Netflix seems to be trying as hard as they can to provide
> cost-effective alternatives for ISPs to accept their bits in a variety of
> ways and allowing the ISP to choose which solution works best for them.
> True, Netflix hasn't built out every single distant corner of the universe
> with their peering network, but I would say that by any reasonable view of
> the situation, they have aggressively built quite a network over a large
> fraction of their service geography and to their credit, they are
> continuing to aggressively expand that network.
> To the best of my knowledge (and I'm sure Dave will correct me if I am
> wrong), Netflix would prefer to deliver bits settlement free directly to as
> many ACCESS_PROVIDERS as possible, because it saves Netflix from paying
> transit costs and it saves ACCESS_PROVIDERS from paying additional circuit
> or transit costs and it provides a better customer experience all around.
> In cases where Netflix' network does not geographically overlap
> $ACCESS_PROVIDER's network, then one or both will need to cover the cost of
> bridging that distance, whether with an IP transit relationship, a circuit,
> or some other mechanism. In most cases, since Netflix is in a high
> percentage of the major peering centers, most $ACCESS_PROVIDERS already
> have to build into one of those centers in order to reach many other
> things, so it is reasonable for them to connect to Netflix at that same
> point. In other cases, they use a transit provider to reach those centers
> as well, and so likely they will use the same transit to reach Netflix. In
> virtually every case, they're going to reach Netflix the same way they
> reach the majority of other top sites on the internet. In such a case, it
> makes sense that $ACCESS_PROVIDER pays for their unique geographic
> situation. It doesn't make sense to expect Netflix to subsidize their
> choice of geography.
> It seems to me that other than $LARGE_ACCESS_PROVIDERS' public statements
> trying to extort money from $CONTENT_PROVIDERS and Brett's posts in this
> conversation, the vast majority of people in this thread have
> overwhelmingly agreed with this point of view.
> > 7. In the absence of some reasonably balanced formal policies and
> regulations about settlements - we're going to keep seeing this kind of
> stuff.
> Probably true, but I will point out that one of the main reasons that the
> Internet has become such a cost-effective alternative even for voice
> traffic vs. the PSTN is the lack of said formal policies and regulations
> about settlements. Of course, you did say "reasonably balanced" which I
> don't think is a term that could be rationally applied to the ITU
> settlement rules for the PSTN.
> Owen

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