Miles Fidelman <mfidelman@meetinghouse.net> writes:
Either way, if one is a customer of both, one will end up paying for the infrastructure - it's more about gorillas fighting, which bill it shows up on, who ends up pocketing more of the profits, and how many negative side-effects result.
In this case, though, this isn't quite right, is it? There are a bunch of different ways to get Netflix to an eyeball ISP's customers. It seems like right now, Verizon is using one of the ways which is both expensive and poor quality: settlement-free peering with Netflix's transit provider. But, they have other options: direct peering with Netflix and/or using Netflix's cache architecture. These seem like they should, overall, cost less than the current arrangement, and probably would reduce costs and improve performance for everyone involved. That's where the posturing comes in. See, you'll notice Verizon actually made two arguments for why they weren't going to fix their capacity problem with Netflix. One was that Netflix is an exceptionally huge traffic source and unexpectedly dropped this traffic load on Verizon through a path that wasn't prepared for it. That's a semi-reasonable argument for why Netflix should contribute to improving the situation; it's not like this is really unexpected, or that Netflix hasn't offered to contribute, but it's reasonable to have a negotiation about who pays for what. The other argument was essentially "Netflix sends us more data than we send them". As others have commented, that's nonsense. But the reason for trying this argument is the old settlement-free peering problem: Verizon does not want Netflix as a peer if it can possibly have Netflix as a paying customer, and so it has an incentive to place obstacles in its path; and it certainly doesn't want to give everyone else the idea that they can become peers too. That is the real problem here and is why this has become a huge fight instead of a really straightforward transaction.