Comcast vs. Netflix: Is this really about Net neutrality?
Netflix’s disputes with broadband providers, like Comcast, have zip to do with Net neutrality. Here's what you need to know about Net neutrality, and the Internet, to understand why.
If you noticed more buffering and sputtering when streaming video from Netflix a few months ago, you weren't alone. But who was really to blame? Your broadband provider or Netflix?
Netflix, which earlier this year reluctantly agreed to pay interconnection fees to broadband providers, has suggested that Comcast is to blame because it's violating principles of Net neutrality, which are all about keeping the Internet free and open.
Comcast has vigorously denied these assertions. Still, questions remain and confusion abounds over how the two ideas are linked or whether they should be linked at all. The confusion deepened with statements earlier this year by Netflix CEO Reed Hastings, who called on the FCC to adopt "stronger Net neutrality" regulation to ensure Netflix subscribers get flawless access to their streaming video.
So it comes as little surprise that as people try to understand the Net neutrality debate that's taking shape in Washington, D.C., right now, they would confuse it with the public dispute between Netflix and Comcast over interconnection fees.
That debate comes to a head Thursday as the Federal Communications Commission holds an open meeting to consider a controversial proposal regarding its Net neutrality rules. Passions are running high: activists have organized a public protest to coincide with today's FCC meeting. (Update 8:55 a.m. PT: The FCC voted Thursday to allow public comment on that proposal.)
In this edition of Ask Maggie, I try to clarify why the Netflix-Comcast wrangle has nothing to do with Net neutrality. I also take a stab at explaining what Net neutrality is and why anyone is still arguing about it
The real issue between Comcast and Netflix
I've read some of your stories on Net neutrality. And I've read stories from others about Net neutrality and I'm confused. Lots of people say that Comcast is already violating Net neutrality by slowing down Netflix traffic. I watch Netflix and I have noticed the video quality is getting worse, especially in the evenings.
What I'm confused about is that the FCC chairman and other people, like you, say this is not a Net neutrality issue. How is that possible? Isn't Netflix already in a slow lane? I am utterly confused.
Can you please explain?
Net neutrality novice
Dear Net neutrality novice,
You aren't the only person who has confused the Netflix-Comcast dispute as a Net neutrality violation. To understand why it's not will require an understanding of some complicated issues.
The short answer to your question is that the dispute between Netflix and Comcast is not a Net neutrality issue because it does not have to do with how Comcast is treating Netflix's traffic once it's on the Comcast broadband network. Instead, it stems from a business dispute the two companies have over how Netflix is connecting to Comcast's network.
To more fully answer this question and explain what's happening here, you first have to understand what Net neutrality is and how the Internet works.
Defining Net neutrality
In a nutshell, Net neutrality is the principle that Internet service providers and governments should treat all Internet traffic the same. This means that Internet service providers should not block or slow down traffic on their local broadband networks based on individual users or the type of traffic those users are accessing or by the type of service that is sending the content.
The idea is to ensure that consumers can access any legal content they want, while also ensuring that companies using these broadband networks to reach their customers will not have their services interfered with by the companies that control the Internet connections into people's homes. Supporters of Net neutrality and even the federal appeals court that recently threw out the FCC's 2010 Open Internet rules on a legal technicality agree that broadband providers, especially in markets where there is little competition, may be tempted to block or degrade traffic for their own gain. Therefore, rules may be needed to ensure this doesn't happen.
The term "Net neutrality" was coined in 2003 by Columbia media law professor Tim Wu, who used it to explain how the concept of "common carriage" could be applied to the Internet. "Common carriage" is a centuries-old legal concept developed to ensure that the public retain access to fundamental services that use public rights of way. The national highway system and utilities such as water and electricity are regulated under this concept. The traditional telephone network is also regulated under the concept of common carriage.
In the context of the Internet, when people talk about the Internet being regulated as a common carrier or a utility, they're talking about making sure the infrastructure used to deliver Web pages, online video and audio streaming services, and all kinds of other Internet content get the same open access.
After more than a decade of legal battles and public debate, broadband providers say they also want an open Internet and they have consented to work with the FCC to develop formal rules of the road.
But significant disagreement remains over how these Net neutrality rules should be imposed and how strict they should be. For instance, Net neutrality supporters say they want the FCC to formally reclassify broadband as a Title II service under the 1996 Telecommunications Act, which they argue will allow the agency to apply common-carrier rules to the service and protect the Internet. Broadband providers say that reclassifying broadband services would stifle innovation and may not even be legal.
In terms of the strictness of the rules, Net neutrality supporters are concerned that without a common-carrier reclassification of broadband traffic, broadband providers would still be able to create priority services or fast lanes on their networks. They argue these fast lanes would necessarily mean slower access for all other services that don't pay for priority. And they believe it would serve as a barrier to entry for new competitors online, who may not be able to afford the added fee.
Broadband providers have not explicitly indicated that they'd develop these priority services. It could be argued, though, that providing such fast lanes of service could actually improve certain services, such as streaming audio and video, which are extremely sensitive to delay. In this case, consumers could very well benefit from services like Netflix or Amazon paying for priority lanes on congested broadband networks to deliver video traffic.
In any case, these are the issues currently being debated. And these are the issues that will be addressed in the FCC's proposal to rewrite its Open Internet rules, which are being opened for comment today.
What is not expected to be a part of the formal Open Internet rules is how broadband network operators connect to other networks. And that's the issue that you're really asking about regarding the Comcast-Netflix dispute.
How the Internet works
Before you can really understand what's happening between Comcast and Netflix, you first need to understand how the Internet works.
The Internet is not controlled by a single Internet service provider, like Comcast, AT&T, Verizon, or Time Warner Cable, that sells you broadband service. Instead, the Internet is made up of a series of networks that are all connected to each other. And when you request a video from Netflix or send your grandmother an email, the information is chopped into packets and sent over multiple networks until it reaches its final destination.
The only piece of the Internet that broadband providers, such as Comcast or Verizon, control is the so-called last mile of the Internet, which is connected to several other networks traversing the globe. When people talk about Net neutrality and making sure broadband providers don't monkey with Internet traffic, they're talking about the traffic when it reaches this part of the network.
The best way to imagine how the Internet works is to think of it like a system of roads and highways. The last mile is like the beltway that surrounds a city along with all the smaller county and city streets and roads that lead to individual homes. Ultimately, these roads connect to larger state highways and interstate highways that criss-cross the nation.
The other thing to realize about the Internet is that the network itself is a shared medium. Information is chopped into packets that traverse the Internet separately and are reassembled at their destinations. Packets from your email or a video you selected from Netflix travel alongside packets for everyone else's data. Just like a highway where all cars are subject to the same speed limit, but still travel at different speeds due to the congested road, some packets arrive at their destination sooner than others.
For some forms of communication it doesn't matter much if the packets arrive in order or if some arrive a little later than others. This is true of most text-based communications, such as text-based websites or email. But for other forms of communication, such as audio or video, it's crucial that all packets arrive in order and in close succession. If some packets are delayed or dropped, the experience of the video or audio once the packets are reassembled is not pleasant. There's often buffering, pixelation, and/or jitter.
The best way to ensure that video is delivered at a high-quality is to make sure there is enough room on the network for all the packets to arrive when they're supposed to. Network operators employ a bunch of techniques to manage congestion on their networks to ensure that this happens.
Years ago as the Internet was first becoming commercialized people realized that when you limit the distance and number of "network hops" between the server and the end user, the IP packets travel faster through the network. Fewer packets are lost or dropped and they tend to arrive in order on time. This not only speeds up the time it takes to download a web page, but it also improves the quality of video or audio that's being streamed.
Content companies building businesses and services online recognized this speed advantage, and they began working with companies that specialized in building servers all over the Internet that would store or cache popular information closer to where customers would access it. Companies like Akamai and Limelight pioneered what's become known as the content delivery network or CDN business. These companies specialized in building these networks, which if you think of the highway analogy I used before acted as a network of warehouses that were used to store the content closer to end users.
But in order to deliver the goods to end users, these companies still needed access to the roads or transit networks that would carry the packets to their destination. And in order to deliver their packets of content to end users, they would have to pay the owners of those networks -- that is, broadband providers like Comcast, Verizon, and AT&T.
In turn, companies, like Netflix, which have large amounts of content to distribute and want to ensure better quality of service for their consumers, contracted with CDNs, like Akamai, to deliver that content more efficiently. In those days, the cost of paying for transit over long distances was also quite expensive, which also factored into the business calculus of paying a CDN to act as a middleman and store content closer to consumers.
This is how the Internet has worked for more than a decade.
Meanwhile, there is another set of players, which I alluded to above. These players are called transit providers. These are companies, like Level 3 and Cogent as well as big telecom giants, like AT&T and Verizon, that have built networks or backbones that span continents. These companies carry all kinds of traffic and transport it to its final destination. Because it's impossible to build networks in every corner of the world, they have to hand off traffic to other providers, until the IP packets they're transporting ultimately reach their destinations.
This handoff of traffic is what's known as "interconnection" or "peering." In a "settlement-free peering" relationship, network operators simply swap equal amounts of traffic with one another without every exchanging payment.
But sometimes the balance of traffic is not equal. In that case, the companies enter into interconnection agreements where the network operator that is delivering more traffic than it accepts pays the network operator. These arrangements can be between two backbone providers or they can occur between backbone and last-mile broadband providers. Most of the time these are private deals between companies. And the public knows very little about the details of the arrangements.
But there are occasions when one party or both parties make public some details of the dispute, most often to gain some negotiating power in the relationship. This is exactly what happened in 2005 when Level 3 threatened to stop taking any traffic from Cogent. Level 3 said that Cogent was violating its arrangement by sending more traffic onto Level 3's network than Level 3 was sending onto Cogent's network. The two companies could not come to an agreement on the payment terms. Level 3 threatened to stop accepting Cogent traffic. Within a matter of weeks, the two companies settled their dispute. The final arrangement was never made public.
Over the years, the CDN business has gotten more competitive as the cost of transit or transporting packets over longer distances has dropped dramatically. Additionally, transit backbone providers, such as Level 3 and Cogent, have decided to get into the CDN business as well. In other words, they not only act as the truck drivers that carry the packets through the Internet, now they also own the warehouses where the content is stored until it's delivered to end-users.
Because the transit companies also own big chunks of the highway or network, they can undercut the traditional CDNs in terms of pricing. As a result, companies like Netflix have contracted with these companies to deliver their streaming video content to end-users.
So now these backbone transit operators are not only delivering their usual traffic load to networks throughout the world, but they've also now taken on additional traffic from their own CDN businesses. And eventually they will connect with last mile broadband networks to deliver the content to end users.
The result is that Level 3 and Cogent are now sending far more traffic onto some broadband networks than they are receiving. And here is where the disputes come into play. Level 3 and Cogent believe that their old peering relationships with broadband providers should still hold because they are simply delivering traffic to these networks as they have always done. But broadband providers, who are seeing dramatic increases in the amount of traffic coming from these transit providers, say that because of the imbalance in traffic, Level 3 and Cogent must now pay them to interconnect.
This has been the nature of arguments that Level 3 has had with Comcast and that Cogent has had with Verizon.
Netflix vs. Comcast
Meanwhile, Netflix, whose subscription video service now accounts for about 30 percent of all Internet traffic, has also built its own CDN network. So like pure CDN players such as Akamai and Limelight, as well as transit providers such as Level 3 and Cogent, Netflix now has its own network of video warehouses around the Internet that it's using to deliver content.
Because it has its own CDN, Netflix doesn't need to rely on anyone else to deliver its video. What's more, the company believes that if it eliminates these other network hops between its servers and the home video subscriber, it can deliver the video faster and at a higher quality.
As a result, it has been seeking deals that directly connect it with broadband providers to deliver its content. But as anyone who has streamed video knows, the amount of bandwidth that is needed to stream or download video far outweighs the amount of bandwidth needed to request such a video. And the result is a massive imbalance of traffic going onto the broadband network, which likely requires a commercial interconnection arrangement between Netflix and the various broadband network providers.
But Netflix has argued that the improvements in the quality of the video streaming to the broadband providers' customers is so valuable that broadband providers should not charge for the imbalance of traffic on their networks. After all, their customers are benefiting from the direct connection between Netflix and the broadband provider.
Some broadband providers have agreed to these terms. For example, cable operators Cablevision in the Northeast and Grande Communications in Texas have agreed to Netflix's business terms for interconnection. But bigger broadband providers, like Comcast and Verizon, have not. And they are requiring Netflix pay for the interconnection.
This is where the spat between Comcast and Netflix comes into the open. Netflix, which is likely hoping to pressure Comcast into offering better terms in its commercial business deal, has implied that this issue is somehow related to Net neutrality.
In a blog post in March, Netflix CEO Reed Hastings called for "stronger Net neutrality."
He explained: "Strong Net neutrality prevents ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai, or Level 3, to deliver the services and data requested by ISP residential subscribers. Instead, they must provide sufficient access to their network without charge."
In other words, Hastings proposed that "strong Net neutrality" would also call on the government to outlaw the existing interconnection fees that companies charge each other when exchanging unequal amounts of data.
What FCC Chairman Tom Wheeler has said and other Internet experts also confirm is that the Net neutrality rules originally passed in 2010 were never intended to cover these interconnection business deals. Remember that Comcast and other broadband providers don't control your Internet traffic end-to-end. The content you request often travels over several networks before it reaches you. Broadband providers only control the traffic once it's on their networks. And it's this piece of the network that Net neutrality is designed to make sure stays free and open.
It's like complaining that New York City traffic cops are responsible for and should prevent traffic backups on the New Jersey Turnpike. While New York police may control the flow of traffic once cars enter the city, they don't have jurisdiction in New Jersey or anywhere else that the traffic originates. So they are somewhat limited in how they deal with the congestion.
The same is true of broadband providers. They can add more ports or points of entry into their networks. But adding additional ports costs money. It may not be a significant amount of money as it relates to the rest of their businesses, but it's still a cost. Comcast believes that Netflix should have to pay for those additional ports, whereas Netflix believes that Comcast should be responsible for that cost.
Even though the FCC's Wheeler doesn't see these interconnection relationships as a Net neutrality issue, that doesn't mean that the FCC still couldn't look into whether large broadband providers are abusing their power.
So far the FCC has not indicated whether it will consider looking into such matters. But given that Comcast, the largest cable operator is trying to buy Time Warner Cable, the second largest cable operator, it's likely that this issue will come up as the FCC examines whether it should approve the merger.
What's really happening with Netflix traffic?
So now we get to the other part of your question about whether Netflix is already in the Internet slow lane. Netflix has published data showing that its video streaming service has performed poorly over certain broadband networks, including Comcast, for several months. And it just so happens the networks that have seen poor performance are ones with which Netflix has had difficulty negotiating interconnection deals. As a result, some people have concluded that Comcast must be deliberately slowing Netflix traffic on its network until Netflix agrees to pay Comcast for better service. Individuals who have tested their Comcast network connections through speed tests confirm there appears to be plenty of capacity on their networks and yet the Netflix videos they are streaming are still buffering and sputtering as though the network were congested at full capacity.
So what gives?
Think back for a moment to my long explanation of how the Internet works. Now imagine that Netflix is funneling a large amount of its traffic through its own CDN connections to Comcast rather than distributing its traffic among the other 40 or so companies that Comcast has interconnection arrangements with.
In other words, Netflix is attaching a fire hose to the Comcast network, which is only equipped to handle connections the size of garden hoses. The gushing fire hose of content can't possibly be funneled into the few garden hose ports that are available. So packets are dropped and the service is degraded.
Netflix could fix this problem in one of two ways. It could pay for a fire hose connection instead of taking the garden hose connection that it can get through a standard peering relationship with Comcast. The large connection would accommodate the Netflix traffic. The other option is to distribute its traffic more evenly among other CDNs that are delivering traffic to Comcast. In this case, the video traffic could get onto the Comcast network via the many garden hoses already connected to the Comcast network.
Of course, in either instance this would cost Netflix more money. The company would either have to pay Comcast for more capacity or the company would have to pay CDNs more money to deliver its traffic. In either instance, the additional costs that Netflix would incur under either of these scenarios are not new. The company has always had to pay for the transit and delivery of its content.
The bottom line
I recognize that some people reading this will accuse me of being a shill for the broadband companies since it appears by my description of how the Internet works that I agree with all their business practices. The truth is I don't know what happens in the back rooms where these companies negotiate their interconnection deals. All I can tell you is that these negotiations happen. And this process for doing business on the Internet has been happening for years.
Should the government be involved in these negotiations to ensure that no one is manipulating the quality of Internet services that consumers experience? I don't know the answer to that.
But I think it's something that is worth examining. Because the details of these deals are kept secret, it's hard to say whether the big broadband companies are doing anything nefarious. If regulators could get a look at these deals and examine them to see what is really happening, maybe we'd have a better idea of whether there are real abuses or anticompetitive behavior going on.
Ask Maggie is an advice column that answers readers' wireless and broadband questions. If you have a question, I'd love to hear from you. Please send me an e-mail at maggie dot reardon at cbs dot com. And please put "Ask Maggie" in the subject header. You can also follow me on Facebook on my Ask Maggie page.