12 Comments

Summary:

The FCC is taking on the interconnection battles between Netflix and several large ISPs with a call for data. It already has the agreements between Netflix and two large ISPs.

The Federal Communication Commission has finally acted on the allegations that certain ISPs are intentionally throttling traffic from providers such as Netflix as a way to charge content providers additional fees. Chairman Tom Wheeler issued a statement on Friday noting that the agency has asked for documentation about peering, and it currently has the terms of the agreements signed between Netflix and Verizon and Netflix and Comcast.

This doesn’t mean that the agency will regulate the interconnection agreements between ISP networks and content provider networks, but it does mean that the consumer cry for action on this issue has been heard and the FCC is looking into it. Ideally, the data collected by the FCC will be shared in a somewhat timely manner via a public report or data dump, but that might be too much to hope for given how secretive these agreements are.

However, I am glad Wheeler is taking the action he promised me back in January, when I brought the issue up with him. From a statement issued today:

“To be clear, what we are doing right now is collecting information, not regulating. We are looking under the hood. Consumers want transparency. They want answers. And so do I.

In all of the articles on this topic — which is complicated, but has real implications for consumers because it turns internet capacity into something that more closely resembles cable TV.I’ve called for the FCC to get data so we can understand if there is a problem. Are ISPs abusing their power as the sole provider of last mile connectivity and trying to charge companies like Netflix fees to get onto their networks?

Given that in much of the world interconnection agreements are informal and free (and even in the U.S. many interconnection agreements between big name content providers and ISPs are formal, but unpaid) this is an issue worth scrutiny. And if the FCC finds that the lack of a competitive last-mile broadband market is enabling a few ISPs to behave badly it should act.

But hopefully the threat of greater transparency will be enough to solve this problem.

  1. There are going to nasty dealings anywhere you go. Netflix counts on a smooth transmission of its product and the ISPs are just jumping on the band wagon to extract more money. It’s called clout. Unfortunately, they just might spoil it for everyone, including Netflix.
    Leslie

    Reply Share
  2. I hope they take into consideration that the large ISPs are trying to include their ISP subscribers traffic in there as “peering data” which is really the biggest issue.

    Nutshell…. an ISP has to buy peering from someone one like Cogent, L3, etc in order to be a part of the Internet. This is never free to an ISP as they sell a very download intensive connection and restrict uploads with their TOS (no servers). Thus they have no value to offer to a true backbone provider as they will be design request that provider to send them a lot more traffic then they will be sending back. As a result ISPs will pay backbone providers to peer and be a part of the internet.

    What is happening with these large ISPs like Comcast that have gotten so large that they are able to provide some “backbone” services between actual backbone providers and other smaller ISPs in their limited foot print. This has helped them to lower their peering cost to either settlement free or near settlement free.

    Then comes along something like Netflix that causes the users of these large ISPs to begin requesting large amounts of data that throws their numbers off balance. Now what use to be almost free or even settlement free because their ISP traffic and peering traffic combined made it worth wild for those actual backbone providers is no longer true.

    They, being very large, don’t want to invest in their network or pay for additional peering to accommodate for that additional traffic that their own ISP subscribers have been requesting. They instead want the company that their own subscribers, whom are paying them for access, are requesting data from to pay for it. Because of their size they are able to degrade the paid 3rd party service their subscribers are getting from these content providers like Netflix. That is the market power these companies have because of their millions of subscribers and it puts content companies like Netflix into a situation that they either pay the toll to improve their user’s experience or they do nothing and lose customers. For the record, multiple backbone providers, including the largest in the world (Level 3) has stated that there are only 6 ISP’s worldwide that are having these issues and it is because those ISPs are choosing to cause it.

    Today it is Netflix, tomorrow it will be some other service and then the day after that it will be some other product being invented in some kid’s garage right now.

    Reply Share
    1. You have it exactly backwards. When traffic exchange is unbalanced, the network who generates more data pays.

      Reply Share
  3. Hypothetically, what will the response be if the FCC finds that the peering fees being charged to Netflix are both reasonable and customary based on established business models on the internet?

    Reply Share
    1. Haha. So Netflix needs bandwidth, calls up Level 3, level 3 sends them a bill for the connection, level 3 calls up comcast and says hey your pipe just got too small, I wonder why. Comcast calls up Netfix, hey if you tie directly to us it will be faster and we will charge you less then level 3, why else would they do it, Netflix; but you weren’t making money off of this before, comcast; true but it’s cheaper faster and better for both of us. Netflix; OK hook us up! Level 3 put out a statement opposing Netflix tieing directly to comcast. Netflix; lets do the deal and use it as an excuse to raise rates so we can put more money into our own shows! We look like the good guy, besides everyone hates the cable company. FCC; ummm… Not sure whats happening, let’s investigate because everyone keeps releasing press statements and we should too!

      Results; uninformed public, propaganda=policy, the companies we love Comcast and Netflix make more money, we get faster better service. Level3 lost a customer. FCC gets blamed.

      What’s to complain about?

      Reply Share
      1. Here’s my complaint. Why don’t you learn to write where people can actually understand what you are trying to say. You obviously know something and it may well be a very valid point. I just can’t seem to get it but I may be dense. I may be dense but at least I know how to state ideas in a way others can understand.

        Reply Share
  4. As the Internet shifts away from being a platform for web browsing and becomes an important way for people to watch TV, it’s pretty much inevitable that it becomes “more like cable TV”, isn’t it? This seems to be what the people want more than a plot by cable companies or Hollywood to take over the world.

    In another article, you charged that telcos want the Internet to be just like the phone network, despite the fact that they want to sunset the actual phone network.

    So is there some cosmic battle going on between those who want the Internet to be a cable TV network and those who want it to be a phone network, or is this just playing to the inherent paranoia that’s the norm for analytical pseudo-thought in America?

    Reply Share
  5. This is about keeping the internet network neutral as it was created and intended to be. Just because the legislators, bureaucrats and telco/cable operators have advanced their own personal interests at the expense of the tax paying public and fee paying subscribers, via racketeering efforts aimed at net dominance, should not give license for the FCC to just roll over and pretend the internet has not been seized by these racketeers.

    Reply Share
    1. So Netflix is paying Comcast instead of paying level3 and companies like them because they can get more bandwidth, closer to the customer for the same price. This is bad why?

      This ain’t net neutrality, it’s a good agreement between two companies.

      Reply Share
  6. VegasSmitty Sunday, June 15, 2014

    Time to nationalize all the ISP’s.

    Reply Share
  7. Is that a dingo?

    Reply Share
  8. The Supreme Court ruled that corporations are the same as people in regards to legal rights. Sooooo, if a person did what these ISPs are accused of (and we all know they are. Whos kidding who?), it would be called extortion and that person would be jailed. When are we going to see some CEOs going to jail for these crimes.

    Reply Share