If paid peering becomes the way of the 21st century internet, don’t expect the high cost of low-speed U.S. broadband to get any better, Netflix CEO Reed Hastings declared Thursday.
Hastings, hit right at the beginning of his Code Conference appearance with questions about the comments made by his good buddy Brian Roberts of Comcast on Wednesday, reiterated Netflix’s unease with the spread of paid peering, in which content companies like Netflix pay networking companies like Comcast to ensure smooth delivery of their content to end users. Historically this has been done through a handshake agreement with no money changing hands. But Comcast is starting to throw its considerable weight around by demanding payment from content companies and the networking companies — Level 3 and Cogent, for example — that do the dirty work of routing bits over the internet, claiming that they are putting a disproportionate strain on its end-user network.
“It’s a general way of taxing the internet,” Hastings said. “They want the whole internet to pay them for when their subscribers use the internet.”
Netflix felt it had no choice to sign a paid peering deal with Comcast earlier this year, holding its nose as it did so in order to ensure that Netflix performance wouldn’t get even worse for Comcast subscribers. Not a lot of money is changing hands right now, but now that the threshold has been crossed, Hastings thinks that the fees will grow over time.
Hastings didn’t really add anything to the peering or net neutrality discussions that have been playing out over the last six months that Netflix and its supporters haven’t argued before. But it’s clear that these issues, which were once wonkish minutia discussed by a small set of networking geeks, are now drawing the attention of more and more average consumers as the U.S. contemplates the merger of Comcast and Time Warner Cable, which would consolidate the residential broadband market share across two companies that U.S. consumers already despise.
“The fundamental question is who’s going to pay for the network? And the answer is the ISP,” Hastings said.
Netflix makes up roughly 30 percent of U.S. internet traffic on a given evening, which has led Comcast to suggest that Netflix should bear 30 percent of its costs, he said. And when he suggested that if that’s the case, maybe Netflix should get 30 percent of Comcast’s broadband revenue, Comcast demurred.