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Netflix is now paying Time Warner Cable for direct access and faster streams

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Time Warner Cable signed a direct interconnection deal with Netflix, making it the fourth of the big four U.S. ISPs to sign paid peering agreements with the streaming video provider. Presumably, this agreement should improve the Netflix viewing experience of Time Warner Cable’s broadband subscribers who also like to tune into Netflix fare.

Time Warner confirmed the deal happened in June and the implementation has been rolling out this month. The interconnection doesn’t come as a huge surprise given that Netflix has signed agreements with Comcast, Verizon and AT&T in the last few months after fighting with the providers directly and through its transit providers [company]Level 3[/company] and [company]Cogent[/company].

That fighting unfortunately left consumers caught in the middle between Netflix and ISPs as the quality of their video streams suffered and both Netflix and ISPs blamed each other. While Netflix has signed these paid peering agreements with ISPs, it is still arguing before the FCC and in the court of public opinion that these agreements violate the spirit of network neutrality.

Netflix originally tried to address peering issues by offering ISPs access to its own content delivery network called OpenConnect. It signed deals with some U.S.-based and a number of international ISPs that led to Netflix deploying caching boxes inside the ISPs’ networks. But the major U.S. ISPs argued that Netflix was avoiding paying for the burden its traffic put on their networks and said they didn’t want to support different servers for every different internet service on the market, despite already hosting servers for sites such as [company]Google[/company], [company]Facebook[/company], [company]Amazon[/company] and [company]Microsoft[/company] in many cases.

However, apparently [company]Apple[/company], as it is building out its own content delivery network, has signed paid peering agreements with ISPs, perhaps marking a shift in how the big content companies and ISPs will broker traffic going forward.

Meanwhile, the FCC is gathering data on these deals, so we may see them quietly eliminated, continue as before but now with tacit FCC approval, or perhaps regulated depending on what it discovers. I’m just eager to see the data about end-to-end broadband quality make its way to the consumer.

Because over the top services are so fragmented, there’s a lot that could go wrong. It would be nice to get an understanding of what’s happening between my television and the Netflix server.

Updated: I removed the traceroute, because it was truncated. I’ll replace it with a complete one when I get one showing the direct hops again.

27 Responses to “Netflix is now paying Time Warner Cable for direct access and faster streams”

  1. loookatme

    I live in “Gig City” Chattanooga , TN. Our city set up their own fiber optic network with a greater service area and greater capacity than Comcast, which had a monopoly for years, has ever and would ever provide. When approached by our city officials about a upgrading our infrastructure due to the surge of population and industry Comcast refused and attempted to sue the city for being a monopoly. Comcast like any other huge company is only worried about their bottom line. Getting as much revenue at as little cost is all they’re worried about. Not the customer and not the quality. Now we have flat rates for service of 50, 100, and a 1000 under a $100.
    Seems to me Comcast, Charter, and Time Warner have watched to much of that garbage that comes on cable television and it has rotted their minds. Stay off that house wive of atlanta you “Scumbags” lol

    • Richard Bennett

      Chattanooga spent $450M in subsidies to connect 100 people to gigabit service. It would have been cheaper to move them to San Francisco. The average connection speed in Chattanooga was below the national average the last time I checked, long after the Great Boondoggle was built.

      • Wow!! When they realize running/scaling a network is just as hard as building a network that $450M figure may continue to grow. But that is OK… Google will buy it for a $1 and be able to sell low cost gigabit service (with all the build dollars hidden in long term taxes)

  2. James Garr

    There is only one problem with this. I don’t have a choice of high speed broadband Internet Service Providers. It’s a monopoly, like most areas, and this just makes the monopolizing ISP’s richer.

  3. Chris Boyd

    Note that for streaming, the traceroute needs to be FROM the streaming server, not from your machine at home. Even inside an ISP’s network traffic can take different paths on the inbound and the outbound, and traceroute only (sort of maybe, these days due to things like MPLS) shows the path taken from the machine running the test to the target.

  4. Chris Hollman

    The irony is that Netflix and a handful of other bandwidth-monster services are the primary reason I care about my internet speed in the first place and pay a premium for a higher speed connection. The ISP’s should be thanking Netflix for adding value to their high speed services and encouraging users to pay for premium speed. Instead they are punishing them… it is laughably backwards.

    • Richard Bennett

      Active Netfiix users at any given time make up no more than 2% of total users in the U. S. and consume 40% of the total bandwidth. They’re not doing ISPs any favors.

  5. Richard Bennett

    I think there’s a key factual question implied by this remark: “…perhaps marking a shift in how the big content companies and ISPs will broker traffic going forward.”

    What is the norm for the interconnection of CDNs with ISPs? My understanding is that CDNs have always paid ISPs for co-location and interconnection, so there’s nothing new here other than large content players building their own CDNs rather than paying Akamai.

    Gilmore said Akamai has 1200 servers embedded inside ISP footprints, and I can’t imagine they got where they are without some deals being struck.

  6. omegaredhs

    I do not understand, I have Time Warner and I personally never had one issue streaming Netflix on two devices in HD. Maybe this was a preventive measure? Or perhaps other areas had issues while my area does not. Either way, Netflix shouldn’t have to pay ISPs not to slow bandwith, the internet should be neutral. =/

    • chuckpjones

      omegaredhs I find that very interesting. I am in Studio City, I pay the additional Time Warner charges for their extra high speed service, and I almost NEVER get to use my Netflix HD, since my speed is so bad most of the time I am lucky to get half bars.

      If there were another option available, I would be jumping on it. Time Warner has to be one of the worst providers I have ever experienced. No wonder they want to sell the company, present management sure doesn’t understand how to run it or what public service is all about.

  7. Lot’s to do about nothing… Netflix is probably paying less and getting more now. If Netflix didn’t want to do these, it really didn’t have to. While it is true 1/3 of the Internet can’t just call up ISP A and get all of it delivered, they can spread it around (as Google and other CDNs do)

    • quintonlawman

      That’s not true at all. You’re actually there justifying the degradation of content delivery, and saying that it’s cool if our ISPs don’t update their infrastructure to handle the increased traffic of the modern internet.

      That’s short-sited, and it’s an attitude that ultimately hurts you and every other consumer out there.

      You’re basically saying, it’s OK to eliminate the ability for new people to enter the market because ISPs can simply cap high-bandwidth services unless they’re willing to pay extra. You’re taking the consumer’s ability to vote with his or her wallet out of the equation, and putting out future in the hands of companies like Comcast and TWC (the two US companies with the lowest customer service rating).


      • Internet Engineer

        What I don’t understand is why only Netflix was having problems. Seems that all existing and “new people entering the market” find a way to deliver bits with good quality (otherwise there would be a huge uproar). This is not an Internet issue, it is a Netflix issue

        The Internet actually does work and all these problems appear more self inflicted (given the limited impact) to generate a public response and business benefit (free to lower prices)

        • Web Developer

          For an “internet engineer”, you don’t seem to understand how the internet works.

          The burden to improve the infrastructure lies with the provider, not with Netflix. Customers are paying their ISPs for the ability to access any part of the internet that they want. That many are choosing to access Netflix is not Netflix’s fault. If the ISP wants to continue to appeal to customers, they need to update their infrastructure to handle what their customers want to do. The burden lies with them – that’s the cost of doing business.

          • Internet Engineer

            That is not completely true. While it is the ISP is responsibility to have available capacity to reach them, it is the content providers responsibility to deliver their service in a highly reliable way (as most all do).

            Now when your customers are having a great Internet experience (due to all other available delivery systems) with all but one application (using a bad delivery system), this is not an ISP issue and it is more likely a content delivery issue.

            • Kazrath ThatsMe

              Yeah, I have to agree with the above poster on this one.. you really need a name change.

              netflix is something like 1/3 of all internet traffic in the US during primetime hours. Netflix infrastructure can handle this load. The ISP’s are/were throttling bandwidth to netflix for end-users. Hence the whole new blowup over Net Neutrality over the last few months.

              Netflix and no other company should have to pay ISP’s for interconnects. They should be provided through the major backbones like Level3 which netflix was already paying for. Now they are having to pay an additional ransom to prevent big ISP’s in the US from throttling their customers.

            • Internet Engineer

              Perhaps the Netflix servers can handle the load, but their delivery decisions cannot. This is a classic peering maneuver to cause a problem with the only solution being to peer with the problem traffic source.

              The reality today is Netflix does pay for Internet and the only difference with this deal is they are paying someone else (and probably less $$).

              Free rides don’t exist on the Internet for Netflix or any content provider… only paying Level 3 for Internet may sound great (for Level 3), but all ISPs are in the transit business and compete for content $$s. Saying that Level 3 can sell your network, but you can’t sell theirs is an interesting Internet future.

              In the end this is cheaper and better. The alternative is a new untested Internet $$ model that is great for Netflix, but perhaps not their startup competitor.

            • If ISP’s continue to sell their existing infrastructure and never upgrade everyone’s’ cost to get on the internet is going to increase. Net neutrality ensures ISP’s scale to meet the growing demands of streaming video/audio and the modern world.

          • Richard Bennett

            Too simplistic. The Internet is a decentralized network, and it’s the responsibility of every CDN to distribute their load where the capacity exists to accept it. Netflix didn’t want to to do that, so the ISPs are charging them to do their job for them – distributing a third of the Internet’s traffic in the appropriate way.

      • david pavlicko

        I think that view may be a little short sighted. It’s not like bandwidth slowly trickled up to the speed it’s at now. Streaming video takes up a LOT of bandwidth and it’s unrealistic to think the ISPs can just whip out some more fiber next week and problem solved.

        I’m all for competition and voting with your wallet, don’t get me wrong. I’m also very very worried that Comcast and TWC merge and then we are totally screwed.

        But we should prepare ourselves for bandwidth caps sooner than later, because SOMEONE has to pay for the traffic. Right now, I’m ok with Netflix working deals on the backend…my Netflix bill will probably go up a couple of bucks but it beats an extra $10/gig or whatever the ISPs will charge.

        • Web Developer

          But the ISP absolutely CAN whip out more bandwidth. In fact, that’s their entire job. If they didn’t want to continue to develop the internet’s infrastructure, they shouldn’t have gotten into the business of providing access to it. Their only job is to provide the best gateway possible to the entire internet. If they are restricting access to certain parts, they’re hurting their customers. The ISP has no business judging what customers want to use their bandwidth for – they are in the business of providing the connection. The burden to make that connection work properly lies with them.

          • Don’t look past the financial element. If an ISP’s profit margin erodes significantly due to the size and frequency of Netflix use, yet has no means of making that up through increased customer fees how do you propose they continue to provide larger and larger backbone connections to support Netflix? It makes sense Netflix pays for access and passes those costs of doing business it its subscribers. After all, they are occupying ~40% of the internet’s capacity in the evening.