Netflix files a final parting shot to the FCC over Net neutrality | Major Businesses | Business
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Netflix has filed lengthy, sharply critical comments with the Federal Communications Commission, just barely under the wire of the regulatory agency closing its public comment on a controversial Net neutrality proposal.


Earlier in the year Verizon prevailed in a lawsuit to block the FCC’s ability to enforce Net neutrality rules by essentially arguing that Internet services are not communications services. “The FCC has acted without statutory authority to insert itself into this crucial segment of the American economy, while failing to show any factual need to do so,” Verizon said in its brief to the court.

Since then, consumers have anecdotally reported slower video streaming experiences across a variety of providers.

The FCC’s new proposed rules for regulating broadband Internet include a provision prohibiting ISPs from separating Web traffic into fast and slow lanes. But, while throttling websites specifically is a banned practice, FCC Chairman Tom Wheeler has left the door open for companies to strike commercial deals with ISPs to have their traffic prioritised over others when it comes to bandwidth allocation and faster delivery. Critics have been concerned that allowing this behaviour would essentially translate into smaller Web companies being squeezed out of the market, because only the larger ones would have the ability to pay the toll, as it were. And that in turn, they say, would result in a stifling of innovation, a reduction in the marketplace of ideas and the killing of the long-tail economy that has sustained the Internet to date.

Before deciding on any new course of action however, the FCC was seeking comment on the proposal. And in a 28-page filing, Netflix urged the FCC to reclassify broadband providers as Title II services that would allow the agency to treat them like a telephone service and other public utilities, thus bringing them back under its regulatory purview.

The company also blamed both Verizon and Comcast for reducing its movie streams down to “nearly VHS quality.” Netflix has signed direct, paid, interconnection deals (instead of the more typical settlement-free peering arrangements) with both ISPs in a state of affairs that CEO Reed Hastings is clearly not happy about.

“Some big ISPs are extracting a toll because they can - they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay,” Hastings noted in a blog a few months back. “Though they have the scale and power to do this, they should realize it is in their long term interest to back strong Net neutrality. While in the short term Netflix will in cases reluctantly pay large ISPs to ensure a high quality member experience, we will continue to fight for the Internet the world needs and deserves.”

He added, “If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future,” he added. “Roughly the same arbitrary tax is demanded from the intermediaries such as Cogent and Level 3, who supply millions of websites with connectivity, leading to a poor consumer experience.”

Netflix accounts for a majority of peak Web traffic on any given day (and 30% of overall Web traffic), which has given rise to a series of disputes over settlement-free peering arrangements, which Hastings was alluding to. Comcast for instance told Level 3 it would no longer exchange Internet traffic without being paid for it, back in 2010. At the time, Level 3 was a main backbone provider for Netflix, and was sending more traffic to Comcast than Comcast was sending back to Level 3 — an uneven arrangement that demanded compensation, in Comcast's view, to help pay for necessary network upgrades to accommodate all of that traffic.

Major ISPs like Verizon, Comcast, AT&T and Time Warner Cable have also been involved in ongoing disputes related to peering and Netflix backbone provider Cogent Communications. Last summer, Cogent accused Verizon of delaying upgrades to the ports through which the two companies exchange Internet traffic.

"Cogent is not compliant with one of the basic and long-standing requirements for most settlement-free peering arrangements: that traffic between the providers be roughly in balance," Verizon said at the time. "When the traffic loads are not symmetric, the provider with the heavier load typically pays the other for transit. This isn't a story about Netflix, or about Verizon 'letting' anybody's traffic deteriorate. This is a fairly boring story about a bandwidth provider that is unhappy that they are out of balance and will have to make alternative arrangements for capacity enhancements, just like any other interconnecting ISP."

Emphasising that he is not willing to enter into paid peering arrangements, Cogent Communications CEO Dave Schaeffer has publically offered to resolve the impasse with the ISPs over Netflix and other streaming, by paying the capital cost required for these companies to upgrade the connections (as well as Cogent's own costs) to ensure adequate capacity to deliver quality service.

Verizon and Netflix are also locked in a war of words over streaming quality and interconnection. Netflix in May began serving customers an on-screen message blaming the relevant ISP for network congestion if a video takes too long to buffer when streaming. After being called out for poor speeds, Verizon subsequently sent the over-the-top (OTT) giant a cease-and-desist letter demanding that Netflix stop sending such messages to its customers, and requested a list of Verizon ISP customers that Netflix has contacted so far.

"This is about consumers not getting what they paid for from their broadband provider,'' Netflix spokesman Jonathan Friedland said. "We are trying to provide more transparency, just like we do with the ISP Speed Index, and Verizon is trying to shut down that discussion."

Verizon, though, says that Netflix is blaming the wrong carrier. "Netflix has been aware for some time that a few Internet middlemen have congestion issues with some IP Networks and nonetheless, Netflix has chosen to continue sending its traffic over those congested routes," Milch said.

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