Technology Experts Clash Over Implications for Future Streaming Services Following Verizon-Netflix Dispute
The dust-up between Verizon and Netflix over which company is to blame for the slowdown in streaming has raised some concern for possible new entrants into the content streaming market, while some technology analysts argue that the issue comes down to how content companies and ISPs negotiate interconnection or peering agreements, which is how the Internet business model works. Verizon said it’s working with Netflix to avoid congestion problems that prompted Netflix to send on-screen messages to customers claiming that the ISP’s network was crowded (CD July 22 p12).
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Transit network providers Cogent and Level 3 maintain that a refusal by ISPs to upgrade their connections adversely affects customers using the transit networks and could affect the potential for new streaming services to enter the market. Transit providers are “stymied,” said Cogent CEO Dave Schaeffer. When the companies using the transit networks try to get to the ISPs’ end-users, “they're unable to get there, even though those providers have charged their customers for access to the Internet,” he said. It doesn’t really threaten Cogent’s business, he said. But “it creates a lower quality of service than we'd like to deliver to our customers,” he added.
As a result of the edge networks exercising their control over access to their subscribers, “they want to turn the backbone providers and CDN [content delivery network] providers into their customers as well,” said John Ryan, Level 3 general counsel. “The Internet service you would get as a subscriber could be solely a connection to those networks and content applications that have chosen to pay your broadband provider,” he said.
Someone with a bright idea for a new application to be delivered to every broadband subscriber would have to negotiate separate deals with every one of those retail ISPs “instead of being able to go and competitively shop among those carriers with all robust connections,” Ryan said. Schaeffer agreed, saying when ISPs have a competing business, “they are reluctant to allow an innovator to come in and directly compete with them,” he said.
The situation creates uncertainty for other content streamers expecting their throughput to increase, said John Bergmayer, Public Knowledge senior staff attorney. “If I were another big content streamer, I'd be planning for the worst.” Such a company would likely have to plan to pay some of the larger ISPs the fees they think that they can demand, he said. “It’s unclear what the limiting principle is in terms of how much an ISP with millions of customers can charge a company that really needs to access all those customers or it doesn’t have a business model,” he said.
There is “no impact” on startups or small content streaming companies because their content is delivered to third-party CDNs, like Level 3, said Dan Rayburn, a principal analyst in digital media at Frost Sullivan. These CDNs already have the capacity in place with the ISPs, he said. “No one’s throttling traffic,” he said. There’s buffering and lagging when there isn’t enough capacity at certain connection points, he said. It’s just a business disagreement, Rayburn added: Sometimes there’s free peering and sometimes there’s a cost, he said. “Sometimes it’s settlement-free, sometimes you pay for interconnect."
Doug Brake, a telecom policy analyst at the Information Technology and Innovation Foundation, agreed that a streaming service “can’t rely solely on settlement-free peering forever if their throughput needs continue to increase,” he said. If a company is running an application that relies on high levels of throughput, “you will need to ensure sufficient interconnection -- this really isn’t anything new,” he said. The right arrangement for any particular service will depend on a number of other factors, and other streaming services won’t necessarily follow in Netflix’s footsteps in negotiating direct interconnection, he said. The particular interconnection arrangement for a video streaming service would vary depending on a service’s scale, the peak demand, and many other factors, he said: “There are a number of trade-offs I'm sure these companies are already well aware of."
Google provides a Video Quality Report aimed at helping YouTube users understand the streaming quality on their ISPs (CD June 19 p18). The tool claims that video streaming quality suffers when an ISP doesn’t ensure that there is enough capacity (http://bit.ly/KQbxOB). Google is working on improvements for YouTube viewing, including adaptive bitrate streaming and a new video codec “that shrinks the video file down so we can show you uninterrupted HD or even 4K quality at half the bandwidth currently used,” a spokesman said.
More information on payments for interconnection could shine a light on the matter, some analysts said. It’s not really clear what payments to ISPs cover or “what’s to keep them in check to make sure they're not just charging for access to their customers instead of just interconnection costs,” Bergmayer said. It’s not enough to know how much Netflix is paying Comcast, “but what are the actual costs that those fees are supposed to cover and how is that calculated,” he said. The content companies involved in the debate aren’t discussing what they're paying, the length of their contracts, or what they're paying for interconnection from ISPs compared with how much they pay transit providers, Rayburn said.(klane@warren-news.com)