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    Netflix Finally Pays for a Verizon Plug, Shocking No One

    Written by

    Michael Byrne


    No, it's still not quite the death of network neutrality. Netflix inking a deal with Verizon to increase its level of access to the latter ISP's network sure looks corpse-like, but the actual mechanics of the arrangement aren't quite the tiered internet of our fears. This deal, like the one Netflix made with Comcast earlier this year, sure looks like the big guys colluding—well, it is precisely that actually—but who is being colluded against is less certain.

    In order to understand what's going on with today's deal (a deal confirmed today, anyhow), we need to defer first to How the Internet Actually Works. When you load up some URL, you're not connecting to the internet directly via your computer. You're connecting to an ISP (internet service provider, like Verizon or Comcast) who does the connecting for you. The ISP, unlike your computer, is connected directly to the big stupid wire that is the internet. Via this wire it accesses different web servers that return different sorts of things via webpages back to the ISP and then to your own personal machine. It's been a good system, but one that puts a lot of power into a few hands. 

    Netflix and other similar sorts of services have historically not been directly connected to the internet either, at least in the way you might think. Instead, they've relied on third-parties to sort out the mess of pushing vast amounts of media-rich content onto the internet and then to ISPs (via long-distance transit networks, another intermediary). These are called content delivery networks (CDNs) and their job has been to take all those 120 different encodings of all 48 different episodes of Peep Show (or whatever) from the Netflix infrastructure and optimize and distribute them in a way that the internet's big stupid wire, the ISPs, and eventually your machine can digest as smartly as possible. It's been less of a good system, and the result has been declining service for Netflix and its customers (and allegations of service throttling by ISPs).

    So, Netflix built its own CDN, called Open Connect. An ISP can now hook directly into Netflix at one of eight different connection ports housed at data centers across the United States, with no need for third party CDNs. Alternatively, as an ISP, you can just install Netflix's Open Connect service directly onto your network. In return, your ISP gets better Netflix performance because being directly connected to an ISP means being able to cache content locally—as if it were a BitTorrent file—rather than upping and reupping whole movies from those connection points to local machines. 

    Netflix has been pushing its Open Connect on ISPs as a service to them, a way to improve the performance of some very large portion of the streaming media taking place over their networks. Farty Netflix makes everyone look bad. Most (smaller) ISPs have taken Netflix up on the deal, but the big fishes have held out, demanding that Netflix pay for the privilege of a direct connection. Netflix caved.

    You can see easily enough the argument that this has nothing to do with net neutrality and is really just a way to improve service by cutting out a no-longer-necessary intermediary. It's just technology moving on, adapting. You can also see easily enough the leverage that Comcast and Verizon had in squeezing Netflix for payment. Netflix is huge, but it's also at the mercy of the ISPs that control the "last mile" of connection between users and the internet's arteries. From one perspective, Netflix isn't Netflix. Netflix is whatever streaming outfit is willing and able to pay for that direct connection.

    But there's another, probably more accurate perspective. Comcast and Verizon have no love for Netflix and its bandwidth hogging service, and Netflix has money, quite a lot of it. Netflix got squeezed because it's big enough to squeeze. That's a peculiar sort of attack on neutrality, and I think one a bit different than the sort of neutrality we typically worry about, where it's users getting squeezed. Will the user squeeze come from higher Netflix rates? Eh, maybe. Probably not, or at least not in any huge way. I imagine Netflix had the fragility of its customer base in mind when it made whatever deal actually got made (we don't know specifics). But, at the same time, who really knows what might happen when you push the basic operating model of an internet giant to the ropes.