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Cable Technology Feature Article

August 20, 2014

Netflix Signs Interconnection Deal with Time Warner Cable

By Tara Seals, TMCnet Contributor

Netflix is widening its stable of paid peering agreements with ISPs, adding Time Warner (News - Alert) Cable to the mix. Now, Netflix streaming over-the-top (OTT) traffic will be delivered to TWC subscribers via a direct interconnection between the two—boosting quality of service.

The deal means that Netflix now has direct peering arrangements with the top four U.S. ISPs, having signed deals with Comcast, Verizon and AT&T (News - Alert) over the last few months.

The interconnection saga for Netflix and the ISPs is a long one that has given rise to a heated war of words since the beginning of the year. To kick off 2014, Verizon prevailed in a lawsuit to block the FCC’s ability to enforce Net neutrality (News - Alert) 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.

The ruling negated the FCC’s Net neutrality requirements for ISPs, and since then, consumers have anecdotally reported slower video streaming experiences across a variety of providers. Netflix in recent filings with the FCC also blamed both Verizon and Comcast (News - Alert) for reducing its movie streams down to “nearly VHS quality.”

Netflix has thus signed direct, paid, interconnection deals (instead of the more typical settlement-free peering arrangements) with 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 percent of overall Web traffic, according to Sandvine (News - Alert)), 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.

Meanwhile, 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.

Pshaw, Netflix said. “Some broadband providers argue that our actions, and not theirs, are causing a degraded Netflix experience,” Netflix spokesperson Joris Evers noted. “Netflix does not purposely select congested routes. We pay some of the world’s largest transit networks to deliver Netflix video right to the front door of an ISP. Where the problem occurs is at that door -- the interconnection point -- when the broadband provider hasn’t provided enough capacity to accommodate the traffic their customer requested.”

Edited by Stefania Viscusi

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