back to article Netflix and other OTT giants use 'net neutrality' rules to clobber EU rivals

Cable giant Netflix and other big firms are using calls for greater net neutrality to drive down the prices they pay, according to recently published research. Referring specifically to the Dutch internet market, late last week John Strand of Strand Consulting said: “Net neutrality law (which limits operators’ ability to …

  1. Charlie Clark Silver badge

    Now it should be remembered that "sender pays" is a founding principle of internet video — video providers can’t use reciprocal free peering swaps to deliver low latency, high bandwidth traffic.

    I don't agree with this. At some point NetFlix is attached to one of the big carriers (Level 3) and will be billed by them for the traffic based on the agreements they have with the other ISPs.

    Net neutrality can only be about ISPs not privileging their own offerings over those of other companies. Customers should be prepared to may more for higher bandwidth, lower latency, better QoS, etc.

    NetFlix and bandwidth costs are being used a strawman by vested interests when the main battle, as always, is about the price charged for content. Most countries in Europe have a pretty healthy VoD market with players like Watchever already well-established and the European Commission pushing to remove preferential, location-specific deals: content in Germany, France or the UK should not cost more (or less) than in Estonia.

  2. Tom 38 Silver badge

    Cable giant Netflix This is some new definition of "cable giant" you have come up with? The first "cable giant" that runs no cables.

    Norway’s biggest ISP, Telenor, was keen to improve the quality of its OTT video service, and offered a commercial rates direct connection…

    “Telenor said ‘send it direct to us and customers will get a better experience’, but the US company said it preferred direct connection,”

    Wow that's jolly nice of Telenor, offering to take all of Netflix's content and stick it into Telenor's OTT service. What possibly could be Netflix's issue with their content being sucked up by whatever system has been chucked together by Telenor.

    Now it should be remembered that "sender pays" is a founding principle of internet video — video providers can’t use reciprocal free peering swaps to deliver low latency, high bandwidth traffic.

    So I pay my ISP and my supplier pays my ISP? Good times to be an ISP.

  3. John Robson Silver badge

    Netflix don't peer

    They pump.

    Peering arrangements imply traffic goes both ways.

    Yes they should pay for their own connections to the internet - that's what these interconnect charges are aren't they?

    1. Yet Another Anonymous coward Silver badge

      Re: Netflix don't peer

      Netflix aren't an ISP or a telco or a peer. They are a website.

      Connections to the reg aren't peered either and I read a lot more than I comment - should the reg have to pay my ISP as well as me paying them ?

  4. Raumkraut

    Norway’s biggest ISP, Telenor, was keen to improve the quality of its OTT video service, and offered a commercial rates direct connection, said Layton...

    “Telenor said ‘send it direct to us and customers will get a better experience’, but the US company said it preferred direct connection,” said Layton.

    What?

    Telenor offered a direct connection, but Netflix refused because they wanted a direct connection?

    What?

  5. cray74

    Oh, my gosh. Corporations exploiting loopholes in ideologically-driven regulatory actions? That's never happened in recent history.

    This must be a fluke. I bet we could safely alter housing, lending, and energy market regulations without risk of exploitation and market bubbles.

    1. Indolent Wretch

      I don't understand where the exploit or the loop hole here is.

      Netflix provide video I want to stream.

      I pay Netflix to stream the bits from them

      I pay my internet provider to deliver the bits I'm streaming.

      I pay my internet provider quite a bit to do this.

      Maybe they should just do their frikking job and stop whining.

      If they don't like it they can put their prices up.

      And entire industry based on the corrupt premise that they are selling X

      when they are actually selling X*10 to a 1000 people and hoping they don't

      all use it at once. Or on things they don't like.

      Small print writing tossers.

      1. Andrew Orlowski (Written by Reg staff)

        But who's whining? Netflix spent two years "whining" that it couldn't do direct peering with ISPs (or if you prefer, arguing that its CDN is super-duper and good enough). It produced a shit list that was very misleading, to help it.

        This year direct peering is fine, Netflix signed direct peering deals with major ISPs.

        Remember: we have always been at war with Eurasia.

  6. Steve Todd Silver badge

    This is all part of the myth that ISPs are trying to spin

    The likes of Netflix, Amazon etc pay for their internet connections and content delivery. They want to peer at public exchanges, and certainly in the case of Netflix, provide free caching hardware to reduce the amount of public trafic. They pay to deliver the data to the public exchange, the ISP pays to take it from there to their private network (which is what their customers pay them to do). Netflix is open and upfront about this. It says on their web site, in black and white, that they will only engage in private peering in limited circumstances.

    Net neutrality is nothing to do with this. ISPs are allowed to manage data on their network. What they are not allowed to do is unfairly prioritise data based on payment by the content provider.

    1. Anonymous Coward
      Anonymous Coward

      There are many myths.

      "The likes of Netflix, Amazon etc pay for their internet connections and content delivery."

      True. Netflix and Amazon pay say, Level3. Not your ISP. If your ISP doesn't peer with Level3, they have to pay Level3 for transit to get to Netflix or Amazon. Level3 gets paid twice, so the transit providers are really the ones double-dipping. As your Netflix subscription means increased transit traffic, your subscription effectively becomes an increased cost to your ISP, reducing the margin they make on your connection. Which is usually very small already.

      This is also where potential clobbering comes in. Netflix and Amazon being kinda huge almost certainly pay less per Mbps for transit vs a smaller content provider or small ISP. So one side of the deal connection Level3 may charge 10-20c/Mbps, the other €1-2 for the same bits. So this is relatively normal, ie buy in bulk, get better pricing. But it's also where regulators tend to (or should) take a closer look to see if there's SMP (Significant Market Power) and any market abuse or competition concerns.

      "They pay to deliver the data to the public exchange, the ISP pays to take it from there to their private network (which is what their customers pay them to do). Netflix is open and upfront about this. It says on their web site, in black and white, that they will only engage in private peering in limited circumstances."

      But that approach can be bad for both quality and cost. It potentially keeps costs down for Netflix, but may force additional costs onto the ISP. So where Netflix is present on an exchange, they rent a few ports and can peer with multiple ISPs. The ISP does the same, but if Netflix traffic exceeds their port capacity, quality drops and they'd be forced to pay the exchange for additional ports. And to borrow from another commentor- "LINX applies a surcharge if your ports exceed 80% of capacity, that's all". Generally if you're exchanging substantial traffic with another peer, it's better to take that off-exchange via private peering. But that would mean Netflix would have to have more ports available, so again they're avoiding costs and passing them through to the ISP.

      There are also other potential challenges, like Hungary's proposed Internet Tax. If that happens, ISP's would get charged a per Gbps tax for your video streams. How would that cost be recovered?

      1. Tom 38 Silver badge

        Re: There are many myths.

        If your ISP doesn't peer with Level3, they have to pay Level3 for transit to get to Netflix or Amazon.

        I pay my ISP to make peering arrangements so that I can access the internet. This is the purpose and reason for being for an ISP, I do not need them for anything else. If the ISP chooses to not make peering arrangements with the main internet peers to save costs, that is their problem.

        I don't want my ISP to charge the sites that I want to visit for me to visit them because that is what I am paying the ISP to provide to me - access to those sites. If they can't provide that without charging the other site, what am I paying the ISP for?

  7. pepsiman

    Professor Layton

    "academic Ros Layton"

    Professor Layton?

    http://en.wikipedia.org/wiki/Professor_Layton

  8. SolidSquid

    Got to admit, I agree with Netflix here. If you're going to sell me a connection for £x/month, I'd expect you to actually be able to provide that. If your infrastructure isn't up to handling the service you're selling then you need to spend your own money on upgrading, not expect others to pay for fixing your over-selling

    1. ecofeco Silver badge

      In the US, that's just crazy socialist commie talk.

      The corporation is always right and the customer is always wrong and sometimes the watchdog agencies do their job, but the customer almost NEVER sees a rebate, let alone real money for damages.

  9. Mage Silver badge

    Providers pay too

    Yes you pay your ISP for a connection, but usually the T&C forbid public hosting on a domestic connection. In the past providers had to pay per byte for upload AND hundreds of times more for the connection. Why should Netflix get a free ride?

    1. brainbone

      Re: Providers pay too

      How is Netflix getting a free ride? They pay for their connection, just as you pay for yours. Why should they pay your ISP when they are already paying theirs?

    2. KjetilS

      Re: Providers pay too

      They don't. Netflix does pay (probably a lot) for their own connection.

      What the ISPs want is to get paid yet again to deliver the packets they already get paid to deliver.

      1. Andrew Orlowski (Written by Reg staff)

        Re: Re: Providers pay too

        "What the ISPs want is to get paid yet again to deliver the packets they already get paid to deliver."

        Er, no. ISPs aren't asking to get paid twice, because they haven't been paid once. It's simply a row about how two businesses divvy up the costs.

        1. brainbone

          Re: Providers pay too

          Re: "because they haven't been paid once"

          Er, yes they have -- or does my $80 per month to my ISP not count as a payment in your book?

          Re: "direct peering arrangement"...

          That's simply another way of saying: "We'll throttle traffic on your current transit provider unless you pony up for a 'direct peering arrangement'" -- and that's _exactly_ what happens.

          1. Andrew Orlowski (Written by Reg staff)

            Re: Re: Providers pay too

            "Re: "direct peering arrangement" == That's simply another way of saying: "We'll throttle traffic on your current transit provider unless you pony up for a 'direct peering arrangement'" -- and that's _exactly_ what happens."

            Nobody is throttling. A modern packet switched network is a contested resource in which the greediest application wins.

            See:

            ... "it is always contested even when it is not congested"

            ... "other internet users are not neutral to you. Every packet is pollution to someone else and the polluter doesn't pay. So really it's a war, a battle for resources, in which the greediest application over the biggest pipe triumphs. The strongest will always win"

            http://www.theregister.co.uk/Print/2014/05/09/net_neutrality_explained_and_how_to_get_a_better_internet/

            You don't understand how the internet works. When you do, we may then agree or disagree about what regulation it needs. (And in that article I raise genuine competition issues they're just not the ones people talk about very much).

    3. localzuk

      Re: Providers pay too

      Let's put it simply.

      I go and slap a server into a data-centre. I pay that data-centre for the power usage and net connection, which they pay for via various peering arrangements with companies like Level3.

      A customer of mine wants to connect to my server, so they sign up to an ISP and pay for the data they use, and that ISP then pays to peer with companies like Level3. My customer can then access my server.

      What Netflix is saying - we already pay to peer with people like Level3, so why should we pay the ISP of the customer accessing us? No-one else does!

      They even go one step further and provide free caching hardware to stick into peering locations, so data is going the shortest distance possible. Yet people are saying they should still pay even more.

      I entirely agree with Netflix on this.

      1. Andrew Orlowski (Written by Reg staff)

        Re: Re: Providers pay too

        "No one else does"

        But they do, everyone who needs to move large amounts of video reliably does it. They either use L3 or (better) a direct peering arrangement, or build their own private network (Google). Video traffic is not like email. Conventional reciprocal pubic peering doesn't cut it.

        1. localzuk

          Re: Providers pay too

          I still disagree Andrew. I'm a customer of my ISP. I'm paying for internet access - that access is for the entire internet, not just the "non-video" bits. The ISPs should be using that money to provide the back end needed to cover it. If they aren't earning enough, they need to charge customers more, not look to charge the content providers, else you end up creating a 2 tier web - one where there's companies paying ISPs for access, and one where companies don't pay and the end users can't access their sites properly. I don't want that internet.

          Put it this way - without content providers, ISPs wouldn't have a business. The sole purpose of ISPs is to connect people to content...

    4. ecofeco Silver badge

      Re: Providers pay too

      While I agree with most of the sentiments here that it looks like the Level 3 businesses are trying to get paid from both ends, Andrew is right in that video is a class of problem all by itself.

      Video EATS bandwidth. It EATS processing power. It EATS all the cooling you can throw at it. Even with modern compression, it's still the 800lb gorilla. All of that translate into costs.

      That said, yeah, it's too bad if my ISP can't handle it. They are already screwing me, aren't they? "FTC sues AT&T for throttling 'unlimited' data plans on the sly"

    5. Daniel B.

      Re: Providers pay too

      Yes you pay your ISP for a connection, but usually the T&C forbid public hosting on a domestic connection.

      And this should be made illegal with six or seven-figure fines per violation for ISPs to put these T&Cs. Internet connectivity is both ways, not a "grab stuff from outside" thing only. This is also why CGNAT should be explicitly made illegal as well.

      Forbidding end users from hosting stuff or having a public IP is the equivalent of having a landline phone service that can't receive calls. Sure you can call, but it's pretty much useless as nobody can call you.

      Interestingly, usage of NAT is one of the main reasons we have this "asymmetrical" data flow problem in the first place! Older IM programs and apps would directly peer between end-users, with the "central server" being used only for IP discovery; see how ICQ used to work in the early days. These days, thanks to NAT everyone has to go through a central server because NAT breaks connectivity everywhere and you can't be sure about anything on the other side anymore.

  10. KjetilS

    I live in Norway, and if Telenor says something, it's usually best to just assume the exact opposite is true.

  11. Anonymous Coward
    FAIL

    “Net neutrality law (which limits operators’ ability to manage networks and recover costs)

    Is there some special 'net neutrality law' Strand's talking about that I'm not familiar with? If their networks are so overcommitted that their management traffic (that is what he's talking about, right?) gets dropped, they have bigger problems.

    1. Yet Another Anonymous coward Silver badge

      limits operators’ ability to ... recover costs

      Like security guards limit bank robbers ability to recover costs

  12. scrubber

    "Net neutrality law ... rolls out the red carpet for the American giant"

    Just like roads roll out the red carpet for Tesco (or did!) or running water does for Radox.

  13. brainbone

    bringing your own cockroach

    "It’s like bringing your own cockroach to McDonalds, then making a complaint about their hygiene"

    No, it's more like dropping a bus load of customers off at McDonalds, but McDonalds insists that they will serve the passengers at a slower rate than everyone else, unless the bus driver pays McDonalds an inconvenience charge.

  14. Uncle Ron

    OTT

    I don't consider an ISP to be a "startup" in OTT content services. They just happen to own the wires--and huge profits. Poor Telenor wants to offer "TelenorFlix" and finds it tough to compete with the big bad Netflix from the US. They're having a hard time further monetizing (a word I hate) their semi-monopoly, which began over a hundred years ago as a -state owned- monopoly.

    IMHO, The ISP's and cable TV companies should stick to their knitting. They shouldn't be allowed to build or buy a content and advert offering on the back of the business they simply inherited. They shouldn't be allowed to use their government sponsored franchise--or License to Print Money--against a successful specialist that has done almost everything right.

    This "sense of entitlement" on the part of monopoly telecoms and monopoly cable TV companies around the world is breathtaking. They feel they should be the arbiters--and gatekeepers--of everything we see and hear. We must separate--completely--the plumbing and the content, or this bellyaching--and the consequent fleecing of consumers--will never stop.

    1. Andrew Orlowski (Written by Reg staff)

      Re: OTT

      "Telenor wants to offer "TelenorFlix"

      [citation needed]

      Do you mean like BT spending billions buying football rights and bunding it with their network?Please explain why that is evil.

      1. Anonymous Coward
        Stop

        Re: OTT

        "Do you mean like BT spending billions buying football rights and bunding it with their network?Please explain why that is evil"

        As do BT expects the other ISPs deliver their transmissions over internet for the BT costumers? And Netflix paying their millions to offer video streaming service?

        1. Andrew Orlowski (Written by Reg staff)

          Re: OTT

          I don't understand. Where's the evil, exactly?

  15. Jamie Jones Silver badge

    Great plays on at my local theatre at the moment

    So great, I've been regularly spending money on the bus to get there.

    To save a bit of cash, I bought a season ticket. Now the bus company is complaining I use the bus too much, and want to charge the theatre when I do so.

    1. James 100

      Re: Great plays on at my local theatre at the moment

      Exactly.

      I pay my ISP for my bandwidth, including transit to/from LINX. Netflix pays for its own bandwidth to/from LINX too. They split the costs of LINX between themselves and all the other members. (Neither LINX nor my ISP has any ratio requirement for peering: LINX applies a surcharge if your ports exceed 80% of capacity, that's all.)

      Of course, it doesn't help when ISPs offer "unlimited" connections with very high peak speeds but no way of delivering heavy usage at those prices - but letting them try to squeeze money out of the sites their customers visit is the wrong solution to that.

  16. Confused Vorlon

    Let's try a thought experiment.

    Netflix start charging ISPs for the privilege of delivering Netflix.

    Virgin signs the first deal (at advantageous rates) and start advertising that if you want Netflix, you need Virgin.

    Would the other ISPs breathe a sigh of relief at the fact they no longer needed to deliver all that video traffic, or would they scream bloody murder that Netflix was being unfair - while haemorrhaging customers?

    The reason our ISPs get to charge us more for larger/faster connections is that we want to watch Netflix and iPlayer. They should stop whining about the fact that we expect them to deliver Netflix and iPlayer.

    1. Mike VandeVelde
      Flame

      Netflix Charging

      I think Netflix should structure their pricing differently. $8.99 for Netflix, unless you use one of the ISPs who are double dipping then it's $12.99. Pass the extortion costs on to the appropriate customer. I sure don't want any of my subscription money going to prop up any of these monopoly dinosaurs, how is that fair?

  17. This post has been deleted by a moderator

  18. noominy.noom

    Andrew would fit right in with the commentators on the far right in America. He's redefining terms in sneaky ways, e.g. “Net neutrality law (which limits operators’ ability to manage networks and recover costs)" Net neutrality does no such thing and is not related to management. You can manage the packets by type all you want. Doesn't have anything to do with net neutrality.

    1. Andrew Orlowski (Written by Reg staff)

      eh?

      "You can manage the packets by type all you want. Doesn't have anything to do with net neutrality."

      So "net neutrality" was never about packet discrimination or service discrimination, as everyone thinks. Including the person who coined the phrase "net neutrality". And the people who wrote the FCC's 2010 Open Internet Order. ("blocking lawful content, applications, services, or non-harmful devices") Or the EU's neutrality consultation aka "traffic management investigation".

      http://ec.europa.eu/digital-agenda/sites/digital-agenda/files/Traffic%20Management%20Investigation%20BEREC_2.pdf

      It was always about regulating peering arrangements?

      @noominy.noom: "He's redefining terms in sneaky ways"

      It isn't me who's redefining terms in sneaky ways. Neutrality means whatever neutrality activists want to mean, and that depends on whatever they want to regulate this year. I wonder what "net neutrality" will be about next year? It's anyone's guess.

      (And remember: we have always been at War with Eurasia.)

      1. Daniel B.
        Boffin

        Net Neutrality

        Net Neutrality basically means that whatever bandwidth you pay is the bandwidth you get. Content is irrelevant, and that is how things should stay.

        Content providers can and should set up links with IX facilities, and optionally they might set up some kind of content cache within some ISP's networks. Yes, if they set up the latter they should at least pay the ISP for the link on their side. But that isn't the issue with Net Neutrality.

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