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Streaming Video & Net Neutrality

By 21 October 2010 3 Comments

According to Sandvine, via Connected Planet, “Netflix video streaming traffic already accounts for more than 20 percent of the downstream traffic in the U.S. between the peak usage hours of 8 p.m. to 10 p.m.”

This provides an opportunity for advocates of Net Neutrality to get real about how they would treat specific business practices, in accord with my view that airy abstraction is the curse of this policy debate. Should carriers be allowed to charge Netflix (or their subscribers) a premium for delivery during these hours? Grant a discount for off-peak use?

It is an axiom of network economics that an effort to support capacity necessary to meet peak use can increase the costs to everyone, and that shifting the temporal demand curve can benefit everyone. That is why the D.C. Metro charges more during rush hour, and why movie theaters have matinee prices.

The Internet problem will become even more acute as the number of mobile devices increases and everyone wants to use scarce spectrum at the same time.

Another specific: “The Sandvine report also noted that peer-to-peer traffic, which the company previously highlighted as the dominant bandwidth force on the Internet, has evolved to include more live peer-to-peer video and TV streaming through services like PPLive, PPStream, StreamTorrent and others. ‘Peer-to-peer is very dominant in Asia now, and it’s starting to grow elsewhere,’ [Sandvine CEO] Caputo said. ‘The upstream bandwidth demands will be higher for this live traffic.’ ”

As George Ou points out regularly, P2P creates many bandwidth problems for other users. As far as I can tell, it is also used almost exclusively for unauthorized downloading of copyrighted content. So do Net Neutrality principles forbid carriers to take any action to discourage it? Again, specific discussion would be in order.

By the way — I don’t know what the NN advocates would say about temporal price discrimination, largely because the definition of NN is vague. I am pretty sure that would oppose any effort to diminish P2P, since the most vigorous advocates of NN, such as Free Press, also want to discourage protection of content.

Connected Planet is running a virtual forum on telecom next Tuesday — this issue might furnish some useful discussion fodder.

3 Comments »

  • George Ou said:

    “Should carriers be allowed to charge Netflix (or their subscribers) a premium for delivery during these hours? Grant a discount for off-peak use?”

    Carriers cannot charge Netflix a dime based on their existing contractual peering obligations. I’m not even talking about what the FCC or congress would do to them if they tried to levy a forceful terminating tariff. The peering obligations would require that they deliver all legitimate traffic (excluding malicious attack payloads) on a best effort basis.

    Now of course the ISP can offer a more attractive delivery service with price and performance characteristics that services like Netflix want to use.

    Ultimately, it wouldn’t matter if Netflix was consuming 90% of the data during peak hours if that’s what people want to use their broadband service for. The ISP should certainly be able to manage the traffic fairly such that other subscribers and other applications can get a fair share of the capacity if they so choose. But if the users are choosing to use only Netflix and/or only YouTube, then the network could be 100% used by Netflix and YouTube and the ISP shouldn’t do anything about it.

    ISPs are already charging or exchanging for the peering which pays for the traffic coming from the servers. That’s why they aren’t entitled to charge more. The broadband subscribers also pays their end of the connection, but only on a current best effort basis. Where the ISP can and should be allowed to charge more is for better than best effort service to either the content/application side or the subscriber side.

  • Andy C. said:

    George — If Netflix users do ramp up their streaming usage considerably (particularly for HD), there’s a reasonable scenario where current network capacity will not be adequate–and therefore, “best efforts” will not be adequate.

    Wouldn’t the next move for carriers then be to increase capacity, but only for their preferenced product; i.e., “a more attractive delivery service with price and performance characteristics that services like Netflix want to use.” Netflix would then need to pay for this service, or risk losing customers.

    Isn’t this a way for the carriers to circumvent their current contractual peering obligations, effectively eliminating net neutrality restrictions?

  • George Ou said:

    Andy,

    ISPs can leave their transit connections unupgraded, but that’s risky because users will start complaining if they risk losing them. In reality, network carriers do frequent and expensive upgrades (on the order of billions of dollars a year for large carriers like AT&T).

    Comcast doesn’t have as deep a backbone network from my understanding, but it can’t be bad either. They do encourage paid peering which costs content providers less than the transit they’re already paying and with much better performance characteristics. This is not illegal, it doesn’t violate their existing peering agreements, and I there is no such thing as “net neutrality restrictions”.

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