Despite Comcast-Netflix deal, settlement-free peering is alive and well

In order to connect to Comcast's network you need port capacity on Comcast's routers. Netflix pushes approx. 3 Terabits [1] onto the Comcast network, so they need Comcast to supply (configure, support, monitor, upgrade, power, etc...) approx. 300 10-GigE interfaces, as well as any incremental Line Cards, Routers, Cabinets that might be required to add that port capacity and bandwidth capability to their network. (3 terabits is enough bandwidth to get your attention)

In addition, now that there is an extra 3 terabits of incoming data onto their network, Comcast also has to scale their outgoing network (to the home users) by another 3 terabits as well, so there are incremental costs there. It could be argued (and I would do so) - that those 3 terabits have already been paid for by the cable-subscribers, and so Comcast should be prepared to provide sufficient capacity to deliver it - but regardless, it's an additional cost that Comcast needs to account for, regardless of whether they are installing appliances in their network, or peering with content providers.

Comcast provides these peering locations in at least 17 discrete locations in the United States [2] - Many of those locations are just general CoLos - I've heard of about 25% on that list - so many of them aren't "Dedicated Comcast Data Centers" - they are CoLos in which multiple customers can come together and interconnect with each other or carriers such as Level3, Cogent, etc....

So, in those facilities, from Comcast's perspective, providing Port Capacity is a matter of connecting a fiber patch cable to one of their 10 GigE interfaces, and exchanging some BGP routes with a content provider.

It's true that there are several routing relationships Comcast can establish with content providers, and some of those relationships might involve placing those Content Providers in AS7922 (Comcast's Autonomous System) - but, from a cost perspective, there are a lot of costs that are duplicated, regardless of whether Comcast establishes a peering relationship with Netflix, versus having them route from within Comcast networks.

You still need to install 300+ 10 GigE ports and all the associated costs that go along with that, and you still have to provide downstream capacity of 3 Terabits to home subscribers. Peering with a partner in a 3rd party CoLo instead of having to provide them cabinets/electrical/etc for the appliances avoids those cabinet/appliance costs.

Something to keep in mind, is that in addition to providing the three terabits streaming capacity on their network, Comcast would also have to provide Capacity to keep those Appliances "supplied" - each of the appliances would need about five Terabytes of content loaded each night [3, pg 13]. There are also some operational advantages to managing a Content Provider at "arms-length" distance with BGP, versus having to do custom routing on your own network to support them. Comcast already knows how to peer and interoperate with many carriers/partners using BGP, so no new procedures/technology required to add Netflix to that list.

In the end - Netflix and Comcast each negotiated in their own best interests. Netflix's access to the Comcast network was provided in roughly the same way that Content Providers have been getting access to networks for the last 10 years, and, until there is real competition in the broadband market, you'll continue to see content providers having to pay to get access to customer eyeballs, whether that's through a transit provider, a CDN, or a paid peering relationship like we see here.

Now - if end-users could chose from several competitive Broadband providers, then maybe it would have been Comcast paying Netflix in order to provide a higher quality service to their customers so as to differentiate themselves from the other ISPs; at the very least a settlement free peering arrangement would have been much more attractive. It might be interesting to see what the nature is of paid-peering arrangements with premier content providers like Netflix are like for ISPs who operate in competitive broadband markets. My guess is that settlement free peering arrangements, and installation of the Netflix Open Connect Appliance are more common in those markets.

[1] http://blog.streamingmedia.com/2014/02/heres-comcast-netflix...

[2] http://www.comcast.com/dedicatedinternet/servicelocations/de...

[3] http://oc.nflxvideo.net/docs/OpenConnect-Deployment-Guide.pd...