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You're missing a point. Netflix _pays_ for their bandwidth. Namely, their network provider. (Or more likely, their peering points).

It's not like somebody showed up at their office and said "Here's a giant pipe, push all you want".

And "they're not paying to the right people" is an incorrect argument. You pay _your_ connection point for money, and the recipient pays theirs. Intermediate connections need to be handled by the respective networks, not the endpoints.

So if Verizon wants money, they need to extract it from their peers, not Netflix. (Or the user). Which they don't do, because, well, turns out they make enough money of it that losing a peering agreement is actually detrimental to their business.

It's completely within VZWs rights to expect money from Layer3 for peering. It's not within their rights to extract it from somebody three hops down. That is the _reason_ we have peering agreements, billing individual customers doesn't make sense.

As far as I know, there has been no claim that Level3 pays Verizon for their peering. The Verizon-Level3 peering is settlement free as both are large Tier 1 networks. What verizon is refusing to do is upgrade the size of the interconnections until Level3 either pays them for paid peering or gets their traffic ratios back to an equal ratio.

Level3 as a Tier 1 who pays no one for peering or transit, and is of course not going to do that. That leaves their transit client Netflix with the choice to either use other providers, who will likely run into the same traffic ratio issue, or pay for peering directly with Verizon.

When Netflix is pushing out 1/3rds of the internets whole traffic, and it's all going in one direction, there's practically no tier 1 network out there that can provide transit for that without breaking their peering agreements, except perhaps the same content providers (Verizon, ATT) offering paid peering to netflix. It's not unreasonable with their traffic levels to expect netflix to peer directly with the largest consumer networks.

> Not understanding this is why HN and other tech news outlets are in outrage. This is just how peering arrangements work. Unless your traffic is balanced you need to pay the cost of transit, simple as that. ... > Now, the reason Netflix is bitching is they -are- paying for transit.. they just aren't paying enough to the right people. Their problem is that their transit providers don't have sufficiently large links to Verizons network.

It is mainly because of 2 things:

1) If you pay for X internet access, you expect to get X internet access. You don't expect to get a restricted version of what Verizon puts out in its marketing. It isn't reasonable to expect a lay person to see it differently.

2) https://www.netflix.com/openconnect

Netflix is willing to let them put their hardware inside their network. Verzion, et al. refuse unless they receive "special compensation" above and beyond what is normal [normal being defined as Netflix's relationship with companies like Frontier, British Telecom, TDC, Clearwire, GVT, Telus, Bell Canada, Virgin, Cablevision, Google Fiber, Telmex].

Verizon, et al. can complain all they'd like. However, they want special treatment above and beyond what a small ISP like Google gets. Their argument is "because Verizon has a monopoly on its customers internet access". :/

Free peering is mutually beneficial: Verizon is receiving payment from customers who want to access Netflix at reasonable speeds. Verizon serves consumers, who are by definition asymmetric users.

"When you pay Verizon you pay for access to their network. Not access to Netflix's network."

I don't see it that way, not do I think, the vast majority of US consumers see it that way either.

If you go to the landing page for verizon's high speed internet service, you'll see nothing that says "You are paying for verizon network service, not internet access. The do not call the server "high speed verizon network service", they call it internet service because they know customers do not want access to verizon's network, but the internet.

Also, verizon knows many of their customers want to watch netflix, and they certainly would rather watch a netflix video with 15 seconds of buffering for every minute of actual video (which, funny enough, is probably still less wasted time than in ad supported channels as such is supplied by verizon's tv service). Thus, but fulfilling their promise to connect their customers to the internet via peering relationships to the parts of the internet that their customers demand, they are creating happy customers, how is that not mutually beneficial?

Lastly, you would have to be devoid of all pessimism to not believe this isn't about money, but control. If you look at the money verizon is charging for these peering arrangements, is quite trivial to both netflix and verizon. But it just so happens that netflix is competing with a core product of verizon. Once the peering arrangements go in, verizon has a platform to begin to influence netflix and their ilk.

I get where you're coming from, but I still don't agree with you.

If that's the case then it would be "helpful" for Netflix to configure their players to send garbage data back to Netflix as fast as possible while playing videos just to get closer to that 1:1 peering that you talk about. We both know this would benefit exactly no one, not the ISP, Netflix, or the consumer.

"When you pay Verizon you pay for access to their network" When I pay my ISP I pay for access to the Internet, not to some other net. The customer doesn't have to be preoccupied about any backroom operations necessary to provide the service contracted. OTOH, when I pay Netflix I expect it to be able to provide the content, including having a link with enough capacity.

What Netflix is doing is "bullying" a bigger company into a less favorable deal in a negotiation table. Verizon now has to deal with customer pressure to make a deal sacrificing their profit/incurring in loss. That's the way negotiations are made, you have to know who are the stakeholders, how can they affect the outcome and how can you act on them. If neither side lied then everything is ethically sound.

The outcome will depend on whether Netflix can endure a competitor who offers a better deal to Verizon and wether Verizon will bulge under customer pressure. From where I stand, Verizon is in a better position because its monopoly is stronger.

Except that I want to pay someone to deliver the traffic I request from third parties (up to a specific rate that I pay for), and just make that work.

Not for the privilege to have traffic delivered to me if the sender pays enough money to the government mandated monopoly that owns my area.

The value that Verizon gets for accepting that traffic is that I continue to pay them money; no need for the person fulfilling my request to pay Verizon for Verizon to accept things on my behalf (which is what they agreed to do). Verizon (and other ISPs) bill their service as accepting any package on my behalf, and tell me that I can have a certain rate of packages accepted and routed to me.

They're simply not upgrading their package receiving centers to reasonably reflect what their customers are ordering because they know that their customers can't do anything about it, and they don't have to provide the service they promised.

Netflix could fairly easily make the traffic symmetrical (send nonsense in the other direction), but that wouldn't be beneficial for anyone.

It would be more interesting if Netflix were able to start doing caching on the client boxes that sit there mostly idle and have a bit-torrent like protocol for distributing it.