The Cost Of Permission Culture: Or Why Netflix Streaming Library Sucks Compared To Its DVD Library

from the first-sale-is-important dept

Why can't movie-streaming sites deliver the selection of movies that customers obviously want? This was the question posed by a recent New York Times column, comparing undersupplied services like Netflix with unauthorized platforms like Popcorn Time. The answer, the Times explains, is windowing—the industry practice of selling exclusivity periods to certain markets and platforms, with the result of staggered launches.

But the Times fails to ask a more fundamental question: why do streaming sites have to listen to Hollywood's windowing demands in the first place? After all, while it's clear why the studios like windowing—they can sell the same rights over and over once the promised exclusivity periods expire—it doesn't seem like a very good deal for users. Those users get access to a smaller selection, higher prices, and fewer choices between platforms and services. It should be astonishing that a company that once had to maintain and transport a staggering inventory of fragile plastic discs is able to offer less when its marginal cost dropped to near zero.

The problem is that, unlike earlier movie-rental options, streaming rights fall fundamentally within a permission culture. Netflix is a great illustration of what's gone wrong here. It's gone from having a nearly unrivaled catalog of films available to rent to being the butt of Onion jokes. What happened: It shifted from a system where nobody had a veto power over its operations, to one where it had to get permission and make deals with Hollywood. Sometimes it's difficult to find the concrete costs of living in a permission culture, but the decline of Netflix's selection is an important cautionary tale.

It's especially clear when you look at how Netflix upended the movie rental market in the first place. In one way, it suffered from a major competitive disadvantage: competitors like Blockbuster had locations near people's houses. As long as those stores had the movie you wanted, you could be watching within hours—not days—of deciding on a title.

But Netflix was able to experiment with different price points and subscription models and, crucially, it could try those without first convincing any incumbents. Both Blockbuster and Netflix's DVD-by-mail service relied on the first sale doctrine, meaning they can buy physical copies of movies, and then resell or rent at any price they like. No royalties, no licenses, no contracts—with physical media, once a rental company has bought the copy, the copyright holder is basically out of the picture.

You can see how this is great for users. Companies can experiment to find the things that people like best, and have the power to make decisions based on their users' needs and wants. Movie studios still got paid—these rental companies were buying lots and lots of copies, after all—but couldn't exert control over the rental businesses, which could then compete on their merits.

Rightsholders hate not having this control. So the first sale doctrine gets attacked over and over. From Nintendo's suing Blockbuster in the 80s to Universal's "revenue sharing agreement" with Redbox, and through to more recent cases like Kirtsaeng v. Wiley in the Supreme Court, rightsholders have tried to restrict the first sale doctrine in physical media. And when it comes to digital media, consumers have even more of an uphill battle.

When the ranking member of the House Subcommittee on intellectual property is calling the principle of "you bought it, you own it" an extreme view, there's something seriously wrong here. Furthermore, the Netflix example shows that the problem isn't confined to the books, movies, records, and games that we own; it limits the kinds of services that can ever be created.

With a commercial product like Netflix, we can feel those costs today. But more troubling are the costs we will feel tomorrow, in a decade or a century from now, if we make a transition to digital media without keeping the first sale doctrine intact. Copyright has already cost us crucial elements of our cinematic and literary history. Those costs will compound if librarians, archivists, and enthusiasts aren't allowed to care for their own copies.

As Matt Schruers over at the DisCo Project notes, studio practices have ensured that no option so far can be convenient, comprehensive, and lawful. Netflix Instant is a great service for what it is able to offer, but in a permission culture it is broken from the start.

Filed Under: copyright, first sale, permission culture, streaming
Companies: netflix

Lawmaker Responds To Studio's 'More Tax Breaks Or We Walk' Letter With Eminent Domain Seizure Amendment

from the I-guess-it's-back-to-Hollywood,-where-people-treat-each-other-right dept

Here's the sort of thing that results when bad behavior is greeted with worse behavior.

The bad behavior is production companies seeking tax breaks. Politicians love to grant these tax breaks because a) they like having celebrities around and b) they've bought into the perception that somehow shooting a movie or TV series in town is a net fiscal gain for the community. Generally speaking, the first is almost always true and the latter is seldom ever true. A 2010 Tax Foundation study found that most cities granting tax breaks make back less than $0.20 per dollar "invested."

Media Rights Capital, the company behind Netflix hit "House of Cards," has already collected $26.6 million from the state of Maryland. But it isn't enough.

It began late last month when Charlie Goldstein, the senior vice president of Media Rights Capital, sent a letter to Maryland Gov. Martin O'Malley, threatening to leave the state if the show was not provided with millions of dollars more in tax credits for which it believes it should qualify.

In the letter, Goldstein wrote that the company would "break down [their] stage, sets and offices and set up in another state."

This is standard operating procedure for studios -- playing cities and states off each other in hopes of obtaining perpetually escalating tax breaks in exchange for a steadily diminishing ROI on taxpayer funds. Totally the sort of thing the state should have expected when it started handing out free money.

The response, however, was even worse. Rather than calling the studio's bluff and helping it pack its bags, a legislator chose to do this:

Delegate Bill Frick introduced an amendment to a budget bill that would allow Maryland to seize the production company's property under eminent domain in the event it leaves the state.

Of all the wrong things legislators have ever done, eminent domain is one of the very worst. Bill Frick has an excuse, however.

Frick said the move was inspired by the style of politics depicted on "House of Cards" and by the show's ruthless protagonist, Frank Underwood, who is played by Kevin Spacey. He told Business Insider, he thought, "How would Frank Underwood respond?" Frick said his eminent domain plan was the "most dramatic" thing he could think of to counter MRC's threat.

In what will surely be recorded in the legislative history books as a "Frick move," a legislator has managed to outdo the studio in terms of sheer, manipulative nastiness. Yes, Frick would do Frank Underwood proud, but is that what we really want from our legislators?


Frick's amendment doesn't specifically name the studio but its cutoff line of $10 million or more in tax breaks leaves "House of Cards" stranded on an island made of taxpayer funds. It also puts the legislator in the rare position of openly espousing Marx's calls for the State to seize the means of production from the Elite, something that plays better in hazy dorm rooms than in a system where corporations have been determined to be "people."

While Frick's amendment passed a voice vote in the House of Delegates, the state Senate approved its own legislation -- which increases the tax credits available to companies -- with a 45-1 vote. Either way this pans out, the taxpayers will lose -- whether they're footing the bill for more tax breaks that won't create long-term wealth, or watching their representatives carve a legislative toehold for the future seizure of certain businesses.

Filed Under: bill frick, eminent domain, house of cards, maryland, movies, studios, tax breaks, tv
Companies: media rights capital, netflix

Australian Broadcasters, Netflix Competitors Pout Because Netflix Hasn't Banned VPN Users Yet

from the give-the-people-what-they-want dept

Australia has a long and proud history of seeing higher copyright infringement rates, thanks in large part to the country's failure to offer up legitimate, affordable streaming video options. With Netflix officially unavailable Down Under, many viewers there have taken things into their own hands and have started using VPNs to mask their location and subscribe to the service anyway. Cue the rising hysteria from both broadcasters and Australian Netflix competitors, who insist that something has to be done about this flagrant outrage. They're helped by regional paper The Australian, which suggests that these paying users are "pirates":

"Highlighting how the TV networks view these people, an article this morning in News Corp-owned The Australian went as far as labeling subscribers as “pirates”, even though they are paying for the service..."There is concern at local networks about the growing impact of the US company flouting international regulations by accepting payments from Australian credit cards, despite maintaining a geo-block that is easily bypassed by VPN manipulation or spoof IP addresses,” the paper said."

Granted, if companies were delivering what users wanted, this wouldn't even be an issue. In fact, that would seem to be a much easier solution to this "problem." Instead, broadcasters and Australian streaming provider Quickflix (HBO is an 8% owner) seem to think it would make more sense to force Netflix to ban the use of a very common technology that has innumerable uses well outside of just skirting regional limitations. Some users, for example, are finding that VPNs are one (albeit sometimes inefficient) way to bypass some of the annoying new peering feuds erupting here in the States. Still, Quickfix thinks somebody really should force Netflix to start blocking VPNs before the country starts falling apart:

"Quickflix chief executive Stephen Langsford has accused US online streaming service Netflix of turning a blind eye to copyright infringement in order to get a free ride in Australia, as competition heats up in the TV and movie streaming market..."The studios have licensed Netflix to distribute content on particular terms in the US and other larger markets, they haven’t licensed Netflix for Australia. I have no doubt that the studios are in discussions with Netflix about VPNs because it is blatantly in breach of terms and Netflix is essentially getting a free ride into Australia."

It seems like only a matter of time before proxies and VPNs see a renewed focus as public enemy number one by the entertainment industry. Most of the world's graduated response programs, including ours here in the States, can't detect users who are using proxies and VPNs at all. With Australia now contemplating a graduated response program of their own, you can expect the vilification of VPNs to ramp up quickly, even though any laws restricting their use would be met with swift and steep opposition.

Netflix hasn't stated why they've yet to head to Australia yet, but it's either because they want to prioritize larger international markets, or they're having a hard time securing content licensing from Australian broadcasters. Until Netflix does show up Down Under, Australian cable operators like Foxtel are engaged in the kind of brilliant anti-piracy maneuvers we've grown used to, such as locking down HBO's Game of Thrones in an exclusive streaming and download arrangement. Surely that will stop copyright infringement of what's become the most pirated show on the Internet, right?

Filed Under: australia, streaming, television, vpn
Companies: hbo, netflix, quickflix

No, Netflix's New Deal With Comcast Probably Won't Destroy The Internet. Yet.

from the too-many-experts,-not-enough-data dept

The mysterious performance problems customers on large ISPs (specifically Verizon, AT&T and Comcast) have been having with Netflix streaming has just gotten slightly clearer. For months people have posted traceroutes as undeniable proof that large ISPs like Comcast, AT&T and Verizon had intentionally been throttling subscriber Netflix streams. However, as we've been noting, simple route analysis doesn't tell the whole story, and it's not always possible to determine where video transit breakdowns are occurring without direct access to ISP network data (data they hide completely).

Adding a sliver of insight into the problems, Netflix and Comcast announced over the weekend that they had struck a new interconnection deal that involves Comcast providing Netflix with direct access to the Comcast network. The announcement itself says little, other than to insist that Netflix "receives no preferential network treatment under the multi-year agreement." A Wall Street Journal report had a little more insider detail, noting that the two sides bypassed core network operator Cogent in an arrangement that involves Netflix paying Comcast for direct access:

"(The connection to Cogent) was starting to become overwhelmed with Netflix traffic, congesting traffic and leading to slower Netflix streams for Comcast Internet users, people familiar with the matter said. At the same time, Comcast presented Netflix with more attractive deal terms than the operator had been offering, the people said. The deal spans several years. Netflix was aiming for a long-term deal to make sure its projected traffic growth wouldn't put it at a disadvantage, one of the people said. The connection is a so-called "paid peering" deal, which connects Netflix's network to Comcast's directly. Netflix was previously using several middlemen to access Comcast's network."

Why the sudden interest on Comcast's part in getting a deal done? They're likely not too excited about the fact that they've been receiving bad press for poor Netflix streaming performance at the same time they're trying to sell regulators on the purported technical benefits of their $42 billion acquisition of Time Warner Cable.

Despite a lot of Internet hand-wringing about the deal and counter-kvetching about said hand-wringing (all based on no actual data, mind you) -- the agreement on its surface appears to be good for everybody involved except Cogent. That's thanks to the fact that in this case, Comcast appears to have been willing to make apparent concessions on price and deal length in order to keep up appearances for the merger. Netflix pays the same money they were paying Cogent to Comcast (or less), Comcast makes revenue they weren't making before, and customers get better streaming performance at no added costs (since Netflix is probably paying about the same, for now).

The problems are twofold: one, these deals are kept highly secret so promises of "no special treatment" aren't something people can confirm, and as Timothy Lee at the Washington Post discusses, the continued expansion of last mile ISPs into CDN and transit markets over time (note this is not new) could potentially lead to higher prices and less competition overall across the Internet's core:

"The fact that Netflix agreed to pay Comcast suggests that Cogent will likely lose its fight with Verizon as well. And as Cogent's chief executive Dave Schaeffer told Ars, "once you pay it's like blackmail, they've got you, there's nowhere else to go. They'll just keep raising the price in a market where prices [for transit] are falling." Indeed, in the long run, this development threatens the survival of independent backbone companies like Cogent. If it becomes industry practice for backbone providers to pay residential ISPs, companies like Cogent will become mere resellers of access to the networks of large broadband companies. Or they may be cut out of the loop altogether, as large customers such as Netflix cut deals directly with broadband providers such as Comcast."

I'm not sure Lee helps his argument by bringing net neutrality into the discussion though, as this is again more about market power than neutrality (for the moment). It's also worth noting that Cogent has a reputation of being difficult in peering disputes, and when a breakdown happens, more often than not Cogent is at the heart of it for not following through on truly balanced peering. Cogent was busy telling media outlets last week that it was Comcast and Verizon that were to blame for recent slowdowns. To hear Cogent tell it, Verizon and Comcast have been refusing to upgrade their interconnection links, largely because the ISPs want to move from an era of settlement-free interconnection, to one where the ISPs play a larger role in transit and get paid:

"This isn't the kind of problem consumers can solve by purchasing a faster Internet connection, because they'd be paying only for a faster path to Verizon's network, not a faster path to the rest of the Internet. In some cases, Verizon has actually purchased and installed the necessary equipment to upgrade ports, but not turned it on, according to (Cogeco CEO) Schaeffer. "They actually put it in, so they spent the money, but they just politically have not been willing to turn it on in order to ensure that Netflix will not work as well as Redbox," he said. When Netflix can't get through to Cogent, it sends traffic through other providers, but Schaeffer claims that "everybody is full." So what are they fighting over? Schaeffer said Verizon "wants a price that is about 10 times the market price for transit." Again, transit is a service that takes traffic across the entire Internet, whereas peering is just a connection between two networks."

To intentionally belabor a point again though, nobody can confirm anything either side says because the details aren't released. Meanwhile, while the Comcast deal might not be bad, the worry among consumer advocates is that in a world where ISPs get bigger and more powerful and transit options are reduced and replaced under absolutely no transparency, the overall industry could get less healthy. With Comcast controlling the last mile conduit, an ever-increasing slice of the core networks, and the media content itself, you start to see the monopsony concerns Comcast's expansion could raise among antitrust regulators.

Remember of course this deal only impacts Netflix on Comcast, there's continued ongoing problems for Netflix and YouTube traffic reaching the networks of a number of larger ISPs (Time Warner Cable, AT&T and Verizon), with no indication of when they'll get resolved. While I don't think the FCC's Wheeler is going to do much of anything meaningful on broadband competition, net neutrality, or prices, I do think he'll work to find some way to bring a dash more transparency to these disputes if everybody involved can't start getting along. Mainstream services grinding to a halt with nobody willing to admit fault and everything kept in the complete dark is simply bad for business. For everyone.

If this is all tl;dr for you, all you need to know is that if you're on Comcast and your Netflix streaming stinks you should either see improvements right away, or sometime over the next few months as the changes are implemented.

Filed Under: broadband, streaming, throttling
Companies: at&t, cogent, comcast, netflix, time warner cable, verizon

'House Of Cards' In 4K Will Eat Broadband Caps Like Popcorn Shrimp

from the pricing-innovation dept

After years of pretending that broadband usage caps were necessary because of network congestion, the cable industry not all that long ago admitted that congestion had nothing to do with it. While the industry still pretends that usage caps on broadband networks are about their expression of "creativity" and "pricing innovation," most people realize caps were always designed to milk yet more money out of an already profitable network (and make no mistake, unlimited, flat-rate pricing is profitable), while allowing gatekeepers to simultaneously cash in on and inhibit Internet video. Carriers are relentlessly trying to expand usage caps under the banner of "fairness," and they're aided by an uncompetitive broadband market.

Despite claims that imposing caps is about altruism or even helping grandmothers, most consumers understand that ISPs want them to pay more money for the same product at a time when network hardware and bandwidth costs are falling. Generally, ISPs that do impose caps insist that these caps will be flexible as modern usage evolves. That claim is about to get tested more seriously as next-generation game console downloads and 4K video slowly come to market.

Netflix CEO Reed Hastings not that long ago stated the company's planned 4K streams will need at least 15 Mbps but optimally 50 Mbps. Streaming a 1080p 3D movie from Netflix at the moment eats around 4 to 5 GB per hour, a total that could jump to closer to 20 to 30 GB per hour with 4K video. Similarly, Sony is cooking up a 4K video download service that could involve downloads as high as 100 GB per title. It's a subject getting revisited with everybody binge-watching "House of Cards." Tacking 4K video on to existing bandwidth consumption begins to get very bandwidth intensive when you're talking about entire series at 4K resolution (how much modern compression codecs like Google's VP9 or H.265 will help are very rough estimates):

"Streaming in 1080p on Netflix takes up 4.7GB/hour. So a regular one-hour episode of something debiting less than 5GB from your allotment is no big deal. However, with 4K, you've got quadruple the pixel count, so you're burning through 18.8GB/hour. Even if you're streaming with the new h.265 codec—which cuts the bit rate by about half, but still hasn't found its way into many consumer products—you're still looking at 7GB/hour. But you're not watching just one episode, are you? Of course not! You're binging on House of Cards, watching the whole series if not in one weekend then certainly in one month. That's 639 minutes of top-quality TV, which in 4K tallies up to 75GB if you're using the latest and greatest codec, and nearly 200GB if not. That means, best case scenario, a quarter of your cap—a third, if you're a U-Verse customer with a 250GB cap—spent on one television show. Throw in a normal month's internet usage, and you're toast."

Gizmodo doesn't note that many people's bandwidth caps are even lower. CenturyLink, Suddenlink and AT&T lay claim to tens of millions of DSL users (which the companies don't intend to upgrade anytime soon) who face 150 GB monthly caps on top of a significant flat monthly fee -- plus sometimes the cost of a mandatory copper voice line and all the additional, annoying fees that entails. Those slower, 3-10 Mbps connections in reality cost very little to provision and provide, but there's the rub: these customers are being aggressively beaten about the head and neck on price because of limited nationwide competition. Innovation and creative pricing, indeed.

ISPs have long defended low bandwidth caps by claiming that the majority of today's users wouldn't be impacted by them, knowing full well that the majority of tomorrow's users would. That day is coming quicker than you'd think, and it's worth watching whether ISPs are flexible on allotments, or if they keep existing allotments firmly in place to intentionally clothesline Internet video customers -- especially those looking to cut the cord.

Filed Under: 4k, broadband, house of cards, reed hastings
Companies: netflix

If You Do A Search Almost No One Does, Google Might Point You To Unauthorized Version Of House Of Cards

from the reporting? dept

We've noted in the past that various copyright maximalists who are hellbent on blaming Google for their own failures to adapt and innovate, like to point to various searches on Google that point to what are likely to be unauthorized sources. They'll use examples like adding "download" or "free" to a search and then point out that the link appears to go to an unauthorized source. But that's silly, because (1) the people doing such searches probably aren't going to pay for the authorized version anyway and (2) very few people do those searches.

Chris Crum over at WebProNews has a story that's been getting some attention claiming that Google points to an unauthorized site ahead of Netflix if you do a search for "watch house of cards" on Google. Here's the screenshot he's showing: While that may sound damning, it only matters if people are actually doing that search. But they're not. Most people are just searching for plain old "house of cards" as you can see by looking at the Google Trends searches on both terms: The red line is people searching for "house of cards." The blue line that is basically across the bottom is "watch house of cards." In other words, this search that Crum and others are making out to be some evidence of Google "favoring" unauthorized sites over the official Netflix channel is a search that almost no one uses. The one that everyone does use -- "house of cards" -- doesn't appear to show any links to unauthorized sites.

You could argue that perhaps Netflix should do a bit more optimizing on searches for shows with "watch" before them, but given the fact that it appears almost no one does that search, why should they bother?

Filed Under: copyright, house of cards, piracy, search, streaming
Companies: google, netflix

Wall Street Journal Manages To Make The Netflix, ISP Streaming Kerfuffle Even Muddier

from the yes-I-said-kerfuffle dept

Major ISPs have slowly seen their Netflix streaming experience deteriorate over the last six months, major carriers like Comcast, Verizon and AT&T all dropping like a stone in the Netflix ISP streaming ranking index. We've discussed how, despite a bevy of well-intentioned claims, these ISPs are intentionally throttling connections for their own gains, there's still not really enough evidence to conclusively prove ISPs are up to no good here. Much of the network data just isn't publicly available, and there's an ocean of peering and CDN relationships between you, Netflix and your ISP that muddy the waters further.

That said, the Wall Street Journal this week complicated things somewhat with a report on the streaming shenanigans that offers this curious, anonymously-sourced paragraph, which suggests big ISPs are letting peering links saturate intentionally:

"Until the standoff gets resolved, the bulk of Netflix's traffic continues to flow across Internet intermediaries, including low-cost carrier Cogent Communications Group. People familiar with Cogent's and Netflix's thinking say the cable and telephone companies are delaying upgrading existing connections. Executives at major broadband providers, meanwhile, privately blame the traffic jam on Netflix's refusal to distribute its traffic more efficiently."

Again though, nobody can prove any of this because the network and peering data needed to do so is held tightly by all parties involved. Peering disputes generally involve core Internet companies agreeing to exchange equal amounts of data at hand-off points, often without compensation under confidential agreements. Historically, there have always been occasional skirmishes between companies as that balance gets out of whack. In recent years, those battles have intensified as last mile ISPs like Comcast have pushed for significantly more money to carry traffic, as we saw with the Comcast Level 3 peering fight from a few years ago.

In these disputes it has always been a goal to make the other guy look like the greedy one for leverage, though the Netflix problems have reached a new level. Netflix offers ISPs free access to their own Open Connect Content Delivery Network, which improves streaming performance. Larger ISPs have refused to join, not wanting to give what they see as a competitor to their own services (like Verizon RedBox streaming) any leg up, instead relying on their own CDNs that, theoretically, should offer equally decent performance. That those ISPs are suddenly seeing such dismal streaming performance suggests someone along the chain is being either cheap, incompetent, or is up to no good. Potentially all three.

Incumbent ISPs don't exactly have what you would call a stellar reputation for playing nice with disruptive companies or competitors, thus the theory that AT&T, Verizon and Comcast are intentionally letting these peering points saturate then pointing the finger at Netflix in the hopes of making them look bad. If that's the goal it's not working: data released this week suggests that Netflix just reached a three year high in customer satisfaction -- despite the price hike and Qwikster nonsense of a few years back. If the goal is to make Netflix look stupid, it doesn't appear to be working so far, and as the lowest rated industry in these kinds of rankings, it's probably futile for pay TV companies to try.

The whole mess is a good example of how net neutrality violations, should they occur, might not knock you over the head with their obviousness as traditional discourse has suggested. In fact, they might not even be provable. ISPs are too smart, and too wary of getting socked with new regulations. Instead, what you'll see is gatekeeper abuses dressed up under the guise of legitimate technical issues. Verizon Wireless, for example, blocked activation of Google's Nexus 7 tablet on their LTE network for six months, blaming Google and obscure technical certification issues (while selling users their own, inferior tablet in the interim). Wireless carriers also blocked Google Wallet from devices for proclaimed security reasons, while at the same time pitching their own, Isis mobile payment platform.

People were quick to cry foul in both instances. Do incumbents have a history of this sort of thing? Yes. Can you prove carriers were up to no good in either instance? No. It all makes the point that you probably could get away with net neutrality violations without regulators batting an eyelash. You just need to be a little bit clever about it -- with a dash or two of believable technical jargon for good measure. It also makes the point that with real neutrality violations inhabiting such murky territory, we're going to see a lot more people crying net neutrality wolf -- which only helps those engaged in anti-competitive shenanigans.

Filed Under: isp, net neutrality, streaming
Companies: at&t, comcast, netflix, verizon, wall street journal

Netflix Rather Quietly Admits Verizon Isn't Throttling Netflix Streams

from the crying-wolf dept

A lot was made last week of the blog post by iScan developer David Raphael, who managed to get a front line Verizon support tech to admit Verizon was intentionally throttling Netflix streams (and essentially anything hosted on AWS) for home FiOS users. The resulting press cacophony largely consisted of outlets claiming that this was indisputable proof positive Verizon was violating net neutrality. Except as we noted previously, while anti-competitive shenanigans certainly aren't out of character for the telco, there really wasn't enough actual evidence proving that the problem wasn't the result of peering, routing, or other congestion issues, the kind that Netflix and YouTube users have been complaining about for much of the last year.

While some believe Verizon might be intentionally letting peering links saturate to their own benefit, the company issued repeated statements denying traffic discrimination, and blaming Netflix for the problems. Strangely Netflix wouldn't comment to anyone in the press on what was happening, but the company did for whatever reason feel free to tell J.P. Morgan analyst Doug Anmuth privately that Verizon is not throttling Netflix streams:

"J.P. Morgan analyst Doug Anmuth...says he has been talking to Netflix CEO Reed Hastings and CFO David Wells, and they told him they don’t think cable and telco companies are hampering the company’s video streams. Anmuth doesn’t have much to report on the topic, so here are his comments in their entirety: "Netflix does not seem overly concerned regarding Net Neutrality, and continues to believe that violations would be escalated quickly. Netflix also indicated that it has no evidence or belief that its service is being throttled."

Granted no "evidence or belief" doesn't mean Verizon isn't up to no good; the company has made an art form out of using bogus technical jargon to justify anti-competitive and closed behavior, especially on their wireless network. But the admission from Netflix (which sees a lot of the obfuscated peering data consumers don't) at least suggests Netflix can't prove it. It's not like Netflix has any vested interest in lying for Verizon's sake either; the company just got done threatening ISPs in an investor letter (pdf) that if ISPs were caught manipulating traffic anti-competitively, Netflix would "vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver."

The entire story continues to be kind of fascinating in that despite press comments from a universe of very smart networking experts who claim to know what's going on, nobody actually knows what's going on. The full data simply isn't available to the public. A lot of people are claiming they're seeing throttling by their ISP, only to later realize they're not seeing the full picture. Claiming net neutrality every time the network farts is dangerous in that if we keep crying neutrality wolf without indisputable supporting evidence, less attention will ultimately come when a violation does truly occur.

Filed Under: bandwidth throttling, net neutrality
Companies: netflix, verizon

Netflix, YouTube Streaming Gets Worse on Major ISPs, Who In Turn Blame the Deep, Dark Mysteries of the Internet

from the what-the-hell-is-going-on dept

Last week this blog entry by iScan developer David Raphael saw a lot of attention as proof positive that Verizon was violating network neutrality. Specifically, Raphael observed that services using Amazon Web Services accessed from his home FiOS connection (including Netflix) delivered bits more slowly than services accessed on his business FiOS connection. As his supposed nail in the neutrality-violation coffin, Raphael provided a chat transcript from a Verizon rep supposedly "confirming" that the company was throttling select services. This "proof" then bumbled and stumbled its way around the Internet as evidence neutrality had been trampled.

Except as anybody who has spent any time on the phone with a support rep knows, what comes out of their mouths may or may not have any direct tie to this particular plane of reality. It's also worth noting that the kind of Netflix stuttering Raphael saw has been going on for much of the last year across numerous ISPs, long before Verizon's recent court victory over the FCC's neutrality rules. Verizon also denied they were manipulating traffic in a statement sent to all media outlets:

"We treat all traffic equally, and that has not changed. Many factors can affect the speed a customer's experiences for a specific site, including, that site’s servers, the way the traffic is routed over the Internet, and other considerations. We are looking into this specific matter, but the company representative was mistaken. We are going to redouble our representative education efforts on this topic."

While Raphael may have stumbled into Verizon shenanigans, what he saw could also be explained by normal peak network or peering congestion, and we've long discussed the problems with crying net neutrality wolf. Peering relationships are indeed complicated, with ISPs, content companies, and Internet backbone operators all engaged in an endless tug of war over video profits and peering imbalances (I recommend this piece last summer from Jon Brodkin at Ars Technica or this piece from last week by GigaOM's Stacey Higginbotham).

With that as background, fast forward to this week when Netflix released their latest ISP streaming rankings, which show that most of the nation's biggest ISPs have been dropping in regards to their Netflix streaming performance. ISPs that partner with Netflix's Open Connect CDN do better in the rankings, and major ISPs have tried somewhat feebly to claim Netflix's attempt to name and shame them into using their CDN is a sort of reverse network neutrality.

Still, Verizon FiOS (and DSL), Comcast, and AT&T's U-Verse services have seen major drops in the rankings not entirely explained by their refusal to use Netflix's CDN. Being large network operators, you would imagine that they'd be able to explain what exactly is happening to stink up millions of broadband users' Netflix experiences, though Comcast, AT&T and Time Warner Cable refuse to comment to the media on their collective performance nose dive. Netflix also refuses to comment. Verizon, with all of their network expertise, continues to blame the problems on either unknown Internet bogeymen or Netflix:

"We state unequivocally that Verizon’s broadband Internet access services deliver a pristine user experience to our customers at any time of day on every day of the week. This has been repeatedly proven through independent testing by the Federal Communications Commission (FCC), which has conclusively demonstrated that FiOS Internet consistently delivers both download and upload speeds in excess of what we advertise. In short, our Internet customers often get more than they pay for. How the Internet works can be complicated, and consumers should be aware of the fact that the integrity of their home Internet connection is only a portion of the streaming video quality equation. If their broadband connection is functioning correctly, the source of their frustration and the content they wish to see may be one in the same."

In summation, the only major ISP wiling to comment on why millions of people are having YouTube and Netflix issues on fast connections insists "it's complicated." So what's really happening? One theory du jour is that companies like Verizon are abusing their gatekeeper position and letting their peering points to companies like Netflix saturate in order to gain leverage in negotiations and rhetoric, while giving a leg up to their own CDN or services (like Red Box Instant by Verizon). Verizon's certainly no stranger to these kinds of tactics, but again, there's not enough data to prove that hypothesis, and while neutrality rules are dead, big ISPs aren't exactly eager to do anything to invite new neutrality regulations.

The reality is that despite the best guesses of some very smart people, the jury is out because we lack enough data to make full conclusions just yet. The good news is we should see some more robust data in the coming months as data from collection operations like MLAB comes to light in looming FCC ISP performance reports. In addition, YouTube has started ranking ISPs based on YouTube streaming performance, which will also hopefully shed a little more light on precisely which Internet bogeymen are to blame for your stuttering video feed.

Filed Under: broadband, david raphael, fcc, net neutrality
Companies: at&t, comcast, netflix, verizon, youtube