FCC Commissioner Spearheads Flimsy Attempt To Shame And Discredit Netflix For Its Title II Support

from the faux-outrage dept

Given Netflix's rather vocal opposition to usage caps and support of Title II (pdf), the company is unsurprisingly public enemy number one for many major broadband and TV companies (and their various PR, lobbying and policy folk) at the moment. There's a pretty apparent attempt on some fronts to paint Netflix as the villain in the recent interconnection feuds, in which Netflix (and companies like Level 3 and Cogent) insist incumbent ISPs are intentionally letting interconnection points degrade to extract new fees from content and service companies.

This week, Netflix's supposed villainy was highlighted by FCC Commissioner Ajit Pai, who penned a letter (pdf) to the company complaining that Netflix had abandoned its net neutrality principles and had been hypocritically encouraging the creation of Internet "fast lanes":

"Netflix has been one of the principal advocates for subjecting Internet service providers (ISPs) to public utility regulation under Title II of the Communications Act, arguing that this step is necessary to prevent the development of so-called "fast lanes" on the Internet. "The basic argument," you have said, “is that we're big believers in the free and open Internet." For this reason, I was surprised to learn of allegations that Netflix has been working to effectively secure "fast lanes" for its own content on ISPs' networks at the expense of its competitors.

What is Pai's evidence that the company is being a hypocrite on neutrality? Exhibit A appears to be Netflix's refusal to join a new coalition called the Streaming Video Alliance, whose founding members include two of the biggest players in the cable and broadband industry: Comcast and Charter Communications. One of the group's other founding members is Frost and Sullivan analyst Dan Rayburn, who has spent much of the last year telling anyone who'll listen that incumbent ISPs with thirty years of anti-competitive behavior are just misunderstood, and it's Netflix that's to blame for most of the modern era's Internet video problems.

That Netflix didn't feel the overwhelming need to join this coalition of BFFs isn't particularly surprising.

Pai's other example of Netflix's fast lane hypocrisy appears to be simply the fact that Netflix runs its own content delivery network, Netflix Open Connect. Open Connect is a free-to-join CDN that involves ISPs hosting Netflix caching hardware on their network, something that reduces Netflix's costs, but also reduces overall ISP traffic load, improving video delivery efficiency all around. To hear Pai tell it however, Netflix's CDN is a big, bad bogeyman:

"Some have suggested that Netflix has taken these actions because the company is currently installing its own proprietary caching appliances throughout ISPs' networks as part of its Open Connect program. If ISPs were to install open caching appliances throughout their networks, all video content providers—including Netflix—could compete on a level playing field. If, however, ISPs were to install Netflix's proprietary caching appliance instead, Netflix's videos would run the equivalent of a 100-yard dash while its competitors' videos would have to run a marathon."

You might recall that AT&T, Verizon and Comcast refused to participate in Netflix's CDN, instead forcing Netflix to pay them new interconnection fees to keep streaming performance from foundering. Meanwhile, Netflix makes the company's peering locations, guidelines, hardware design and the open source software components largely open to inspection, so while you can't go build Netflix CDN hardware yourself, we're not exactly talking about state secrets. It's also worth noting that small and mid-sized ISPs (usually with much better track records on consumer issues than their larger brethren and no TV revenues to protect) have wholeheartedly supported Netflix's efforts. Dane Jasper, CEO of Sonic.net, for example called Netflix's Open Connect "brilliant." George Mitsopoulos, COO of independent ISP Ikanos/DSLExtreme, also similarly notes that Open Connect is of great benefit to ISPs.

None of this is to say Netflix is a saint. Everyone is running blindly toward the Internet video cash trough, and all of them want everyone using their preferred solutions, with meaningful transparency an ongoing problem. To be sure, Netflix's ISP rankings system is also a bit of a ham-handed attempt to name and shame ISPs that don't use its CDN (Open Connect partners unsurprisingly seeing better positioning), and the company's initial decision to restrict higher-quality "Super HD" streams to just these partners was thankfully reversed. That said, at some point you have to ask yourself based on history and experience: which do you trust more on consumer issues: Comcast or Netflix?

You also have to wonder why an FCC Commissioner that has no problems with rampant media consolidation, net neutrality violations or the lack of broadband competition is just so very concerned about such a curiously specific issue. Of all the pressing consumer issues facing the telecom and TV market (usage caps, neutrality, lack of competition, sneaky fees, cramming, etc.) Pai's greatest concern is Netflix's free, entirely voluntary content delivery network? If one didn't know any better, one might get the impression that the legacy TV industry and its loyal politicians and pundits are putting on a political dog and pony show to punish Netflix for standing up to companies with thirty years of anti-competitive behavior under their belts.

Filed Under: ajit pai, content delivery networks, dan rayburn, favoritism, fcc, net neutrality, open internet, standards, streaming
Companies: charter communications, comcast, netflix