Netflix Inc. (NASDAQ: NFLX) has been, according to its management, the champion of an open and free Internet. The cause is self-serving. Without a fast Internet connection for everyone, its streaming movies will freeze and buffer until they are unwatchable.
Netflix is a prisoner of the infrastructure it chose when it moved its business model from primarily one that delivered DVDs to one in which movies streamed into the customers’ homes. Netflix’s primary public enemy has been Verizon Communications Inc. (NYSE: VZ), which is challenging cable companies as a primary provider of broadband and television services. The battle between the two broke into the public eye again recently.
Recently, Verizon management issued a blog statement in which it claimed it does nothing to limit Internet speeds. Therefore, its service cannot be considered the cause of poor video streaming, or any other service that requires significant bandwidth.
A Los Angeles based Verizon customer expressed confusion about why his broadband connection was slow. Verizon publicly told him it was not its fault:
After receiving the letter, our network operations team studied the network connection for this customer for the week preceding the date that he emailed us. They measured the utilization — or the percentage of total capacity used — at every link in the Verizon network — from the customer to the edge of our network, where we receive Netflix traffic — to determine where, if at all, congestion was occurring.
This review confirmed again what I’ve explained before: there was no congestion anywhere within the Verizon network. There was, however, congestion at the interconnection link to the edge of our network (the border router) used by the transit providers chosen by Netflix to deliver video traffic to Verizon’s network.
Verizon is innocent. Netflix is the villain. Netflix could have picked the most efficient way to use the Verizon network, and thereby give its customers the best viewing experience. According to Verizon, oddly Netflix did not:
Netflix chose to attempt to deliver that traffic to Verizon through a few third-party transit providers with limited capacity over connections specifically to be used only for balanced traffic flows. Netflix knew better. Netflix is responsible for either using connections that can carry the volume of traffic it is sending, or working out arrangements with its suppliers so they can handle the volumes. As we’ve made clear before, we regularly negotiate reasonable commercial arrangements with transit providers or content providers to ensure a level of capacity that accommodates their volume of traffic. Such arrangements have been common practice for content delivery networks in the Internet ecosystem for many years, and Netflix is fully capable of taking the necessary and customary steps to ensure that its connections match its traffic volumes.
All of this blogging and public relations back and forth between Verizon and Netflix may make interesting reading. However, all the customer wants is for his service to work. At this point, that is not happening.