Yes, Verizon Is At Fault In Netflix Dispute; It's Not Delivering What It Sold Customers

from the a-dose-of-reality dept

We wrote about the latest Netflix/Verizon dispute over who’s to blame for poor quality movie streaming. Netflix has chosen to pin the blame on the ISPs when there’s network congestion, while Verizon angrily hit back at this “PR stunt,” claiming that it was actually Netflix’s fault for not doing a better job routing its traffic. Except… that’s not true. As we’ve been pointing out for the better part of a decade, this is all about the broadband companies trying to double charge. Tim Lee, over at Vox, summarizes the point nicely:

Verizon’s customers have paid Verizon for the service of delivering content to them. But rather than simply performing the service Verizon’s customers have paid it to perform, Verizon sees an opportunity to get paid twice: in addition to charging its own customers for connectivity, Verizon hopes to also charge Netflix to deliver its content to those customers.

Verizon is effectively using its own customers’ poor experience as leverage. Verizon has been threatening Netflix that if they don’t pay up, Netflix customers (who are also Verizon customers) will get frustrated and cancel their Netflix service. Of course, that threat is a lot more powerful because most customers don’t have many alternatives to Verizon service.

And yes, I know that some big broadband defenders will immediately trot out the usual defense: that Verizon sold its network in a way that it never actually expected subscribers to use — but it’s difficult to see how that’s everyone else’s fault. If anything, it raises some questions about whether or not the FTC might want to step in and look at whether or not Verizon, AT&T and Comcast totally misrepresented what they were selling consumers.

As for the bullshit claim that Netflix is to blame because it sends Verizon more traffic and thus the “traffic ratios are unbalanced,” well, Lee points out that this is actually Verizon’s fault as well.

But this argument doesn’t make sense. Verizon customers aren’t just paying Verizon to send traffic to Netflix, they’re also paying Verizon to deliver Netflix (and other) traffic to them. And there’s no reason to think that carrying traffic from Netflix to Verizon customers is more expensive than carrying traffic in the other direction.

Indeed, there’s a simple reason that Verizon’s network receives more traffic than it transmits: that’s how Verizon set it up. All of Verizon’s standard FiOS packages provide dramatically more bandwidth for downloading than uploading. The entry-level service, for example, is 15 Mbps downstream and 5 Mbps upstream. The fastest package is even more lopsided: 500 Mbps downstream and 100 Mbps upstream. If Verizon builds a network that’s optimized for downloading, it can’t complain that its customers use it to download stuff.

And, of course, Verizon can squawk all it wants about this, but it’s not going to change the fact that it’s the problem here. Yes, Netflix delivers a lot of data. But if Verizon can’t handle it, it shouldn’t have sold it to consumers.

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Companies: netflix, verizon

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Comments on “Yes, Verizon Is At Fault In Netflix Dispute; It's Not Delivering What It Sold Customers”

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77 Comments
NoNamesLeft says:

Re: Re:

Its simple. Customers pay Verizon to get them onto the internet. Verizon is purposely not upgrading their internet peering points to force others to pay them to peer. Instead acting in good faith and upgrading their side of the network, they are purposefully providing bad service.

They are hoping for the Tier 1 backbone providers to pay them to access their network when in reality, it should be the other way around. Verizon should be paying the tier 1 providers for access to their content.

Imagine if Cable TV worked this way. CBS would have to pay Comcast/Verizon to be apart of their channel lineup instead of CBS being paid for their content they provide.

andypandy says:

Re: Re:

Netfix does not have a problem supplying the data verizon customers request, verizon purposefully slows down Netflix so their customers have issues and buy verizon media instead. Simply blocking content your customers have paid to get is fraud and i hope that Verizon takes Netflix to court it would be interesting to see what a judge thinks about this.

Scote (profile) says:

In fact, Verizon requires it....

“If Verizon builds a network that’s optimized for downloading, it can’t complain that its customers use it to download stuff. “

They didn’t just optimize it for downloading, it is a requirement of standard ISP customer service agreements. Running a server, a computer that typically “uploads” to the internet more than it downloads, is *prohibited* by consumer ISP agreements.

Anonymous Coward says:

Am I the only person using Fios (50/25, router several years old) who has never had a performance problem with streaming video of all sorts? I am just curious how many users have the problem out of, say, all Netflix subscribers who use Fios? (Our alternative to Fios would be TWC, but we didn’t use cable much for streaming video before switching)

andypandy says:

Re: Re: Re:

Why? netflix has data on a server and people request copies of that data, why should netflix pay anythign other than the connection from their server to the backbone of the internet. If netflix has to pay to send data then you must accept that you are charged whenyou ever talk to someone as you are sending data to their ears.

hegemon13 says:

Re: Re:

No, it’s worse than that. It would be like if you paid FedEx to send someone a package, and they subcontracted the USPS to deliver it. And then the USPS charged the recipient to deliver it. Except the USPS decided that you were sending too many packages to them through FedEx, so they deliberately held up your package, and the USPS came back to you demanding an exorbitant fee to deliver the package in the amount of time that you AND your recipient have already paid for.

Anonymous Coward says:

Re: Response to: Mason Wheeler on Jun 6th, 2014 @ 11:02am

No, it’s more like if the delivery company charged you more to get it sameday when the shipper only paid for 5 business day delivery. Netflix is not squeaky clean in all of this either. They used to use Akamai for local caching but dropped them because they didn’t want to keep paying, then tried to get ISP’s to host Netflix only caching servers for free. When that failed, they started blaming isp’s for congestion. Its a case of two big players BOTH trying to leverage their market position in order to turn a bigger profit.

Cdaragorn (profile) says:

Paid twice already

I would argue that Verizon is already being paid twice, and in fact is looking to triple dip.

Netflix would need to pay for a connection to upload anything to customers in the first place. Correct me if I’m wrong, of course, but I can’t see any way Netflix could deliver anything to anyone if it wasn’t paying someone to let it do that already.

Kal Zekdor (profile) says:

Re: Paid twice already

Netflix would need to pay for a connection to upload anything to customers in the first place. Correct me if I’m wrong, of course, but I can’t see any way Netflix could deliver anything to anyone if it wasn’t paying someone to let it do that already.

They pay someone, to be sure, but that someone isn’t Verizon (who provide consumer internet connections). They pay for their data centers’ dedicated fiber lines (probably to Level 3 or other backbone internet providers). Verizon/Comcast are also shaking down Netflix for peering arrangements.

From wikipedia:

In computer networking, peering is a voluntary interconnection of administratively separate Internet networks for the purpose of exchanging traffic between the users of each network. The pure definition of peering is settlement-free, “bill-and-keep,” or “sender keeps all,” meaning that neither party pays the other in association with the exchange of traffic; instead, each derives and retains revenue from its own customers.

Basically two companies (Content Provider and ISP) need to fulfill the same business need (get data from content provider to the end user). The “customer” pays both businesses for the service provided, the Content Provider for the content, and the ISP for delivering it. Thus, in order to increase customer satisfaction and decrease costs all around, the two companies would setup a direct connection between the Content Provider’s data center, and the ISP’s backbone, minimizing the number of hops to the end user by cutting out middleman networks. This not only provides faster and more stable connections to the end user, it decreases general network congestion, as the content no longer needs to travel through other networks. For the ISP, it means lower costs, less congested networks, and higher customer satisfaction.

At least, that’s how it worked historically. With what is equivalent to monopoly status, broadband ISPs don’t need to worry about things like costs, service levels, or customer satisfaction. Netflix and other content providers, however, don’t have the same luxury, which means either capitulating to the demands of the big cable/telcos, or watch their user base suffer and ultimately dwindle. It’s like playing a game of chicken, but the other guy is driving a tank.

Anonymous Coward says:

Re: Re: Paid twice already

I think you pretty much nailed it for peering arrangements, but in this case, I’m not too sure. With the Comcast debacle and people being able to stream Netflix from a VPN connection better than local transit, we could prove this was a peering issue.

In this case though, I’m tending to think maybe it’s just Verizon’s over-subscription model finally not paying off. Since we are talking about high bandwidth udp streams, I’m sure they are going to be dropped first and probably most often. I’ve never really had too many issues on my Verizon FiOS at home, but for all I know this could be a DSL user as well.

Cdaragorn (profile) says:

Re: Re: Paid twice already

Somehow I sincerely doubt peering is going on between Netflix and just about any other major provider. That kind of setup mostly describes how Tier 1 ISP’s handle hooking their networks up to each other, not how a content provider handles hooking it’s very tiny (comparatively) local network up to the ISP’s.

As to who Netflix pays directly, ya, it might not be Verizon. Generally speaking, I’m treating paying whatever ISP they are as paying Verizon because Tier 1 ISP’s use peering.

Anonymous Coward says:

Verizon's lawsuit speaks volumes

To quote Tyrion from game of thrones.

“Cutting out a liar’s tongue does nothing to prove them a liar, it just fear what the ‘liar’ has to say”.

Only, as Tyrion knew full well, the ‘liar’ he was referring to was actually telling the truth in the book. And Netflix is also telling the truth here.

Yet Verizon’s approach to this dispute is to call Netflix a liar, and attempt to cut out their tongue by suing to get Netflix to stop blaming Verizon for the problem they created. All that’ll do is get more people talking about what Netflix says Verizon is doing.

Anonymous Anonymous Coward says:

Costs

Please excuse my ignorance, but if an ISP (Verizon, Comcast, TWC, other) actually has the proper infrastructure in place, does it actually cost them more to let streaming movies through? Could this amount be significant?

If the cost is not significantly higher, then the answer has to be that the proper infrastructure is not in place, and those customers who bought a certain bandwidth were sold a bill of goods (a lie), or there is actual blocking/filtering of packets going on.

NoNamesLeft says:

Re: Costs

The customers pay for internet access. Since Netflix is on the internet, Verizon is obligated to upgrade their equipment to access it. They are intentionally providing poor service to force netflix to pay them to peer. In reality, Verizon should be paying Netflix to peer into their network.

Anonymous Coward says:

Re: Re: Costs

“In reality, Verizon should be paying Netflix to peer into their network.”

Cable operators have to pay a fee for the right to carry local broadcast stations under the theory that the local stations make the cable service ‘more valuable’. By that same reasoning Verizon should have to pay Netflix for carrying their traffic and making Verizon’s internet service ‘more valuable’.

rapnel (profile) says:

Re: Costs

Infrastructure is a gamble. You’re always gambling that it can handle what’s going on and what’s coming. When what’s coming is recognized as being potentially overwhelming to your infrastructure you upgrade & re-optimize. As soon as you start applying rules as the primary means of optimization then both the overhead and complexity of your infrastructure increases exponentially and the efficiency decreases. They’re trying to spend all of the “upgrade” capital on optimizations and very little in the way of adding capacity. Until they’re up against the wall all of the “free” money they’ve received has been payed out for new optimization gear (i.e. bandwidth/protocol shaping), shareholders and regulations prevention legal & lobbying fees. They have a minimal (at best) competitive environment, are over subscribed and/or are “over optimized” and all by design. The design is for maximization of income and profit, all bets are off. It’s a racket. “The proper infrastructure” is directly correlated to which side of the agreement you’re on.

So.. they have or could have an appropriate infrastructure and streaming bandwidth requirements are significant and customers were over-sold and there is shaping, throttling and filtering going on AND the last mile are the worst customer service crews on the planet. They’re thieving money-hungry blood-thirsty vampire whores that have it all entirely backwards with zero for competition and the friends and means to keep it all rolling in their favor.

Verizon is at fault and in no small way.

Josh in CharlotteNC (profile) says:

Re: Costs

It is at most a minimal cost, and part of what Verizon’s customers are paying for. They don’t have to dig up anyone’s yard or street for this.

In some cases, it is just a matter of running an extra line from one router to another at an exchange and configuring the connection and networks. In other cases, a new router is needed (to be fair,the routers required aren’t something you can run to best Buy and get in an afternoon, but compared to the major ISP’s expenses, they’d be nearly a rounding error).

See: http://en.wikipedia.org/wiki/Internet_exchange_point

Upgrading these connection has been for most of the internet’s history a completely routine and expected minor expense. Up until a few years ago, most interconnections between larger networks were done as handshake deals without lengthy negotiations. When technicians who monitor this stuff saw that capacity at some connection point was getting saturated, they’d just work it out and perform the needed upgrade without fanfare.

Fios Customer says:

streaming

I have FIOS and I have always found Netflix streaming has a hard time connecting via HD quality yet Amazon Prime streaming always connects via HD.
I’m not sure about the compression, or possible Verizon manipulation of the data, but why does Amazon have no problems streaming to my house but Netflix does?

BigKeithO says:

Re: streaming

Everyone seems to think that the ISPs are intentionally slowing down Netflix in order to shake them down for more money. They want Netflix to pay them money (hence all the double dip talk) in order to make sure their packets get to you in a timely manner (something you are already paying for).

So in this case, because Netflix is much larger than Amazon video, Verizon is slowing down Netflix traffic in order to shake them down for more money but allowing Amazon Video through like normal. That is why you see a slow down on one and not the other.

Anonymous Coward says:

Pay verizon for service and you should get what you pay for , It’s that simple , until they decide to actually tell the truth to everyone that the speeds they quote are intermittent. now lets take this to the next level we are THE isp we charge you for speeds we can not deliver, AND we charge the online services that you frequent for speeds we can not maintain, even though we already charge you the customer for the same thing .. connectivity is not the product being sold to the consumers ,speeds are , I think the isp’s have forgotten that.

Baron von Robber says:

Re: Re:

The issue isn’t confused, you are.

Verizon customer’s already paid for their service. And that service is for X amount of Bps. Verizon customers, then request Netflix service through Verizon.

As others have pointed out, other streaming works OK thru Verizon, but no Netflix.

And when some of them use VPN, violla!, Netflix works fine.

So is the magical encapuslation of VPN making Netlix packets nice and fast?!

Anonymous Anonymous Coward says:

Re: Re: Re:

I use a VPN. Yesterday I went to Craigslist, via a bookmark I have used many times (shopping for a new to me motorcycle) and was denied access. Looking around the web for info, folks seem to think that someone using certain IP addresses are doing funky things in terms of posting ads. Craigslist’s solution was to block that IP address. Well, there a probably thousands of people, who use the same VPN, and chose that particular exit node, who now cannot use Craigslist anymore, even to shop.

Yet another example of how bad trying to use IP addresses does not get you to the actual issue.

It won’t be long before the Verizons of the world will pick up on this utterly stupid idea, and start to block VPN exit node IP addresses, just so you cannot get around their Netflix filter.

Michael (profile) says:

Re: Re:

Let’s simplify it for you.

Let’s say Verizon’s infrastructure supports 1000mbs to a specific area in which they have 500 customers that are paying for 10mbs connections. Now, if all of their customers log on at the same time and play a movie, their network becomes congested and, at best, each of their customers will get a 2mbs connection. If Netflix streaming requires 5mbs for good quality and no buffering, everyone having a problem has one because Verizon has not delivered on what they sold.

The telco’s have oversold their networks not anticipating the usage that Netflix has driven their customers to.

THAT IS VERIZON’S FAULT AND THEIR PROBLEM TO FIX.

ltlw0lf (profile) says:

Re: Re: Re: Re:

Also – let’s point out that Netflix is just the canary. The problem is pervasive.

Thanks Michael, exactly.

The problem boils down to Verizon’s use of an asterisk next to their “up-to 25 mBps.” They promise the customer a maximum limit of 25 mBps (like everyone else in the industry,) but rarely can they provide 2.5 mBps per customer. As others have said here, the FTC should really get involved at this point and mandate that ISPs be at least 2 standard deviations or below of their average speed, instead of pushing the maximum theoretical speed, which is all but unobtainable even in the best of conditions. This problem is only going to get worse and like their current views on cable-cutting (as in, it isn’t happening in their eyes, even though everyone else knows it is,) they are going to go through a lot more canaries before they realize the air is bad.

Mason Wheeler (profile) says:

Re: Re:

You are confusing the issue. Verizon is not Netflix’s ISP, therefore, they have zero need to pay Verizon for their service. They are paying their ISP for service. Verizon customers are paying Verizon for service. Verizon is refusing to provide the service that their customers are paying for by putting in place the necessary infrastructure. It very much is the fault of Verizon.

Stephen Hutcheson says:

Re: Re: Re:

Verizon is trying to get paid TWICE for the same bandwith.

Yes. While never actually delivering the bandwidth they got paid twice for.

To be fair, this is the company that’s been getting government subsidies from several states for extending their infrastructure to providing universal service…then not actually extending that infrastructure.

Fraud: it’s an ugly word but a very profitable business model.

Gwiz (profile) says:

Re: Re:

Netflix customers are not paying Verizon for Netflix’s service.

They ARE paying Verizon to deliver Netflix. Just like when you order from a retailer – you pay the retailer the cost of the goods and then you pay UPS to deliver the goods.

Everyone is confusing the issue.

The only one confused here is you.

If Netflix is having problems with its streaming service, it’s not the fault of Verizon.

It is if it’s Verzion’s system that is slowing down the stream. Just like it is UPS’s fault if your purchased goods end up in Walla Walla, Washington instead of at your doorstep.

This isn’t rocket surgery here, but, I’m not surprised you fail to grasp even the basics kenichi, I’ve read other posts of yours…

Anonymous Coward says:

Re: JS

Yes, but each side pays for their access to the network to their own cell provider… your cell provider doesn’t charge the person you call, and their cell provider doesn’t charge you… each of you are charged by your respective provider.

Netflix pays their ISP for access to the network, you pay for your access to the network – then you both get to communicate.

If one of the callers has “unlimited minutes”, they aren’t charged for the minutes they use the phone, and why should they be?

nasch (profile) says:

Re: JS

I understand in Europe generally customers aren’t charged at all for incoming calls. Though I recently signed up with Verizon and the most basic smartphone plan has unlimited minutes and texts, so I’m thinking charging for minutes is maybe on the way out. As voice usage shrinks and data goes up, maybe it no longer makes sense for carriers to bother charging for minutes when there’s so much more money to be made in data.

Though that is all totally off topic. 🙂

Anonymous Coward says:

Netflix long ago offered to put servers in major ISP areas to assist in handling traffic by caching the main flow. It’s available to any major ISP center. This was to improve the customers satisfaction and to speed delivery. It is very telling that Verizon, Comcast, and AT&T, have refused the service, hoping to be paid more by the blackmail Verizon is attempting.

I further point you to the idea that until the court case was decided that the FCC could not regulate the internet by demanding net neutrality, none of these peering issues came up. Within a month of the ruling, Netflix started seeing problems. This is far from accidental and very much purposely staged.

This peering business isn’t about throttling. It’s about putting in an artificial bottleneck by refusing to update the computer connections between different parties of the internet, chosen on purpose.

When you look back at the methods that have been attempted to raise the price of the internet connections it becomes very plain where the issue is. We’ve all heard of the throttling of torrents supposedly to conserve bandwidth. But the red herring of bandwidth hogs is just that. Everyone is sold a package they can not exceed. You pay for a certain amount of service and you aren’t getting it because it is oversold. Then there are the artificial caps attempts to once again raise the cost of internet connection by demanding you pay for a higher service.

These companies are not sinking into the business the upgrading and adding on of equipment. That costs money and takes from their profit line. They are now trying to get Netflix and later other companies to pay for it instead.

This is about over charging, triple dipping, and refusal to move into modern day usage of the internet support. Competition would remove this issue if you had choices and it is the biggest supporting reason why these ISPs need to be considered a utility instead of a data communicator.

Milan says:

The "unbalanced traffic" argument is being misused

The original context of the “balanced traffic” argument was in peering arrangement between TRANSIT carriers (i.e. ones with networks interconnecting distant points. Obviously, if your network had a route between two peering points also paralleled by a competitor, you didn’t want them handing you big chunks of traffic, carrying only the small chunks themselves, and arguing you both were “sharing the load” between the peering points. Thus, the tradition that free peering had to include enough traffic in both directions so that both partners were providing roughly equal contributions to the relationship.
This situation is radically different in an end-network, such as exemplified by the user distribution portions of Verizon’s or Comcast’s networks. As there isn’t another route to the end user, the “balance” issue is moot. One could argue cost-effectiveness for e.g Netflix connecting to Boston Verizon customers in NYC versus Chicago (i.e. forcing Verizon to carry that traffic further on their own network) but not whether the traffic to the end nodes was mostly download data versus data ack’s.

Zonker says:

Re: The "unbalanced traffic" argument is being misused

The problem is the end-network providers like Comcast and Verizon designed this imbalance into their networks by limiting upload speeds compared to download speeds. I currently have 50Mbps download, but only 15Mbps upload at home. This limits the shared load by design even before they block or degrade p2p connections and servers from their networks.

Again, nobody to blame but themselves (Comcast, Verizon, etc.) for their inadequate networks.

Spaceman Spiff (profile) says:

I pay for bandwidth

I don’t care who I want bandwidth from, but I pay AT&T (or whomever) for X MBps, and I expect to get that, no matter from whom it is coming. If they cannot deliver, then they are in violation of our (presumed) contract. Unfortunately, the verbiage is usually on the order of “up to X MBps”, if if it’s less, I have no basis for complaint… What a crock!

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