When I read headlines like “Will Netflix Destroy the Internet?“, it is as disagreeable to me as the notion that packet prioritization or enhanced network services will destroy the Internet.  Farhad Manjoo cited some Sandvine data which showed that the newly available Netflix in Canada can account for as much as 90% of traffic at certain times on one Canadian broadband network with just 10% of the user base.  The same Sandvine data also revealed that Netflix accounted for 20% of the peak hour (8PM to 10PM) bandwidth consumption in North America which is higher than YouTube, Netflix, and even BitTorrent.

Note: I find it promising that consumers are opting for more legal content over pirated content.  The price is what consumers are willing to pay and the quality and on-demand aspect of Netflix far exceeds any peer-to-peer (P2P) technology.  It’s also interesting that Mr. Manjoo admitted to stealing movies with BitTorrent as if it were as natural as breathing.

Managing the traffic fairly

The disproportionate bandwidth consumption with 10% of the user population consuming 20% to 90% of the resources is interesting, but it’s not necessarily a bad thing.  It certainly justifies managing that 10% user base down to an hourly average of 10% consumption if the remaining 90% of the subscribers all want their maximum equitable share, but subscribers typically average less than 10% of their peak bandwidth performance so there usually isn’t a problem.  Occasionally when other subscribers on average want more of their peak bandwidth, the broadband provider can give it to them by reducing disproportionate consumption from Netflix, and Netflix buffers its videos to avoid disruption or dynamically drops bit rates to accommodate traffic conditions if necessary.  Broadband providers also have the right and duty to manage the jitter induced by Netflix, but that doesn’t negatively impact Netflix in any way.

Upgrades to broadband capacity are inevitable

The amount of bandwidth that Netflix is currently consuming in North America is probably what the broadband infrastructure can handle.  As the number of Netflix subscribers increase and as the popularity of other video sites increase, broadband providers will have to upgrade their capacity at significant cost.  However, I personally know Netflix subscribers that have upgraded their 1.5 Mbps broadband connection to 6 Mbps connections because they need more than 4 Mbps to take full advantage of Netflix HD content.  So while Netflix forces broadband providers to upgrade their capacity, it also increases their higher tier subscribers.

Cable broadband providers may be more sensitive to Netflix usage because their subscribers already have sufficient peak bandwidth to view Netflix HD but the cable networks can’t accommodate concurrent usage without upgrades.  Every time a cable broadband neighborhood (called a “node”) adds another 8 concurrent Netflix subscribers, the node needs another 6 MHz channel of capacity or everyone on the node suffers.  But the cable providers already collect higher monthly fees than their DSL ISP counter parts and they don’t have to spend as much money up front to upgrade to next generation broadband, so the infrastructure expenses will have to be paid as the need arises.  If a cable provider fails to add capacity, their subscribers will complain and jump ship to the competing Telcos.  But there is plenty of evidence suggesting that broadband is competitive because we have seen major broadband providers like Comcast double their subscribers bandwidth with no price increase.

Voluntary agreements are the solution and not regulation

Some have implied that Netflix might be responsible for paying for the broadband infrastructure expenses they’ve incurred, but this has led to a backlash that Net Neutrality laws must be passed to prohibit ISPs from offering premium services to content or application providers.  But both extremes are wrong because Netflix doesn’t owe broadband providers anything but nothing should prohibit the broadband providers from offering Netflix better network services on a purely voluntary basis.

Netflix doesn’t owe a termination fee to broadband providers because they’ve paid their Internet transit provider or Content Delivery Network (CDN).  The transit or CDN provider already paid the broadband provider directly or indirectly through existing peering agreements, and those payments might involve money or bandwidth exchange.  Netflix has essentially paid all the broadband providers through other distribution channels, but that shouldn’t preclude broadband providers from offering direct wholesale bandwidth (e.g., paid peering services) at a quality and price level that is attractive to Netflix and other content or application providers.  So long as the premium services are offered with no implied or explicit threat of unreasonable discrimination against sites that don’t pay up, that’s how the Internet has always worked.  Applications that consume ever increasing amounts of bandwidth and force network upgrades are nothing new either and it’s how the Internet has always worked

[Cross-posted at Digital Society]