Bloomberg ponders the question of “will Netflix kill the Internet” which cites some interesting data, but I think it has a misguided view of the effect of Netflix on the Internet.  I don’t believe Netflix will *kill* the Internet because the evidence shows that Netflix is actually *growing* the Content Delivery Network (CDN) and broadband networks which are now a significant and special component of the Internet.  In fact, entities like Netflix will force and enable this expansion to happen.  The only thing that can stop this growth of the Internet is the kind of government interference of the Internet free market that many are clamoring for.

A disturbance in the Internet’s equilibrium

Level 3 CDN recently demanded 300 Gbps additional capacity on top of the 200 Gbps free peering they already got from Comcast for free (see video for back story).  When they only got 60 more Gbps for free and were asked to pay for additional *private* peering capacity outside of the “open” Internet, they paid for it but screamed to the media that Comcast wasn’t playing nice and that they were violating Net Neutrality.  Once it became obvious that it was merely a peering dispute, Level 3 responded that Comcast had no right to charge any CDN companies and that any increase in costs associated with capacity requests from Level 3 CDN should be passed on to broadband consumers.  Level 3′s exact words are:

“Comcast can either lower the cap or charge more for higher usage as many other broadband access providers have already done.”

Level 3′s position is ridiculous for the following reasons.

• If we take Level 3’s request to its logical conclusion, any CDN company that demands private peering capacity from an ISP or additional peering capacity, no matter the cost to the ISP, should be granted that capacity by force of the government.
• If and when that increases costs for ISPs, they should bill their broadband customers and not the CDN company that requested the extra private capacity.
• There’s also a comical aspect of Level 3′s view.  If ISPs were required to give free peering capacity to CDNs, then why wouldn’t they be required to give private peering capacity to Netflix, Google, or anyone else who asked?  And if that happens, why would Netflix or anyone else buy indirect bandwidth from Level 3?
• Or is that free peering privilege only to be granted to the anointed “backbone” providers like Level 3 who maintain that Internet backbone providers have the sole right to charge money for connectivity?

If the government sees Level 3′s complaint for what it really is and dismiss it, then all is right in the Internet landscape.  We have conflicting, self serving, and self preservationist business interests that are in a constant struggle with each other and it all seems to be balancing out just fine.

Content companies like Netflix will continue to buy CDN capacity whether it’s from Level 3 or Akamai or Limelight and CDN companies will continue to buy wholesale peering access from ISPs regardless of how much some of them shamelessly whine about not getting it for free.  ISPs in turn will be forced to upgrade their broadband networks (peering and backhaul and last mile) and they will have the funds from the CDN company to do it with.  Consumers will continue to benefit from having the financial burden of broadband upgrades being shared by the advertisers and content distributors.  That sounds like the free market working as well as it can work as it always has on the Internet.

[Cross-posted at Digital Society]