My Latest Thoughts On The FCC’s Statements and The Netflix/Comcast Dispute

I appreciate so many people being interested in what I have to think about the latest comments by the FCC and the latest hair pulling fight between Netflix and Comcast. Since I’ve gotten so many emails and questions on the topic, I figured another blog post was needed. On the FCC and net neutrality topic, I really don’t have any comments on that yet, as it’s too early and we don’t have any concrete info on what exactly is being proposed. While FCC Chairman Tom Wheeler published a blog post on Thursday, it does not say much. The post is entitled “Setting the Record Straight on the FCC’s Open Internet Rules,” but it doesn’t do anything of the sort.

The post is vague, with no real definitions and is full of words and phrases like “unreasonable” and “commercially reasonable”. We don’t have any idea what those words mean, how they are defined, or the scope of what they will or will not cover. I see people making a lot of guesses or assumptions on what will take place, but I’ll save judgement on that until I have something tangible and detailed to review. Without it, my guess is just as good, or bad, as anyone else’s on what may or may not transpire.

I will add that personally, I’m tired of hearing so many consumer advocacy groups quoted in the media telling everyone that as a consumer, I need to be saved from the harm that will come to the Internet. They don’t even have the details on what’s being proposed be it the business terms, how compliance will be monitored, who exactly will be in charge of it, or how any of these rules will work. And many of them, can’t tell you the different between peering and transit or speed versus capacity. Just because they call themselves a consumer advocacy group, does not mean they know the subject they are being quoted on. Personally, I think the Internet has worked pretty well over the past twenty years that I have been on it, so I’ll save judgement on what good or harm will come from this until I have more details.

On the Netflix and Comcast dispute, honestly, it’s getting really tiring watching two billion dollar companies try to use the media, and consumers, to convince us of their stance on the subject. Netflix is standing behind blog posts and letters filled with vague, high-level terms, which many times are inaccurate. I say stop all the posturing, show the data you have and let all of us decide what makes the most sense. Stop deciding for us what you think is best and let the consumer, or those who track the industry, decide. Netflix and Comcast both have a lot of data on what’s actually taking place on the backend, from a technical and business level, yet they won’t use any of it when they make their arguments.

If Netflix wants to solve this, make points with facts, real data and numbers, not assertions based on opinions. It’s fine if Netflix has a different take than Comcast or anyone else, but then treat it as such and don’t call things “unprecedented” just to exaggerate and get people all worked up. If either company wants us to takes sides with them, show some transparency as to what’s taking place, especially when it comes to the numbers. I don’t care what anyone says, this debate is all about big business, with both Netflix and Comcast wanting to protect their bottom line. It’s about dollars and cents and who can spend less and have better margins. Any other implication by either side is simply not genuine.

While it is about business for both sides, Comcast has the leg up in this regard as their argument is that interconnection deals have been taking place for a really long time, and they are right. This is how the Internet has always worked and anyone who builds their own CDN, like Netflix has done, has costs associated with connecting to any ISP, if it does not fall within the ISPs peering policy. If Netflix wants to argue that this is no longer the Internet of 2000, or that an ISP like Comcast is now too big and has an unfair advantage, then that’s a fine argument. But it won’t go far without facts and the burden of proof is on Netflix to prove this is bad for everyone.

Netflix has been very vocal to say it’s bad for the whole Internet and consumers, but the one point I hardly ever see anyone talk about is why Netflix is all alone in their corner? Why aren’t other large content owners/distributors backing them up? Why isn’t there a big contingent of content companies rallying around Netflix? Where is Google? Apple? Microsoft? Amazon? They all have a stake in this, if Netflix’s argument is to be believed, especially because they all operate their own CDNs. I find it odd that no one really seems to mention that to date, Netflix is standing alone on this topic, being backed up by no other major content owner.

It also does not help Netflix’s cause that they are all over the place in their statements. When the media and others were stating, with no proof, that Comcast was throttling Netflix’s stream, Netflix’s CEO said he didn’t think that was the case, and we’ve seen no proof to show otherwise. Netflix then signs a deal with Comcast saying it was “a mutually beneficial” agreement, but then weeks later says it isn’t and they did the deal because they had no choice. Netflix said it was a mutually beneficial agreement because in reality it is, from a cost and quality standpoint. The only thing more beneficial to them, would be if they didn’t have to spend any money with Comcast, but still got the improvement in quality.

As I have said before, if Netflix thinks the economics of the CDN market need to change, I’m all for that debate and listening to their reasons. But it seems, at least to me, that Netflix isn’t saying they are paying too much, but rather they should not have to pay anything at all. Am I the only one who feels like every time Netflix makes their argument they sound like someone who always wants everything for free? BOTH sides should bear the cost to improve video quality as it benefits both companies. If that’s what Netflix is proposing, then they need to detail what those numbers are and how BOTH sides pay for it. You can’t try to debate something in a public forum, but then hold back all the data that’s needed to solve the problem.

For those not following the latest happenings between Netflix and Comcast, and I don’t blame you if you aren’t, it’s very time-consuming, and frankly, getting tiring. On Thursday, Netflix’s VP of Global Public Policy sent a letter to Sen. Al Franken. In the letter, he once again reaffirmed Netflix’s statement that Comcast should not merge with TWC as it would be bad for consumers and content owners. Comcast then replied with a blog post about the letter, saying Netflix isn’t being honest about its cost-shifting strategy. Netflix’s person responsible for their CDN, Ken Florance, whom keynoted my CDN Summit show last year, published a post on Netflix’s blog, signaling out Comcast as the one troublemaker. The post points out that “Comcast alone sets the terms and conditions for access to Comcast subscribers,” which is true, because it’s Comcast that owns the Network.

In the letter Netflix sent to Sen. Al Franken, Netflix said they are “committed to sharing facts with policymakers to increase their understanding of this issue.” That’s a bit disingenuous to me. Netflix is using the public to their advantage, getting consumers to complain to Comcast, but then aren’t willing to share “facts” in a public forum. If you stand behind your argument, show what you have, give us the data, and state your case with the evidence you have. This is the same request I made in some of my previous blog posts, but I’m not expecting Netflix to do it, which is a shame.

This whole argument between Netflix and Comcast is pretty childish. Two billion dollar companies who can’t come to an agreement for the benefit of consumers and their own customers. I’m amazed that Netflix would rather the government get involved, which is crazy, considering what kind of track record they have in solving problems. And before I get hate mail saying I am talking down on our country, I’m not. I spent six years in the military, I respect my country, but our legislators don’t have a great track record when they start making policies around technologies they don’t understand.

I’ve got to get some sleep, but the comments section is open and I’ll try to get to any questions when I can.

Carriers Facing New Challenge Of Caching Huge Demand For Live Video Traffic

With all the talk of how much traffic video on demand services like Netflix and YouTube take up on carrier networks, one fact being overlooked by many is that live streaming traffic is exploding, and is harder to deliver. There are a lot of solutions and options in the market to cache VOD content, but trying to do the same for live streaming isn’t easy since to date, vendors in the market haven’t been focused on live caching platforms. It’s one of the reasons why transparent caching provider Qwilt recently announced the first carrier solution I know of in the market specifically to cache live streaming. Following up that announcement, on Wednesday Qwilt updated its live stream caching platform to allow operators to cache and stream Twitch content from within the carrier network.

To put the growth of live streaming in perspective, just take a look at some of these impressive numbers. Live streams of video gaming championships are one of the fastest growing segments of the industry. Last year, the League of Legends Season 3 World Championship broadcast peaked at 8.5M simultaneous streams. Twitch, which is now on the Xbox One and PS4 has 1M people streaming live footage each month and some of the most popular gamers are doing 137,000 simultaneous streams just from their single account.

The growth of Twitch in particular is incredible with some saying that Twitch now commands 1.8% of peak U.S. internet traffic, and is in the top 10 list of video sites. Based on data from North American broadband operators who have deployed Qwilt’s transparent caching platform, in December, Twitch was sixth on the list of top video entertainment sites and number one in the live category.

qwilt

Seventy five percent of carriers I speak to are now asking about caching of live video streaming and Qwilt said they saw this problem coming month ago, and had been working on a solution since then. Twitch is growing so fast that they will be the keynote speaker in two weeks at our Streaming Media East show, on Tuesday May 13th in NYC.  Matthew Szatmary, Senior Video Encoding Engineer at Twitch will kick off the show and the day before, on Monday May 12th, Alon Maor, CEO of Qwilt will present on “Building The Open Architecture For VOD And Live Caching In Operator Networks”, at our Content Delivery Summit event.

If you want more details, with data, on Twitch’s impact on the Internet, check out Qwilt’s very informative page at qwilt.com/twitch

Verizon, Netflix, Comcast & Google Join Other Telecom, MSO and Content Owners Presenting At Content Delivery Summit

LogoIf you want to learn how video is cached inside the last mile, how Netflix, Comcast and Google build out their CDNs and what’s taking place in the CDN industry, come to the Content Delivery Summit on May 12th in NYC. This one-day highly focused event brings together telecom carriers, service providers, content owners, and industry vendors for a detailed look at web, acceleration and media delivery infrastructure. Register with the discount code of 100DR and get a ticket for only $395.

Learn about transit, last mile video delivery, multi-CDN deployments, licensed and managed CDN, dynamic content acceleration, measuring QoS, delivering live events and hear what some of these services cost. See the latest solutions in the market from some of the leading vendors and meet the new startups who want to disrupt the industry. At the Content Delivery Summit, real business gets done as this is the place to meet those who are building out some of the largest public and private CDN deployments to date.

As conference chairman, I am providing introductions between attendees and presenters and will introduce you to those you want to do talk to. Get the personalization you don’t get at most shows. Conference topics and presentations will include:

  • Building the Netflix Open Connect CDN
  • Deploying A Multi-CDN Environment For Content Providers
  • Google’s Approach to Content Delivery
  • Scaling The Comcast CDN
  • Real User Measurements for CDN Performance Monitoring
  • Using SDKs for Improving End-To-End Mobile Performance
  • Evaluating Different Caching Strategies Inside an Operator Network
  • Uncovering the Real Reasons Why Online Audiences Leave
  • Dynamic Content Acceleration: Lightning Fast Web Apps
  • Optimizing Mobile Engagement & Cross-Device Experiences
  • New Strategies For OTT Monetization
  • The Business Challenges of Delivering Content to Emerging Markets
  • Building The Open Architecture For VOD And Live Caching In Operator Networks
  • CDN As A Virtual Network Function: Lessons Learned
  • Using Managed DNS to Integrate Multiple CDN Providers
  • Using Big Data for Real-time Video Stream QoE Optimization
  • Video CDN Data: Pricing, Contract, Volume and Market Sizing Trends

The event will kick off with a keynote from Bob Toohey, President, Verizon Digital Media who will also join speakers from Comcast, Netflix, Google, Yahoo!, Viacom, Deutsche Telekom North America, Level 3, Amazon, Etsy, Cedexis, Qwilt, Ericsson, MileWEB, Yottaa, PeerApp, Tata Communications, Instart Logic, Limelight Networks, Hewlett-Packard, Conviva, Citrix Systems, DYN and others.

Twitch To Keynote Streaming Media East Show: Learn How They Broadcast Live To Millions

Twitch_Logo_ 6441a5I am pleased to announce that Matthew Szatmary, Senior Video Encoding Engineer at Twitch will kick off the Streaming Media East show, on Tuesday May 13th in NYC. Launched in 2011, Twitch is the world’s leading video platform and community for gamers where more than 45 million gamers gather every month to broadcast live video, watch and chat about gaming. In February 2014, the Wall Street Journal ranked Twitch as the 4th largest website in terms of peak internet traffic in the U.S. fortifying the brand as an entertainment industry leader and the epicenter of social video for gamers.

Live streams of video gaming championships are one of the fastest growing segments of the industry. Last year, the League of Legends Season 3 World Championship broadcast peaked at 8.5M simultaneous streams. Twitch, which is now on the Xbox One and PS4 has 1M people streaming live footage each month and some of the most popular gamers are doing 137,000 simultaneous streams just from their single account.

Come hear how Twitch is developing next generation encoding services and playback technologies to serve live video to one of the Internet’s largest audiences. Register online for an exhibits pass using the code DR100 and you’ll have FREE access to the keynotes.

Netflix’s Arguments Against The Proposed Comcast & TWC Merger Aren’t Valid

On Monday Netflix announced earnings and in their shareholder letter, said they oppose the proposed merger between Comcast and Time Warner Cable. While Netflix is entitled to that option, they should be arguing their point with facts, instead of making statements that aren’t accurate. Netflix says that “Comcast is already dominant enough to be able to capture unprecedented fees from transit providers and services such as Netflix“, but that’s not true. The definition of unprecedented is “never done or known before, novel, groundbreaking or revolutionary. There is nothing “unprecedented” about interconnection agreements. [If you want to know how the interconnection deal between Comcast and Netflix deal works, from a technical level, read my other post: Here’s How The Comcast & Netflix Deal Is Structured, With Data & Numbers]

As Comcast rightly points out in their rebuttal to Netflix’s statement, Akamai, Yahoo, Limelight, and Google have similar agreements with companies like Verizon, AT&T, Level 3, Sprint, and Comcast. Interconnection deals have been taking place between ISPs and content portals since the late 90′s. For Netflix to imply anything else is simply wrong, and it can’t be argued with. If Netflix wants to argue that there would be fewer options for high-speed broadband, fine, but that’s not what they are doing. They are intertwining the topic of customer choice for ISP providers with interconnection deals, when one has nothing to do with the other. This is about Netflix protecting their business and wanting to keep their costs down. In fact, in Netflix’s letter they even point this out saying the “long term threat” is from ISP driving up “costs for everyone else“. This is simply about what’s best for Netflix’s business, nothing else.

Netflix goes on to say that the “combined company would possess even more anticompetitive leverage to charge arbitrary interconnection tolls“. When Netflix signed a multi-year interconnection deal with Comcast, it wasn’t based on random choice or personal whim, which is the definition of arbitrary, it was based on metrics. All Netflix is looking to do is scare people by using words like “unprecedented” and “arbitrary”, even though they are not accurate. Netflix is quick to say paid interconnection deals are bad for large companies and small content owners, yet we don’t hear any of these other companies backing Netflix up in their argument. How come Netflix isn’t arguing their case with any other large companies? In Netflix’s original blog post on this topic, they mention Google and Skype as companies who would benefit from interconnection agreements being regulated, yet neither Google nor Microsoft, which owns Skype, have publicly backed Netflix with any kind of statement. If not having interconnect relationships regulated is such a big “threat” to the Internet as Netflix says it is, why are they the only content owner complaining?

Netflix also calls out AT&T in their shareholder letter, saying that Netflix streaming on U-verse is poor quality and that “it is free and easy for AT&T to interconnect directly with Netflix and quickly improve their customers’ experience, should AT&T so desire.” It’s also easy for Netflix to connect to AT&T, in a paid model, just like the deal Akamai did with AT&T. When Akamai wanted to get their servers inside AT&T’s network, they did a paid deal with them. Akamai didn’t use the media and public opinion to try to get free access to AT&T, they paid as is customary when you are in the CDN business, which Netflix is, and you want to get deeper into an ISPs network. You don’t see Akamai, the largest commercial CDN on the planet, who handles 20% of the world’s total Web traffic, out in the media complaining about costs associated with running their business.

If Netflix does not like the business model of being a content delivery network and the costs associated with it, then they should not be in the business of operating their own CDN. While they like to make it sound like they don’t have any choices and that Comcast has them in a corner, we know that’s not accurate. Remember, Netflix use to deliver 100% of their video via companies like Akamai and Limelight Networks, who already have the necessary interconnection deals in place. There are other options in the market, and when Akamai and other commercial CDNs were delivering Netflix’s content, you didn’t see many complaints about poor quality Netflix streaming. Netflix has multiple options in the market for delivering high-quality streaming with a good user experience.

On multiple occasions, and in Netflix’s latest letter the say that there is a threat from the largest ISPs “driving up profits for themselves“. While ISPs like Comcast have a lot of profitable revenue, it’s not from interconnection deals. For my last post on this topic, Comcast went on record to point out that less than .1% of their revenue comes from such deals. In 2013, Comcast had revenue of $64.6B and of that, all of their interconnection deals accounted for between $30M-$60M in total. If you want to argue that ISPs raise rates for their services too often, I won’t argue with you, but that’s not the debate. The fact is that the revenue that Comcast and other ISPs get from interconnections deals is not what’s driving their business or contributing much to their bottom line. Netflix makes it sound like there is a lot of money at stake for the ISPs when it comes to interconnection deals, but let’s not debate it because, in the case of Comcast, we know what the real numbers are.

Netflix didn’t have to move away from third-party CDN providers, but they chose to based on business decisions including cost and control. When their strategy changed and they decided to build out their own CDN, Netflix then had costs associated with that business decision, which they are unhappy with. But that’s what this is about, a business decision made by Netflix for what’s best for their business. This argument between Netflix and Comcast about interconnection deals has nothing to do with net neutrality. This isn’t about “fighting for the Internet the world needs,” like Netflix has said, it’s about keeping their costs down. That’s all it comes down to and it really is that simple. Anything else added to the conversation is simply a distraction to the topic at hand.