The Case Against ISP Tolls

[Commentary] As the person at Netflix responsible for content delivery, I spend a lot of time thinking about Netflix’s Open Connect CDN and its interconnection with Internet service providers (ISPs).

Netflix has a mutually beneficial relationship with nearly every ISP in every market where we provide service. But this is less the case for the largest ISP in the US, Comcast, which is trying to become even larger by acquiring Time Warner Cable. For a content company such as Netflix, paying an ISP like Comcast for interconnection is not the same as paying for Internet transit.

Transit networks like Level3, XO, Cogent and Tata perform two important services: (1) they carry traffic over long distances and (2) they provide access to every network on the global Internet. When Netflix connects directly to the Comcast network, Comcast is not providing either of the services typically provided by transit networks. Comcast does not carry Netflix traffic over long distances.

Netflix is itself shouldering the costs and performing the transport function for which it used to pay transit providers. Netflix connects to Comcast in locations all over the US, and has offered to connect in as many locations as Comcast desires. So Netflix is moving Netflix content long distances, not Comcast. Nor does Comcast connect Netflix to other networks.

In fact, Netflix can’t reach other networks via Comcast’s network. For all these reasons, Netflix directly interconnects with many ISPs here in the US and internationally without any exchange of fees.

In sum, Comcast is not charging Netflix for transit service. It is charging Netflix for access to its subscribers. Comcast also charges its subscribers for access to Internet content providers like Netflix. In this way, Comcast is double dipping by getting both its subscribers and Internet content providers to pay for access to each other.

[Florence is vice president of content delivery at Netflix]