Inside the Netflix-Comcast deal

[Commentary] Comcast and Netflix announced a commercial interconnect relationship between the two companies, which is in the very early stages of implementation, and as a result, many who clearly don't understand how the Internet works are writing about the news.

Those who don't cover network infrastructure for a living should not be trying to explain the technical details behind the announcement. Articles from mainstream outlets like TechCrunch, the Wall Street Journal, NPR and many others aren't even getting the basics right. Words like transit, peering, speed, bandwidth, capacity, etc. are being used interchangeably without any understanding of what they mean. In the hopes of trying to educate the market, let's clear up a lot of the confusion many in the media have created. The first one is that consumers need more "speed" from Comcast or Verizon to get better quality video streaming from Netflix. Next up are articles where it says that transit allows two networks to exchange "bandwidth," which is not accurate. Another statement I have seen people write about is saying that the deal focuses on the "two company's pipes." Netflix is not a network operator, they don't have any "pipes." They buy capacity from other network providers who have the pipes. So while this deal is about the interconnection between Comcast and Netflix, Comcast is the only one who actually owns the pipes. Other misstatements of late have been about transit with no real idea of just how many types of transit one can buy or how transit deals work. Most writing about Netflix don't even know the basics of how their content is delivered today or how content delivery networks and transit providers are involved. Commercial deals around interconnect help alleviate the bright lines between settlement-free interconnect (or peering) and a customer buying a retail product. Wholesale commercial deals take into account efficiencies and many other factors to drive a much lower unit cost. Bottom line is this is good for Netflix, Comcast, and for consumers, and it has absolutely nothing to do with net neutrality.

[Rayburn is executive vice president of StreamingMedia.com and principle analyst at Frost & Sullivan]