There is a lot of news surrounding Net Neutrality, and potential repercussions of decisions made by courts, and some players out there that want to grab as much cash as they can, and claim it is in the best interest of their customers.
Netflix is just an example people love citing because it is bandwidth intensive, yet is not the entire story itself. Take a moment and understand how the Internet is pieced together. The Internet is a mass of interconnections between networks. These interconnections happen basically 1 of 3 ways:
transit: network A pays network B to reach every other network that isn’t A or B. Good networks usually get multiple transits for failover, and/or alternate paths to those other networks. You can buy multiple ports for bonding to increase capacity, etc. Average transit price without a Service Level Agreement (SLA, guaranteed connectivity or you can yell at us a lot and we credit you) is around $1-2/mbit, and with a SLA can hit upwards of $10/mbit. These are current avg. prices when buying 10G at a time of connectivity/capacity right now.
peering (settlement free, or “free”): Network A spends a bunch of money to get into popular (and less popular but regionally situated) Internet Exchange Points (IXP), and advertises its customers to other participants at no charge, usually over a series of network switches operated by that IXP. These networks pay for a number of switch ports and those ports’ capacity. This can also happen as a “private interconnect” where, at this mutual IXP, the networks can pay the monthly cost of running a fiber between them and exchange their customers’ routes that way. This means if you have 1G on the public exchange, but want 10G to a specific network, you pay the cheaper of either upgrading your exchange port to handle more capacity, or the private interconnect. The private interconnect is generally cheaper, as a single exchange 10G port can run around $7k/mo, versus a $350/mo for a fiber connection capable of 1/10/40/100G capacities (depending on either sides’ hardware capabilities and negotiated speed). You can also bond multiple ports to have loads more capacity, and still be cheaper than the cost of that single flat rate port on the exchange.
paid peering: Network A pays network B to only reach B’s customers/routes. Comcast, AT&T, etc., these are the players that usually play this game. “Oh you want to reach our users over a dedicated line, pay us $x as well as the cost of the connection.”
Netflix, since it appears to be everyone’s favorite example, has paid for at least 2 of the 3 (because almost no one in the networking world divulges if they have done the “paid peering” option, but it can be assumed in some cases these content companies do). So lets look at Netflix’s interconnection map. The thick lines are where reaching Netflix is most common, and assumed their paid transits. Lots of people traverse Level3 to reach Netflix, so their reliance on that would point to a paid transit. Thinner lines are the other ISPs that do not have as many networks behind them like Level3 might, so users don’t traverse them as much. We could assume those are peering connections at IXPs. Netflix has also deployed caching hardware at locations close to the Comcasts and AT&Ts that talk with players like Level3, to reduce latency and give you a better viewing experience.
So in order for Netflix to provide you with their service, they have now bought: transit, peering capacity, deployed de-centralized hardware to bring their content closer to you, and quite possibly already pays the Comcasts, etc. the paid peering costs. They already pay to put their content on the Internet, the whole Internet, and nothing but the Internet (with the usual regional restrictions to enforce copyright blah blah). You pay $60/mo (or more, or less, whatever) to reach that WHOLE INTERNET, and an additional $7 or whatever for the Netflix service.
But wait, now if Netflix doesn’t cough up more money, to not only your provider but any provider that decides to go this route, the quality of their service could be degraded ARTIFICIALLY. Alllll that capacity is still there, and never went away until the place you pay $60/mo to decided they want more money, and from services/destinations you pay them to deliver to you already. So Netflix eats the cost of doing business and you maybe now look at $11/mo because Netflix is out for profit too, without a doubt.
Now the kicker. Take away the name Netflix, and replace it with some other service you like. Actually, make it your project/next-great-idea. Hope you have the cash to pay to play.
That isn’t what the Internet should be, and for other parts of the world it won’t be. But with the US being a decent driving force behind changes that make their way throughout the Internet, it very well could be. Setting bad precedents here in the US, make it so others might follow suit elsewhere.