Netflix's landmark deal with Comcast to speed up delivery of its videos could push Verizon & AT&T to also start charging the video streaming company. Fred Katayama reports.Reuters
The error message displayed when Internet videos just won't load has become a central focus in a U.S. fight between major broadband providers and Netflix Inc.
On Monday, the video-streaming service played down its role in a public battle with Verizon Communications Inc., while casting a critical eye toward Canada's largest Internet companies.
Verizon threatened legal action last week after Netflix started showing select U.S. users a message blaming poor playback on their ISP's "crowded" network. Netflix said Monday the messages were just "a small-scale test" scheduled to end on June 16, but maintained that slow video playback is due to a lack of capacity on the broadband providers' part.
The spat is part of a larger war over how content travels from a company such as Netflix to video-hungry users, raising questions about who is responsible for funding each step along the way.
As video streaming becomes ever more popular – Netflix now accounts for about one-third of Internet traffic at peak periods – pressure is mounting for both content and service providers to invest in improving speed and quality.
Netflix has started including Canada in its monthly "speed index" ranking the average performance of its own video streams on various Internet providers' networks. Its May report, published Monday, was the second to track Canadian ISPs and found the country outperformed the U.S. But with an overall average of 2.66 Megabits per second, Canada still lagged several European nations.
Rankings such as the Netflix "speed index" can be used to put consumer pressure on ISPs.
"There's no question that these benchmarks are designed to create influence politically from the consumer side," said Don Bowman, chief technical officer at Internet service tracking firm Sandvine Inc., adding that several factors suggest Canada's biggest Internet providers aren't likely to be drawn into the type of battle taking place in the U.S.
Before content from providers such as Netflix can stream through consumers' Internet connections, there are a number of intermediaries responsible for delivering that traffic. For example, transit networks – such as Level 3 Communications and Cogent Communications – help move traffic long distances and charge both the content creator and the Internet provider fees for its delivery.
As congestion mounts, experts say both sides could pay more to those intermediaries for improved service. Netflix has begun reluctantly striking deals with providers such as Comcast Corp. and Verizon, paying undisclosed amounts to connect directly with their networks. The deals for so-called "fast lanes" come as the U.S. Federal Communications Commission considers reshaping the rules on net neutrality.
In Canada, however, several of the largest Internet providers have started to "peer" directly with Netflix through its Open Connect content delivery network, meaning they connect directly at Internet exchanges or through their own networks. Telus Corp. and BCE Inc. are participating, according to Netflix's website. (BCE owns a 15-per-cent stake in The Globe and Mail.)
Rogers Communications Inc. said last month it is also part of the Open Connect program, although it is still working to improve its consumers' experience with the video site, maintaining that it recently doubled its Netflix capacity. It placed last in the April ranking, with an average speed for Netflix streams of 1.67 Mbps. While it moved up in May to 12th out of 14 with an average speed of 2.52 Mbps, Rogers is still well behind the top ranking of 3.16 Mbps for BCE's Fibe Internet service.
"While it shows an improvement over April results, this month's report includes testing done before we finished adding capacity," Rogers spokeswoman Jennifer Kett said Monday. "We expect next month's results to show the improved speeds that customers are getting today."
The TorIX Internet exchange in Toronto is another factor that could help stave off tensions between Netflix and Canadian ISPs, Mr. Bowman said.
The exchange is "settlement-free," meaning "everybody brings their own cable, but they don't pay based on the volume they use out of it."
"The U.S. has not had that model of public interconnection points," he said, adding that public peering exchanges are just starting to become popular south of the border.
"That's why the fight in the U.S. has been about who's going to pay the cost of buying a new router and buying new fibre. Netflix is saying the carriers should pay all of it because they get all the benefit. The carriers are saying Netflix should pay because they get all the benefit. The answer is somewhere in between."
Editor's Note: This story has been updated to indicate that in addition to connecting at Internet exchanges, ISPs participating in the Open Connect program can peer directly with Netflix through the ISPs' own networks.