While Hastings’ blog is an interesting piece of business strategy, ultimately even the most ardent cord-cutter should not be concerned that paid-peering deals will threaten the open Internet we know and love. The flexibility in the interconnection market has actually been a key tool in the successful growth of the Internet and will remain so.
Companies have to pay for their own Internet access, and companies that use more capacity should pay more. Netflix has been tremendously successful, so successful that it accounts for about 30 percent of downstream traffic at peak Internet use hours. Netflix’s recent arrangement with Comcast is simply its latest attempt to keep costs down as it continues to scale up its operations dramatically. Moving this traffic around the nation to local broadband networks is not cheap, and those costs should be borne by the traffic creators, in this case, Netflix. Having these sorts of deals hashed out in the marketplace shows the Internet ecosystem is flexible and healthy.
We should also not be concerned that such a deal will prevent Internet video start-ups. Entrepreneurs will continue to have the same opportunity to grow and prosper using the same old transit options to connect to the wider Internet — it’s only when they grow to the size of Netflix that paying for direct interconnection with residential ISPs starts to make sense. Big companies as well as start-ups in the “garage next door” continue to have countless ways to access customers and connect with broadband providers.
If Netflix has a real claim that the interconnection market is anti-competitive (color me skeptical), it should make a real complaint with anti-trust authorities instead of muddying an already complex area of policy.
Doug Brake is a telecom policy analyst with the Information Technology and Innovation Foundation.