IssueRaiser

Then your understanding is incorrect (sorry; not trying to be flippant).

Then your understanding is incorrect (sorry; not trying to be flippant). Interconnects are the entire story here. The media has framed a lot of the congestion issues in the context of "fast/slow lane" but what they come down to are business disagreements between the transit providers and the ISPs. The solution to these disagreements from the viewpoint of a large service provider is to purchase an interconnect directly to the ISPs. If you are a small service provider, the solution is to purchase delivery through a CDN. Netflix used to purchase delivery through CDNs until it got too expensive for their business model; so they started building their own CDN that they called "OpenConnect". They used their positive brand image in conjunction with the ISP's poor brand image to launch a PR campaign with the goal of knocking down the price they would have to pay for interconnect service. It worked; they knew they were always going to have to pay the Comcasts and Verizons of the world but they were able to talk the ISPs down a significant amount. Strategically, it's a bad position to be in for a service provider because the ISPs can raise the price at any time (which is why Netflix has continued complaining about it). But realistically, the ISPs sit on such a strong market control point that nothing can really stop them from setting prices (common carrier status just means they have to offer the same price structure to everyone; not that they can't arbitrarily raise prices).

Posted by exelius on May 13, 2014, 2:31 PM

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Then your understanding is incorrect (sorry; not trying to be flippant).

exeliusMay 13, 2014, 2:31 PM

Then your understanding is incorrect (sorry; not trying to be flippant). Interconnects are the entire story here. The media has framed a lot of the congestion issues in the context of "fast/slow lane" but what they come down to are business disagreements between the transit providers and the ISPs. The solution to these disagreements from the viewpoint of a large service provider is to purchase an interconnect directly to the ISPs. If you are a small service provider, the solution is to purchase delivery through a CDN. Netflix used to purchase delivery through CDNs until it got too expensive for their business model; so they started building their own CDN that they called "OpenConnect". They used their positive brand image in conjunction with the ISP's poor brand image to launch a PR campaign with the goal of knocking down the price they would have to pay for interconnect service. It worked; they knew they were always going to have to pay the Comcasts and Verizons of the world but they were able to talk the ISPs down a significant amount. Strategically, it's a bad position to be in for a service provider because the ISPs can raise the price at any time (which is why Netflix has continued complaining about it). But realistically, the ISPs sit on such a strong market control point that nothing can really stop them from setting prices (common carrier status just means they have to offer the same price structure to everyone; not that they can't arbitrarily raise prices).

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