Netflix, Net-neutrality and over-the-top TV tactics

It’s easy to paint ISPs as the villains in today’s Net-neutrality debate. After all, they’re the ones that started it, making threats to content providers about needing to “pay to use our pipes”. But a couple of recent events have convinced me that certain content providers aren’t entirely innocent either.

The first incident that got me worried was a plan announced by the BBC to add to its iPlayer online video service a “traffic light” system that would supposedly highlight the “neutrality” of the users ISP. If the ISP was throttling iPlayer traffic to save on bandwidth, for example, it would show an amber or red light, depending on how badly it affected the service.

Auntie gets anti about inferior ISPs
The performance of the iPlayer on the networks of certain UK ISPs is a problem for the BBC. To cope with it, the broadcaster employs a so-called “adaptive bit-rate” system that senses the speed of a user’s connection and delivers video at a quality to match. At 1,500Kbps, the top-end service for Sony’s Playstation 3 console is a little bit better than standard-definition (SD) TV, but the lowest, 500Kbps, is much worse.

Speaking at one of our events, a senior BBC executive showed two slides which illustrated how this system was affected by the average performance of the iPlayer across all ISPs (see fig. 1) and for the “worst” ISP (see fig. 2).

As you can see, the BBC would probably rather you weren’t watching iPlayer via the “worst” ISP, and neither would you. But with a reserve characteristic of the British public-service broadcaster, the executive said “You’d have to buy me a lot of drinks to tell you which ISP that is”.

Netflix names… and therefore shames?
US-based Netflix appears to have no such qualms. Last month, the DVD-rental firm published data which showed the performance of its online video service on the networks of 16 ISPs in the US and four in Canada – all by name (see fig. 3). What’s more, Netflix plans to publish these metrics every month; the next lot will probably arrive in about a week’s time.

Fig. 3: US, Netflix performance on top networks, Jan-10 – Jan-11

The tone of the Netflix blogpost is pretty neutral, passing no judgement on the ISPs which feature lower down in the rankings and making no mention of throttling or Net-neutrality. But it’s hard not to read between the lines. Netflix is one of the single most popular broadband services in the US today and it’s telling consumers to be wary of ISPs which don’t provide enough bandwidth for its service.

That’s a pretty frightening prospect for a US ISP; Netflix had over 20 million customers at the end of 2010, equal to one in five US broadband subscribers, and is growing at a rate of knots (see fig. 4).

Fig. 4: Netflix, subscriptions and net additions, 4Q08-4Q10

In one respect, the BBC’s and Netflix’s initiatives are laudable. Transparency about the quality of broadband services is needed, especially given the gaps between the speeds many ISPs advertise and those subscribers actually receive.

Transparency measures lack… transparency
The problem is such metrics do not explain why their services perform poorly on certain networks. The BBC executive stressed that he did not know whether throttling was to blame for the iPlayer’s performance on the “worst” ISP’s network, or whether the network was simply congested.

I may be wrong, but I don’t believe any technology has since emerged that could adequately answer this question. One content delivery firm tells me that there are ways to detect whether an ISP is throttling traffic, but “it’s more art than science”.

In other words, an ISP could be punished by the BBC’s traffic light system, even if it hadn’t breached Net-neutrality by consciously degrading iPlayer traffic.

The sterner of you may say that such ISPs should be punished, in order to force them to upgrade their networks to support services such as the iPlayer as well as their competitors can. After all, that’s probably what their subscribers think they are paying for.

But you can’t ignore that this will also suit the needs of the BBCs and Netflix of this world quite nicely – the constant expansion of the broadband networks that form the fundamental basis of their services without having to invest a dime in the infrastructure.

Giving a green light to “positive” discrimination?
The question is whether Netflix’s and the BBC’s traffic light system would ever show whether ISPs are breaking another principle of Net-neutrality, say, by giving the video services of the DVD-rental firm and the broadcaster priority over others.

You might think this will not be a problem. Both the BBC and Netflix have been very vocal about not paying ISPs to carry or prioritise their traffic.

But with the happiness of some 20 million Netflix subscribers and 6.8 million weekly iPlayer users at stake, some ISPs may well feel forced to do it anyway. Many ISPs already use a technology called “transparent caching” to deliver certain types of content more efficiently, even though they are not getting paid by content providers to do so.

We understand, for example, that BT will optimise traffic to TV settop boxes for the BBC-backed Youview online video service. Clearly, BT would like the BBC and the other Youview backers to pay for this via the operator’s Wholesale Content Connect content delivery offering.

But if the broadcasters refuse to pay, BT might decide to optimise the traffic anyway if it helps prevent subscribers departing for the conventional pay-TV and broadband bundles of Sky and Virgin Media.

Again, such a situation could be exactly what the BBC and Netflix want. Both organisations have spoken about establishing some kind of mutually beneficial content delivery system that will enable providers and ISPs to deliver video in a more efficient, cost-effective manner. Because such a system would benefit both parties, the BBC and Netflix have argued that they shouldn’t pay to use it.

In some ways, this would be an elegant solution. Aside from the ideological issues, there are many major technical, commercial and administrative obstacles to establishing paid-priority services that a free approach could side-step.

The danger is that ISPs would necessarily end up favouring the content providers with the most users – or the most amount of money to spend on technology and PR exposing the supposedly “poor performance” of uncooperative ISPs. This would hardly be in line with the tenets of Net-neutrality, but it wouldn’t be a bad result for certain major content providers either.

Informa Telecoms & Media is conducting a survey about the future of content delivery networks. Completing it should take you no more than 10-15 minutes. As a “thank you” for your participation, we will provide you with the headline results. To complete the survey, please click here.