This week I wanted to differentiate the "Fast Lane" discussion from the peering changes that Netflix has been making with Comcast and now AT&T.
I will start with the peering side. In this case, Netflix distributes its content over its Internet Service Providers - Cogent and Level 3. These carriers in turn connect to other Internet Service Providers (ISPs) like Comcast (I have Comcast Internet at my house). The challenge for Comcast was that talking to Cogent began to act a lot like talking to Netflix directly. The amount of traffic that Comcast got from those connections with Cogent was by and large Netflix traffic. Well, the agreements that Cogent and Comcast had were for a somewhat different kind of behavior. What Comcast expected is what it gets from other ISPs - relatively symmetrical traffic. From Comcast's standpoint, the agreement with Cogent was breached.
Now all of this was due to the high volume and unidirectional nature of Netflix's business. So, Comcast and Netflix (and now AT&T and Netflix) reached a direct agreement bypassing Netflix's other vendors. I am not sure that this raised costs for Netflix at all. It surely made Cogent unhappy through a loss of business and Comcast happy because of a gain. I hope you can see that this is a topic unto itself and separate than the "Fast Lane" issue.
So, let's circle back to "Fast Lanes". There are lots of words used to describe these but in the Telecom World we use a number of acronyms. The first is QoS or Quality of Service. QoS implies there is some form of Service Level Agreement or SLA between the provider and the customer. Today, you will not find these types of agreements around consumer Internet. Consumer Internet is what is known as a Best Effort Service. In this case, the network tries to deliver traffic but there is no guarantee.
When I was younger, the telephone network used to have "The Mother's Day Problem". People would call their Mom's and the phone network would become congested (just like a road network with too much traffic). The way the phone network works you would get "Busy" or a recorded message if your call could not go through. But if it could get through, you would have a clear connection to your Mom to tell her you loved her.
The Internet works differently when its congested. There is no recorded message sent by the network. The network begins to lose data. Think of a glass becoming filled to the brim. If you keep filling it, is spills over. Now put a small hole at the bottom. If you fill the glass faster than that hole can empty it, then you will still lose some water. Not all of it, but some of it.
This is what we are talking about when the FCC was talking about "Fast Lanes". Today, if the network is congested generally it tosses away data at random. But networks can be set up to choose to let through certain types of traffic first (think of the Big Rock Analogy). In the Business world this technology is used all the time to prioritize important traffic. The question in front of the FCC is whether they should allow such behavior on the Consumer Internet. Just so we are clear, TODAY it would be legal for ISPs to set up such an arrangement.
There is a whole separate question around what services might be offered and what services might be valuable.
I hope this has been helpful and have a great weekend!
Jim Sackman Focal Point Business Coaching Change Your Business - Change Your Life! Business Coaching, Sales Training, Web Marketing, Behavioral Assessments, Financial Analysis