Netflix Suckage Explained

Been frustrated with Netflix lately?  Me, too.  Streaming has been low-quality and rebuffering often over the past couple of weeks.  Here's why:

Netflix users across the country have been enduring extremely slow streaming rates and poor video quality lately. But nailing down the culprit is harder than you might think.

The growing feud between Netflix and Internet Service Providers has gotten pretty hot recently. While reading the headlines of the latest collision between Netflix and major ISPs, specifically the recently reported slowing of Netflix streams over Verizon’s Fios Internet service, its hard not to imagine “Showdown” by ELO playing somewhere in the background.

Netflix’s monthly ISP Speed Index report showed that streams from several service providers, including Verizon’s Fios and DSL internet service, slowed down in January. The report fed directly into fears that have been simmering since Verizon won a court case last month centered around Net neutrality, which stifled the FCC’s ability to regulate ISPs under current rules.

The verdict out of DC sent the Internet abuzz with fears of a new era of draconian rule by ISPs. The already powerful conglomerates ostensibly gained the freedom to charge more money to some companies for use of their Internet pipelines than others, setting up a pay-to-play scenario. First on the list, many worried, would be Netflix, a company which at last tally accounted for up to 31.6 percent of North American Internet traffic in peak hours.

Fuel was added to the flames when a recent Blog post by David Raphael of iScan Online posted a screenshot of a chat with a Verizon representative, who admitted that Verizon was limiting the bandwidth of cloud providers to intentionally “throttle” speeds from streaming services, including Netflix. Verizon representatives have vehemently denied any so-called “throttling,” blaming the speed loss instead on individual servers, and the routing of traffic.

However, even if Verizon’s claims are true and no throttling is taking place, Netflix has run into a basic logistics problem. By many accounts, the company has simply tapped out the speed of the existing video delivery infrastructure. To solve the issue, Netflix has been trying to get ISPs on-board with its Open Connect program, which is essentially an open gateway that pumps Netflix streams straight to ISPs, with no twists or turns along the way.

But the big boys like Verizon, Comcast, Time Warner Cable, and AT&T all want compensation from Netflix to switch to the Open Connect system. As the Wall Street Journal reports,  executives from many major providers also maintian Netflix is to blame for the streaming  issues that are popping up across the country, claiming the company is sending its streams inefficiently.

While the two sides fight it out like school children on the playground, a bigger issue is at play. Net neutrality and general network configuration issues have the potential to do more than just slow down your favorite Breaking Bad episode. Apart from concern for the future of streaming video, many fear the loosening of FCC regulations could also set a troubling precedence for the entire structure of the Internet going forward, in which big money is required set up shop. And without a level playing field, smaller companies may not be able to compete with larger, long-established corporations who took advantage of the old rules.

The FCC is already working on a new method to regulate ISPs, detailed in Digital Trends’ recent report on the subject.  But as for now, there are plenty of balls in the air, with the future of video streaming, and the basic structure of the Internet itself at stake.

That was last week.  Yesterday we saw this follow-up:

And so it begins. Right on the heels of a highly publicized deal in which Netflix agreed to pay Comcast an undisclosed fee for a more direct link to its Internet pipelines, Verizon and AT&T representatives have claimed that similar deals between their services and Netflix are also in the works.

The news doesn’t come as a huge surprise, and is a sign of the crossroads that Netflix and the major Internet Service Providers are sitting at. 

While many immediately cried foul at the precedence the seemingly unholy deal struck between Comcast and Netflix could create, this tumultuous new landscape of pay-to-play between Big Red and the major ISPs has reportedly been in the works for some time. In fact, in a recent interview on CNBC, Verizon CEO Lowell McAdam claims Verizon and Netflix have been in negotiations over the issue for a year.

The situation really began with a very simple problem: Netflix became too damned popular. As Netflix streams started eating up more and more bandwidth, taking up as much as 31.6 percent of all North American internet traffic at peak hours at last count, the company realized it was going to have to find a more efficient way to pump its content into our TVs, computers and mobile devices.

The solution Netflix came up with is called Open Connect which, at its core, is a way to store its most popular content on in-house servers closer to ISP delivery channels, allowing that content a much more direct pathway to the homes of all those millions of viewers. As Reuters reported, ISPs like Google Fiber, Cox and Cablevision all got on board with Open Connect, and have seen little to none of the Netflix speed issues that have plagued much of the Nation as of late.

However, some of the biggest providers like Verizon, AT&T, Comcast, and Time Warner, refused to play ball with the Open Connect system. That is likely one of the major reasons unhappy customers everywhere saw Netflix streaming speeds take a nose dive recently.

Of course, another reason could be the DC court ruling for Verizon in January, in which the FCC’s ability to enforce Net neutrality in its current form was struck down.  The verdict opened the possibility for ISPs to essentially sell their fastest service to the highest bidder, creating fears that fair play online could be seriously threatened. Those fears weren’t helped by the latest Netflix ISP Speed Index Report that came out in the same month as the verdict, showing grinding streaming speeds from many of the same companies who fought against Open Connect.

Since then, accusations that Verizon and others are intentionally ‘throttling’ Netflix streaming speeds to extort money from the company like a mafioso thug have run rampant. A prime example came from a blog post by David Rapheal, showing a screen shot of a chat in which a Verizon employee admitted the company has been intentionally slowing Netflix streams as of late. For its part, Verizon completely denies any throttling of Netflix, or any other streaming service.

Either way, it seems money, not time, heals all wounds. The ISPs seem to have gotten what they wanted. And on the other side of the equation, Netflix is apparently brokering deals with the Open Connect holdouts it can live with. Still, since we don’t know how much Netflix is paying for its shortcuts on the information superhighway, a lot of questions remain.

One you might be asking right now is whether or not these ISP payment plans will be passed on to you, the consumer. And if not now, who knows whether the agreed upon fees will go up in the future and cut into Netflix’s bottom line. But perhaps the bigger question is: What does this mean to everyone else in business online? Sure, the biggest streaming site in the world can afford the toll, but what about new start-ups looking for their share of the streaming market place?

For now, we just don’t know the answer to these questions. What we do know is, ostensibly, the way business is conducted between ISPs and video streaming services just took a huge left turn. All we can do now is wait and see where this new road leads.

Like most things, I suspect this will be a double-edged sword.  On the upside, those companies (like Netflix) that are able to pay for direct connections to the vehicles for their services will provide a great product and continue to grow and do great things.  On the other hand, if having deep pockets is a requirement to play the game, that's going to limit competition, which ultimately hurts consumers due to lack of choice and lack of price competition.  Don't kid yourself - the new costs will inevitably be passed on to paying subscribers, so the prospect of paying twice for content is only a short trip down this road.  Like the article said, we'll just have to wait and see how this plays out to know for sure.

In the meantime, at least this explains why your Netflix has sucked lately.