Netflix “Most Favored Nation,” Paid Peering Agreement With Comcast: The Good, Bad and Ugly

[Commentary] Notwithstanding Comcast’s open Internet access commitment made to close the NBC Universal acquisition, the company has executed a preferential access deal with Netflix. For me the primary question is what kind of discrimination does “better than best efforts” routing constitute?

At the risk of giving an inch so Comcast can take a mile, I consider paid peering a reasonable quality of service discrimination with several caveats. First the possibility exists that payments flowing directly from Netflix to Comcast are largely offset by reductions in the direct payments the company makes to content distribution networks like Level 3 and Cogent. Netflix and its customers benefit from higher quality of service with fewer intermediary carriers and routers. More direct traffic routing probably accords Comcast greater leverage upstream with Netflix and similarly situated content providers. But without adequate oversight nothing prevents Comcast from making paid peering -- and the surcharge it incorporates -- standard operating procedure. In other words, little remains of plain vanilla “best efforts” routing: Comcast can demand similar payments from other content providers and distributors backed up by a not so veiled threat that it simply will not have adequate downstream delivery capacity to accommodate even what it previously was able to handle. Perhaps other content providers, generating less traffic, can continue to squeeze by with standard best efforts routing. But why would a competitor of Netflix risk the consequences knowing that ISPs like Comcast can throttle, degrade and create artificial congestion without FCC sanction.