Is There a Web Video Crisis – Part III

Zeus_peering_around_a_corner__(9386751334)In the earlier two installments of this blog I looked at various components of the Internet backbone to see if any of them might be the reason why Comcast and Verizon want to charge NetFlix and other content providers for and Internet ‘fast lane’. I’ve looked at the fiber and distribution networks as well as the routers in data centers. I also considered caching. In this article I will finally look at peering as a possible reason why there ought to be an Internet fast lane.

Peering is when two networks directly interchange traffic rather than let it route over the open Internet. Peering is done to save money and the savings can be significant. A company like Comcast pays something less than a dollar per dedicated megabit to accept traffic from the Internet. If they can instead have Google hand them the traffic coming from Google services they can avoid paying for the bandwidth that traffic would have incurred coming through the open Internet.

I would assume that Comcast and Google peer because Google peers with many of my much smaller clients. Peering involves having a fiber cross-connection between the two companies at a data center in each Comcast market. Each party would normally be responsible for their own routers and collocation costs at a data center. So Comcast’s cost of peering with Google are relatively small charges for collocation and cross-connection in the data center, while the savings would be gigantic.

This is a good place to note the difference to Comcast for traffic they receive from the web and traffic they send to the web. The companies that sell Internet access sell symmetrical data pipes that provide the same amount of bandwidth in both directions. But Comcast does not sell symmetrical data product to their customers and they provide vastly faster download speeds than upload speeds. For example, the Comcast 100 Mbps download product only has an upload speed of 5 – 6 Mbps. This means that the real cost to Comcast and similar ISPs for Internet traffic is paying for downloading because they have a huge amount of excess capacity in the upload direction. Peering saves them so much money because it shrinks the size of download pipe they must purchase.

So it’s a given that Comcast saves money by peering with Google. With peering they would not have to purchase the bandwidth to provide all of the accumulated traffic for Gmail, Google Search, Google Maps, all the android apps being used on home WiFi networks. It is estimated that for most ISPs that Google is involved with around 25% of all web traffic, so peering with Google can save Comcast from buying a significant amount of Internet bandwidth.

It also costs Google money to peer with Comcast because they also have to pay to use the data centers. But Google likes peering because it speeds up their traffic and gives their customers a better experience using Google products. Peering avoids the extra hops that come from using the open Internet. Generally both parties in a peering arrangement see it as a win:win situation.

Comcast is claiming that one of the reasons they need to charge for a ‘fast lane’ is to cover the costs of peering with NetFlix. I find that claim to be interesting. There is one subtle difference between Comcast’s traffic from Google and traffic from NetFlix. The traffic from NetFlix is one directional in the direction of Comcast while there is some traffic in both directions between Comcast and Google (although it is still mostly towards Comcast). This means that the peering savings for Comcast to peer with NetFlix is even more dramatic than it is with Google. Comcast saves so much money by peering with NetFlix that they could pay NetFlix to peer and still save a ton of money.

When the story about Comcast and NetFlix first came out it was somewhat confusing because NetFlix was using Level3 and other intermediate carriers between themselves and Comcast. It makes sense that they would do this because NetFlix doesn’t own any actual network. The presence of an intermediate carrier does not change the fact that peering with NetFlix is an incredibly good deal for Comcast. The press reports were confusing and it sounded like Comcast wants NetFlix to peer directly with them and not use intermediate carriers. I can only interpret that to mean that Comcast wants NetFlix to buy transport from them and not from intermediate carriers. And this might be how Comcast is ‘charging’ for the peering arrangement. What I find totally mysterious in all of this is how Comcast is using the peering arrangement as a reason why they should be able to charge anything to NetFlix. Again, Comcast saves so much money through this peering that they ought to be the ones paying NetFlix to peer. The whole peering argument has me scratching my head.

And the picture of a cat? It’s peering!

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