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Netflix (NFLX): 'The Misconception About Internet Fast Lanes'

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January 5, 2015 2:42 PM EST

Netflix (NASDAQ: NFLX) VP of Content Delivery, Ken Florance, posted the following to the company's blog on Monday:

In the ongoing discussion about net neutrality, there’s been quite a bit of confusion about so-called fast lanes on the Internet. I’d like to spend a few moments clarifying what these fast lanes are and why they are not a good thing. While some media reports have suggested otherwise, Netflix and other Internet content providers are not using fast lanes to deliver their content to consumers.
First, what’s a fast lane on the Internet? Simply put, a fast lane is where one person’s data travelling on an Internet Service Providers (ISPs) last-mile network gets priority delivery over another’s. A helpful way to think about fast lanes is by visualizing cars on a multi-lane highway where one of the lanes can only be used if you pay a toll. The toll lane only becomes attractive because the other lanes are too slow. Only the person controlling the network -- the ISP -- can slow down traffic to make someone else’s go faster.
From a network architecture standpoint, fast lanes aren’t that useful if you’re managing your network effectively. From a marketing perspective, however, they might be quite useful as a way to sell “premium” access to content providers.
This creates two fundamental problems. Allowing fast lanes gives ISPs a perverse incentive to boost revenues by allowing their networks to congest. It also gives them outsize power to pick winners and losers on the Internet. Those who can’t pay for fast lanes will suffer, entrenching incumbents while undermining the innovative power of the Internet. While the largest ISPs have said they’re not interested in creating fast lanes, one need only look at how they have sought to monetize their network interconnection points to get a glimpse of the future.
It is at these points -- where our traffic enters an ISPs network -- where Netflix and others have been forced to pay Comcast, Verizon, AT&T and Time Warner access fees to reach our mutual customers. Without those payments, ISPs allowed these connection points to congest, resulting in a poor video streaming experience for Netflix users on those networks. While Netflix was able to meet the demand for payments, we continue to believe this practice stands in contrast to an open Internet and all its promise.
After we paid up, our traffic began moving at the same speed as everyone else not facing congestion. This is important, because this is where confusion often arises. Netflix and other content providers are not using fast lanes when they connect with an ISP’s last-mile networks. That is true in cases where we’ve had to make payments as well as when ISPs take advantage of Netflix’s Open Connect Content Delivery Network (CDN). Open Connect brings Netflix content to the location of an ISPs choice, usually at a common Internet exchange or through localized caches. It doesn’t prioritize the data Netflix users have requested. Rather it makes delivery of it more efficient for us and for the ISP.
Right now, there are no paid fast lanes on the Internet. That’s a good thing. A large part of the debate about net neutrality is focused on ensuring it stays that way. If ISPs are allowed to sell fast lanes, competition for various Internet sites and services will become less about the value of what’s offered and more about who can pay the most to deliver it faster. It would be the very opposite environment than the one the Internet created.

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