Netflix has been using the US Mail to compete with MVPDs in the entertainment distribution business, but increasingly it’s been offering the content it started out mailing on DVDs via streaming on the internet. It is now getting ready to name names as to which ISPs Netflix customers should embrace and which they should seek to divorce.
Netflix understands it is the subject of much gnashing of teeth in the ISP world due to the heavy demand on capacity required to deliver long-form video content. But it says it fulfills its part of the bargain by getting it to each ISP’s “front door.”
Netflix CEO Reed Hastings summed up his complaint thusly in a letter to the company’s shareholders: “Today, some ISPs charge us, or our CDN partners, to let in the bits their customers have requested from us, and we think this is inappropriate. As long as we pay for getting the bits to the regional interchanges of the ISP’s choosing, we don’t think they should be able to use their exclusive control of their residential customers to force us to pay them to let in the data their customers’ desire.”
Reed said it is the ISP’s responsibility to cover the last mile to each customer’s home – he says the customers are paying the ISP for exactly that service, and it isn’t fair for the ISP to turn around and charge Netflix for the same thing the ISP subscribers are paying for.
He said the FCC’s approach to providing for network neutrality was “a step in the right direction” but didn’t go far enough to solve the type of problems that Netflix is running into.
So what Netflix plans to do is form a posse consisting of its 20M+ subscribers – it topped the 20M on 12/31/10 – to get ongoing reports on how their own ISPs are doing when it comes to delivering their streamed Netflix content.
Reed wrote, “…we’ll publish on our blog ongoing performance statistics about ISPs collected from our 20 million subscribers detailing which ISPs provide the best, most-consistent high speed internet for streaming Netflix. We can tell you now, though, that for our subscribers streaming Netflix, Charter is the highest-performance ISP in the United States.”