Direct peering deals such as the one Netflix (NFLX -3.7%) struck with Comcast are a "toll to the powerful ISPs to protect our consumer experience," says Reed Hastings in a much-discussed blog post calling for tougher net neutrality rules to "protect an open, competitive Internet."
Though analysts have argued the Netflix/Comcast deal could actually lower Netflix's bandwidth costs, Hastings declares action is needed to keep cable/phone duopolies from having undue leverage against Web service providers.
He dismisses ISP complaints about Netflix's huge downstream volumes by arguing Netflix doesn't get a cut of the high-margin broadband revenue ISPs generate, and by noting ISPs don't pay fees for services (e.g. online backup) that generate heavier upstream volumes.
Level 3 (LVLT -0.6%) and Cogent (CCOI -0.6%), each of whom get charged by ISPs for acting as intermediaries for the likes of Netflix (assuming no direct peering), also call peering a neutrality issue. Today, Cogent offered to pay for capacity upgrades at ISP peering points in lieu of service payments, while arguing ISPs should ultimately be regulated as common carriers.
Dan Rayburn isn't sold on Hastings' arguments. "Netflix likes to make it sound like there is only one way to deliver videos on the Internet when in fact, there are multiple ways ... the company that should be blamed will be different depending on the business situation."