FCC gets Comcast, Verizon to reveal Netflix’s paid peering deals
The Federal Communications Commission has demanded—and received—the paid peering agreements Netflix signed with Comcast and Verizon, FCC Chairman Tom Wheeler announced today.
While Wheeler said the commission has "broad authority," he didn't promise to take any action beyond gathering information. "To be clear, what we are doing right now is collecting information, not regulating," he said. According to Comcast, the FCC has actually had the Comcast-Netflix agreement for months, but it had not previously revealed that fact.
Wheeler said he wants to make sure consumers get the Internet service they pay for—something that has not been happening for many Netflix users.
Comcast spent months preparing network connections with Netflix—Verizon didn't.
“Consumers pay their ISP and they pay content providers like Hulu, Netflix or Amazon… Consumers must get what they pay for. As the consumer’s representative we need to know what is going on," Wheeler said after an FCC meeting today. "I have therefore directed the Commission staff to obtain the information we need to understand precisely what is happening in order to understand whether consumers are being harmed… We have received the agreements between Comcast and Netflix and Verizon and Netflix. We are currently in the process of asking for others."
The FCC will try to obtain the text of deals involving ISPs and content providers "across the board," he said.
"There is no limitation just because I named those companies [Netflix, Comcast, and Verizon]," Wheeler said in response to a reporter's question. "If we're talking about video being a driving force, it would be silly not to include YouTube, wouldn't it?"
He did not say whether the deals would be opened to the public.
Direct network interconnections generally take place between ISPs and content delivery networks and other large network operators. Generally, only the biggest content providers, such as Google, Amazon, Facebook, Pandora, eBay, or Apple have direct connections to ISPs. Netflix is the largest single source of North American Internet traffic during peak viewing periods.
The FCC's new examination of the interconnection market is separate from the commission's network neutrality proceedings, which primarily focus on how data travels after it enters ISP networks, Wheeler said.
Consumers should know why they can’t access content they paid for
Netflix recently agreed to pay both Comcast and Verizon for direct connections to their networks in order to alleviate congestion that makes streaming video perform poorly. Netflix is still negotiating with AT&T, but it has asked the FCC to require ISPs to provide no-fee interconnection.
“We are looking under the hood. Consumers want transparency, they want answers, and so do I," Wheeler said. "The bottom line is that consumers need to understand what is occurring when the Internet service they’ve paid for does not adequately deliver the content they desire, especially content they’ve also paid for."
The congestion affecting Netflix performance on Comcast's network cleared up soon after the companies announced their agreement. However, Netflix performance is still poor on Verizon because the companies haven't established direct connections yet.
Verizon hopes the FCC won't regulate the peering market.
"Internet traffic exchange has always been handled through commercial agreements," Verizon said in a statement sent to Ars. "This has worked well for the Internet ecosystem and consumers. We are hopeful that policy makers will recognize this fact and that the Internet will continue to be the engine of growth of the global economy."
Today, Netflix said, "We welcome the FCC's efforts to bring more transparency in this area. Americans deserve to get the speed and quality of Internet access they pay for."
In recent testimony before a congressional committee, Comcast said that the interconnection market "has functioned effectively and efficiently for over two decades without government intervention."
However, Comcast said today that it welcomes the FCC's review. In a statement, Comcast VP of Government Communications Sena Fitzmaurice said:
We welcome the Chairman’s attention to these important issues in the Internet ecosystem. Internet traffic exchange on the backbone is part of ensuring that bits flow freely and efficiently, and all actors across the system have a shared responsibility to preserve the smooth functioning and highly competitive backbone interconnection market. We welcome this review which will allow the Commission full transparency into the entire Internet backbone ecosystem and enable full education as to how this market works.
We have long published our peering policies, for example, and are open to discussions about further disclosures that would benefit consumers. We also have voluntarily shared a vast array of information about our peering and interconnection practices with the FCC. We also agree with the Chairman that the broadband consumer should be the focus of this inquiry and not any particular business model. We look forward to continuing to work with the FCC on these issues.
Consumer advocacy group Free Press urged the FCC "to protect Internet users from abuse and arm them with any information it finds in this investigation."
"By slowing down content from some of their video competitors, phone and cable companies have duped untold numbers of consumers into purchasing faster and pricier tiers of service," Free Press Policy Director Matt Wood said. "But selling users more expensive services won't fix a problem that the ISPs create elsewhere in the network. "When the FCC required reporting from AT&T after the company blocked Skype in 2009 and Google Voice in 2012, the disclosures revealed that AT&T was indeed misleading its customers. Today, countless Internet users are harmed by these ISPs’ ransom demands when these companies block innovation and blame others for the problem."
Free Press and other consumer advocacy groups want the FCC to reclassify Internet service providers as common carriers, which could provide greater regulatory authority over network interconnection agreements and paid prioritization deals that can speed up content over the network's last mile.