Yesterday, a story in the Wall Street Journal created a lot of stir implying that HBO, Sony and Showtime were asking ISPs for their content to be given “special treatment” by delivering it via a “separate lane” within the ISPs network. After speaking to multiple ISPs and some of the content owners mentioned in the story, they tell me the WSJ post is inaccurate and that they don’t expect any ISP would treat their content differently from another.
Those I spoke were confused as to what exactly the WSJ is implying, when terms like “special treatment” are being used, without any definition of what is “special” about the treatment. There is also no agreed upon definition of what a “managed service” is and the article doesn’t detail how they define it. They also reference a “separate lane” within the ISPs network, but there is only one lane into your house on the Internet. Again, lots of buzz words, no definitions.
The article says the reason the content owners would want to do this is to “move them away from the congestion of the Internet.” The problem with this idea is that neither HBO, Sony nor Showtime owns their own CDN. They rely on third-party CDNs like Akamai, Limelight and Level 3 to deliver their content and these CDNs already have their servers inside ISP networks, or connected directly to them via interconnection deals. That’s the main value of using a service based CDN is to avoid congestion, which HBO and others are already doing. In fact, HBO has been doing this with Verizon since 2010, by allowing Verizon to cache HBO’s content inside Verizon’s network. But that content is not “prioritized” or given any “special treatment” of any kind inside the last mile.
The article also says that media companies feel that the “last mile of public Internet pipe, as it exists today, won’t be able to handle the surge in bandwidth use for all the online-video services.” The problem with that argument is that the congestion we see on the Internet isn’t taking place in the “last mile”, it’s taking place at network access points outside the last mile. To prove that, just look at the latest Measuring Broadband America report by the FCC that measures ISPs advertised speed versus delivered speed. The data shows that there is very little congestion in the actual last mile. So the WSJ argument as to why HBO and other content owners would want to do this doesn’t make sense and take into account the technical details of how it all works.
The WSJ article waits until halfway through the piece to mention that no ISP has actually agreed to whatever it is that the WSJ is suggesting content owners want. The article says that Comcast “wasn’t willing to do anything for any one content provider that it couldn’t offer to every other company.” So the WSJ is saying that content owners asked for something that ISPs said no to. But the piece then goes out-of-the-way to make it sound like this is a potential problem, ties in the topic of Net Neutrality but then never defines, what exactly is being proposed. What does “special treatment” mean? Are they implying the “prioritization” of packets? We simply don’t know as they use high-level terms without any definition of how they are applying them.
Another argument the WSJ makes for why content owners would want this is that some content owners don’t want their service to count against the ISPs bandwidth cap. Problem with that argument is that you don’t need a “managed service” to make that happen. Netflix recently struck deals in Australia where their content does not count against the ISPs cap with no “managed services” taking place.
The WSJ also says, “media companies say the costs of guaranteeing problem-free streaming for users are rising.” What they don’t say is whom those costs are rising for? The content owners? The ISPs? The consumer? It sounds like they are saying the costs to deliver video for the content owner is increasing, but in fact, it’s the opposite. Costs to deliver video via third-party CDNs have fallen at least 15% each year, since 2008. (Source: one, two) Also, there is no way to “guarantee” problem-free streaming no matter how much money you spend so that notion is false. CDNs offer SLAs, but they don’t “guarantee” anything outside their network once it hits the last mile. And ISPs only guarantee customer’s access out of their last mile, which is done on a “best effort” basis. For the WSJ to imply otherwise is inaccurate.
ISPs I spoke to made it clear that they are not in discussions with OTT providers to manage their traffic differently from other content owners or provide them with special treatment of any kind. What they think the WSJ might be confusing is the idea of caching content inside their last mile, but again, that doesn’t come with any kind of “special treatment” or prioritization of any kind. The WSJ story uses a lot of generic undefined words that sound very scary, but when you look at the details rationally, you can see that they simply created controversy where none exists.