Several Internet Service Providers (ISPs) in the US are pressuring Netflix to pay money to ensure the optimal delivery of Netflix streams to customers.
Brian over at Betanews thinks that Netflix should pay ISPs, while the majority of users who left a comment on the article disagree strongly with him.
Logic is not always applicable in a business environment, but here is how it stands right now. Netflix pays for bandwidth to the Internet, so that users can connect to the site and stream contents. Netflix users pay their Internet Service Providers as well to connect to the Internet with a certain bandwidth.
What IPSs are demanding now has already been paid for by their customers. And what Netflix is using has also been paid for already as well. What ISPs demand is that Netflix pays them for increasing the average bandwidth use of their customers.
The only problem that ISPs face is that the rise of Netflix and comparable services has increased the bandwidth utilization of the average Internet user. Streaming media requires more bandwidth than browsing Internet pages, which in itself may not be a problem depending on how Internet is delivered to users.
The problem here is that residential Internet, be it cable or DLS, is oversubscribed, and when users suddenly start to use a lot more bandwidth, comes to its knees because it is just not capable of delivering advertised speeds to all users. Even if the capabilities are there, it reduces the profit margin of the ISP.
That's however not a problem of Netflix or other Internet companies, but one that ISPs have to take care of.
Instead of doing so, some decided to increase profit margins by asking Internet services to pay them money to ensure that their streams or connections are not slowed down in the ISPs network.
Could P2P be the solution?
P2P streaming is not a new thing, and clients such as uTorrent have supported it for a while, and most TV streaming solutions such as Sopcast are also making use of it.
The recent release of Popcorn Time has shown that it works quite well for the distribution of large video files.
So how could this work?
Netflix needs to dedicate some bandwidth to ensure that delivery is always guaranteed. All customers who use the P2P software would not only download the video to their system, but also upload it (share it) to other Netflix users.
This means effectively that Netflix users would spend more bandwidth streaming videos than before while it would reduce the amount of bandwidth that Netflix has to pay for to its provider.
It is likely that this move would increase the pressure on Netflix, not reduce it, and is therefor not an option in this case.
What's your take on this?