Amit Pai from the FCC (Federal Communications Commission) has written to Netflix to accuse them of breaking net neutrality guidelines by establishing proprietary caching servers at the ISP (Internet Service Provider) side to speed up access to Netflix's service. Because Netflix use their own standard to cache video streams, rather than an open standard (which would work for all video streaming services) the FCC believe this is in breach of the guidelines. The accusation is that, "...Netflix has at times changed its streaming protocols where open caching is used, which impedes open caching software from correctly identifying and caching Netflix traffic... ...if standards collectively agreed upon by much of the industry cannot identify and correctly route Netflix traffic, those standards ultimately are unlikely to be of much benefit to digital video consumers..." In other words, Netflix are claiming to be proponents of net neutrality but are going against the spirit of the guidelines.
Netflix are one of the big bandwidth players in the United States and at peak viewing hours, their video streaming data is responsible for 10% of the uploaded data and 33% of downloaded data. Their own installed servers are designed to cache their own video data using what Netflix have called the "Open Server" system. In correspondence with Arstechnica, the FCC state that if Netflix's video streaming data protocol is not identified by the open standard and there is no Netflix caching system installed at a given ISP, this would slow down the Netflix service and not other traffic; that's not great for Netflix customers. Reading between the lines, the FCC are accusing Netflix of forcing the smaller ISPs to install Netflix servers to maintain a good quality of service to their subscribers. The Netflix caching system is paid for by Netflix and having one installed reduces costs for both Netflix and the ISP (as it significantly reduces network congestion). Because many of the big ISPs do not use the Netflix hosted storage, Netflix have been paying for direct connections to the Comcast, AT&T, Time Warner Cable and Verizon networks, because this diverts Netflix data away from the usual routes into the ISP (those that are already congested) and improves performance for all systems.
In making head or tail of the argument, it seems that the issue is a dominant video streaming service, and one responsible for a significant amount of Internet traffic, has been building out its own video streaming standard, which also encompasses a local cache to be held at the ISP and so be closer to the customer to ease the network load. However, the Netflix system uses a different standard compared with other video streaming services. Netflix make use of direct connections to the content providers to the benefit of all customers but it seems that the FCC is not satisfied with this. When the Streaming Video Alliance was formed a few weeks ago, Netflix explained, "We aren't planning to join. Given the scale of Netflix video traffic, we custom-built our Open Connect network to ensure Netflix members have the best viewing experience and we provide it free to ISPs." This, perhaps, is at the heart of the matter. Or rather, why has Netflix built its own caching system? It would have been driven by the need to do so to ensure customers receive a good level of service and that points a finger squarely at the ISPs for not building their own open caching systems. The argument is far from clear cut, but the FCC have given Netflix a couple of weeks to respond. This might get interesting!