Comment Re: Wouldn't apply to Netflix (Score 4, Interesting) 85
I work for an ISP. The way it works is, the 2 isp's have a free peering agreement... Every month or 3 they compare traffic and true up. You ate up 100gig more than we did? You party us X. And vice versa.
What happened with Netflix is they colluded with level3 to try and force the ISPs to not charge them for that disparity or otherwise set that peering agreement up in such a way that made it favorable to Netflix. Level3 tried to charge insane rates to connect to them. Generally the isp's would trade trunks... Let's say ATT and Sprint... Each would have the same number of trunks from each other. In the end, those agreements come out as a 'wash' for both sides
No one makes or losses money. Netflix bet that their traffic was so important that the isp's would start to lose customers over Netflix access and would give in. What Netflix didn't count on was the fact that residential broadband isn't very profitable to begin with, and the customers that uses Netflix are like the fat guy that shows up at the all you can eat buffet... The owners don't want him there anyway. The isp's then, likely colluded, to muscle Netflix out. Netflix played their card too soon. If they waited 10yrs or so they might have been successful.