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Is Verizon service even available wherever the main netflix datacenter(s) is/are? If it is, wouldn't they just need to offer a better monthly connection rate, or better speed for the same rate, and let it be a "normal" competitive service for business?
Netflix and verizon do indeed have pops in the same facilities. There was a recent post by a verizon suggested that all the congestion between netflix and them was due to a 100% saturated interconnect in LA to L3. That of course means that *all* verizon traffic going through that node is badly impacted. Verizon and netflix are currently working out a deal to peer directly. This will likely entail several hundred 10g ethernet interconnects spread out across numerous locations. But until then verizon is happily screwing over their customers just for a leg up in negotiations with netflix.