Re: On paper OK, but
Yes CDN's still exist and buy transit (and use free peering) from last mile networks, so they do exactly what Netflix is having to do. CDN's basically offer an off the shelf alternative to building out your own global network and delivery system, which are two separate things. If you want to build your own servers but not have to negotiate with every major ISP you use an intermediary company who has a backbone connected to major ISP's. They also will have some level of peering and as they aren't a tier 1 ISP they will also be paying for transit from Tier 1 ISP's. Basically they are brokers and aggregators who do some of the delivery for you but then subcontract the rest. The point being with both these models you still pay directly or indirectly to the last mile network as long as their customers.
I do think you misunderstand the financial issue here. You state they don't need to worry about the amount of bandwidth, they do, they pay for it. It's not like they just pay to upload a 1GB file and that's it. They then pay for the number of times it's downloaded which goes to pay the ISP's for the last mile access. Essentially this is what happened. Netflix used an intermediary company to 'remove' their data, this companies links to several ISP's became saturated. The intermediary didn't want to pay for more links, the last mile ISP refused to give it for free so individual connection speeds slowed down.
>The ISP's already charge each and every customer for that bandwidth.
I already explained above, they charge at both ends of each network, they run a last mile network which is paid for by the people accessing it and they run a backbone paid for by companies accessing it. Please read my post before assuming I am wrong.
>But then the ISP(s) started getting greedy. And now they still want their customers to pay them, but they also want the companies that their customers are using to pay them too.
Absolutely false. Charging for transit from companies connecting servers to the internet has been around for decades. It is not something new, the backbones have been funded by transit fees since commercial backbones were released. The cost of operating the networks is shared between customers at both ends based upon usage levels. If you want to pay for a server in your building you pay a one off connection fee and a monthly fee based on the capacity of the pipe you get or 95th percentile billing for people stuck in 1980.
>But then the ISP quietly starts slowing down the data flow for Netflix
Again, completely false. Time Warner etc certainly could have slowed down connections using routing rules \ QOS rules but they did not, they didn't need to. The company Netflix paid (Level 3 were the main one iirc) for its connection to the internet had links to the last mile networks. These links were based on a commercial agreement, either a peered link where you agree to a free transfer of data assuming the ratio one way to the other doesnt exceed X:1 (X is usually between 3 and 5), or transit where they buy a link for $x a month for Y mbps. All that happened was Level 3 sold routes to Netflix at a certain rate, the egress points for their network became congested and this resulted in individual streams having to drop to a lower rate as they were sharing the same finite connection. Level 3 could have expanded their agreement with the last mile isp's and simply paid more. Level 3 were actually charging Netflix more per mbps than TimeWarner wanted for a direct connection.
> Netflix in the end, is forced to approach the big, greedy ISP(s) and offer them money in exchange for what should have been equal treatment by the ISP in the first place since their mutual customer has paid both of them.
Again, you completely misunderstand what happened. Netflix wasn't targeted. If they offered a service that used 1/100th of the bandwidth they wouldn't have had any issues, but given the volume of data they generate they have found themselves needing to directly buy transit rather than indirectly as they previously did. The 'evil' company in this case is level 3, they sold something they couldn't deliver.
I'm not saying net neutrality isn't important, I believe strongly in it, but this isn't a net neutrality issue. Netflix's traffic wasn't artificially limited. They weren't forced to do anything any other company doesn't have to do, they just ran into a limit quicker due to the volume of data they produce. Sadly it is misinformation and not taking the time to understand this situation which hurts net neutrality. Net neutrality isn't about companies paying nothing for transit, it is about prioritizing data based on who you pay.
>That's why Netflix offer a peering arrangement for free
Netflix also offered to generously provide caching servers to large ISP's. If they accepted this arrangement or free peering who pays for the backbone? Caching servers would have been quite sensible but I don't think netflix was prepared to provide them in the numbers required as it wouldn't be one per network, to lessen the load on the backbone it would be one per neighborhood. A consumers monthly charge doesn't reflect the cost of operating a cable network and a backbone. If ISP's offer totally free transit and then pass on that extra cost to the subscribers your monthly bill is going to go up. I'm not sure that is a win for us as consumers. Then anyone with a server gets to connect to the internet as much as they want for free and pass on the cost to us even if we don't use their service.
As I said above, Net Neutrality is about not prioritizing data, not it being free. Companies expect to pay for bandwidth, go and check out large server providers like Softlayer, they pay for their connections to ISP's (without complaint) and their customers pay for it. Bandwidth is fairly cheap, usually cheaper than the power costs or amortization of the hardware unless you are doing something data heavy like sending out millions of 2-4mbps streams. What is at stake is can an ISP charge extra to give priority to data already on its network? That is what we want to avoid.