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March 1, 2014

Five things you should know about the Netflix-Comcast deal

— Edward Snowden's NSA surveillance disclosures have drawn global attention to the sometimes esoteric world of Internet infrastructure governance. Political reactions have ranged from wanting to "route around" American Internet exchange points to walling off services through data localization and nation-specific cloud computing. But these responses sometimes overlook how the Internet works in practice.

Now Comcast and Netflix have announced that they will directly interconnect their networks, rather than having Netflix traffic flow first through a third-party network. With this, another layer of Internet architecture - interconnection and peering - is under the microscope. The Internet is not actually a cloud but a collection of networks that technically conjoin, or "interconnect," and exchange traffic based on negotiated business arrangements known as "peering" or "transit" agreements.

Many have reacted with anger to this recent interconnection announcement, viewing it as a direct threat to the principle of net neutrality. But the responses here again underscore the lack of technical and economic understanding of how the Internet works - which could be attributable to the lack of transparency in this space.

Here are five things to keep in mind when you think about the Netflix-Comcast (and soon, perhaps, Netflix-Verizon and Netflix-AT&T) deal.

1. Content companies are already globally connected to Internet access providers.

Many have claimed that this is the "first time a content company has connected directly to a consumer network or paid for interconnection" and that it will threaten the open Internet. In reality, long gone are the days of a tiered system in which so-called "Tier 3" Internet service providers paid "Tier 2" intermediary networks that, in turn, paid "Tier 1" global backbone providers for access to the global Internet. Interconnection is more organic, messy and decentralized than that. Large content companies like Google and Facebook distribute and replicate their content all over the world, connecting directly to Internet access provider networks either from their own server facilities, via Internet exchange points (IXPs) or via content delivery networks like Akamai and Limelight.

From an engineering perspective, bringing multimedia content closer to "eyeballs" without clogging up a tertiary network is a no-brainer: It decreases delays and optimizes bandwidth consumption. This content distribution is particularly important for bandwidth-consumptive applications like video.

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