The migration of new digital services off the public internet is an established pattern. Driven by economics, and with real money at stake, it is not likely to slow down any time soon.
To recap, large content providers such as Google (with YouTube), Facebook, Amazon (mostly driven by its Web Services division), and Netflix, among others, are taking their traffic out of public exchanges and setting up private connections with consumer ISPs. They make a compelling offer. ISPs save costs by connecting directly and the exchanges that ISPs largely fund avoid the investment that would enable this traffic to remain on the public internet.
Helpfully, Netflix has been sharing its technical architecture and its offer, called Open Connect, to ISPs. Here’s a presentation from a recent network operators’ meeting:
[file no longer online – 5/11/2017]
and you can see the original powerpoint (link updated 2017) here:
and here’s the horse’s mouth:
Free is a very convincing price, and few network operators have the tools to measure the future impact of a lack of investment in common resources.
Netflix even sweetens the deal, by offering a higher quality video stream to subscribers who accept the Open Connect equipment and connection. And this illustrates the policy issue very well indeed.
If our policy makers believe that the open and shared internet is a driver of innovation and value for the public they should be concerned. It is being re-engineered to deliver a second rate level of service. We are still a long way from the point where ISPs don’t need the public internet at all, but arguably that is a destination now in sight.