Netflix today said it will continue to pay "tolls" to Internet service providers to guarantee a good experience for its customers, but it called upon the Federal Communications Commission to create net neutrality rules that govern network interconnections.

The FCC's Open Internet Order in 2010 prevented ISPs from blocking or discriminating against traffic over the "last mile" between ISP networks and consumer homes, but the order did not cover network interconnections that happen further upstream. Netflix and companies such as Level 3 and Cogent, who are paid by Netflix to distribute its content across the Internet, have complained that ISPs such as Comcast, AT&T, and Verizon have let those interconnections become congested in order to extract payments.

The FCC's net neutrality rules were vacated by a court, but the agency is expected to issue a new set of rules. Netflix CEO Reed Hastings today published a post on the company blog, which Netflix said would also be submitted as a comment to the FCC in its open Internet proceeding. Hastings argued that the next set of net neutrality rules should be expanded to govern peering. Level 3 is making the same argument, as we wrote this week. Yesterday, Cogent asked the FCC to reclassify broadband providers as common carriers, which would allow the commission to reinstate its former rules and perhaps implement stricter ones.

Since these changes aren't likely to happen right away, if at all, Netflix will keep paying ISPs. Verizon and AT&T have said they're trying to obtain payments from Netflix.

"Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful ISPs to protect our consumer experience," Hastings wrote. "When we do so, we don’t pay for priority access against competitors, just for interconnection. A few weeks ago, we agreed to pay Comcast and our members are now getting a good experience again."

Netflix said the FCC's previous net neutrality rules weren't strong enough "to protect an open, competitive Internet." The video company wants "settlement-free peering"—exchanging traffic without payment—to be required by regulation. "Strong net neutrality additionally prevents ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai, or Level 3, to deliver the services and data requested by ISP residential subscribers," Hastings wrote. "Instead, they must provide sufficient access to their network without charge."

Hastings noted that Comcast didn't object to the "weak net neutrality" rules that didn't govern peering. "Comcast has been an industry leader in supporting weak net neutrality, and we hope they’ll support strong net neutrality as well," he wrote.

Consumer ISPs have argued that settlement-free peering isn't fair in cases when one network accepts far more traffic than it sends, and that either Netflix or its traffic providers (or both) should pay to cover the difference.

Netflix today argued that it "isn't 'dumping' data; [we're] satisfying requests made by ISP customers who pay a lot of money for high-speed Internet. Netflix doesn't send data unless members request a movie or TV show."

Big networks often agree to no-fee interconnection when data volumes are equal, but the very nature of Netflix's service makes that impossible. Theoretically, Netflix could try to even the traffic exchange by offering a video backup service to consumers, letting them upload videos to Netflix servers. This is more of a thought exercise than something any streaming video service would actually do, but it's one Netflix has used in arguing its case.

"[W]hen we ask [ISPs] if we too would qualify for no-fee interconnect if we changed our service to upload as much data as we download—thus filling their upstream networks and nearly doubling our total traffic—there is an uncomfortable silence," Netflix wrote today. "That's because the ISP argument isn't sensible. Big ISPs aren't paying money to services like online backup that generate more upstream than downstream traffic. Data direction, in other words, has nothing to do with costs."

Hastings praised Cablevision for "practic[ing] strong net neutrality and for their broadband subscribers." With other ISPs, Netflix has "to pay the ISP interconnection fees" to ensure that "sufficient capacity is made available and high quality service for consumers is restored."

Netflix accounts for more than 30 percent of North American Internet traffic at peak times, making it something of a special case. But Hastings argued that smaller services will suffer, too, unless stronger rules are in place.

"If this kind of leverage is effective against Netflix, which is pretty large, imagine the plight of smaller services today and in the future," he wrote. "Roughly the same arbitrary tax is demanded from the intermediaries such as Cogent and Level 3, who supply millions of websites with connectivity, leading to a poor consumer experience."

Home consumers are getting the shaft too, he wrote. "ISPs sometimes point to data showing that Netflix members account for about 30 percent of peak residential Internet traffic, so the ISPs want us to share in their costs," Hastings wrote. "But they don't also offer for Netflix or similar services to share in the ISPs revenue, so cost-sharing makes no sense. When an ISP sells a consumer a 10 or 50 megabits-per-second Internet package, the consumer should get that rate, no matter where the data is coming from."

Comcast Executive VP David Cohen responded to Netflix's blog post in a statement sent to Ars, which said:

There has been no company that has had a stronger commitment to openness of the Internet than Comcast. We supported the FCC’s Open Internet rules because they struck the appropriate balance between consumer protection and reasonable network management rights for ISPs. We are now the only ISP in the country that is bound by them. The Open Internet rules never were designed to deal with peering and Internet interconnection, which have been an essential part of the growth of the Internet for two decades. Providers like Netflix have always paid for their interconnection to the Internet and have always had ample options to ensure that their customers receive an optimal performance through all ISPs at a fair price. We are happy that Comcast and Netflix were able to reach an amicable, market-based solution to our interconnection issues and believe that our agreement demonstrates the effectiveness of the market as a mechanism to deal with these matters.

Comcast's statement that it is "the only ISP" bound by the FCC's rules is in reference to commitments it made when it was allowed to purchase NBCUniversal.