Ajit Pai of the Federal Communications Commission today accused Netflix of “secur[ing] ‘fast lanes’ for its own content” at the expense of competitors and deploying proprietary caching systems in order to force Internet service providers to use nonstandard equipment.

Pai, one of two Republican commissioners on the five-member commission, made the accusations in a letter to Netflix CEO Reed Hastings. The letter describes Netflix’s support for regulating ISPs as utilities in order to prevent them from charging content providers for “fast lanes” and then accuses Netflix of creating fast lanes for itself. Pai’s letter cites a TechCrunch article from May that quotes Hastings’ support for “strong net neutrality,” but it provides no sources for any of the accusations he made against Netflix. It reads as follows:

Dear Mr. Hastings, Netflix has been one of the principal advocates for subjecting Internet service providers (ISPs) to public utility regulation under Title II of the Communications Act, arguing that this step is necessary to prevent the development of so-called "fast lanes" on the Internet. "The basic argument," you have said, “is that we're big believers in the free and open Internet." For this reason, I was surprised to learn of allegations that Netflix has been working to effectively secure "fast lanes" for its own content on ISPs' networks at the expense of its competitors. Recent press articles report that Netflix, our nation's largest streaming video provider, has chosen not to participate in efforts to develop open standards for streaming video. Moreover, I understand that Netflix has taken—or at least tested—measures that undermine aspects of open standards for streaming video. Specifically, I understand that Netflix has at times changed its streaming protocols where open caching is used, which impedes open caching software from correctly identifying and caching Netflix traffic. Because Netflix traffic constitutes such a substantial percentage of streaming video traffic, measures like this threaten the viability of open standards. In other words, if standards collectively agreed upon by much of the industry cannot identify and correctly route Netflix traffic, those standards ultimately are unlikely to be of much benefit to digital video consumers. Some have suggested that Netflix has taken these actions because the company is currently installing its own proprietary caching appliances throughout ISPs' networks as part of its Open Connect program. If ISPs were to install open caching appliances throughout their networks, all video content providers—including Netflix—could compete on a level playing field. If, however, ISPs were to install Netflix's proprietary caching appliance instead, Netflix's videos would run the equivalent of a 100-yard dash while its competitors' videos would have to run a marathon. Because these allegations raise an apparent conflict with Netflix's advocacy for strong net neutrality regulations, I thought that it was important to give you a chance to respond to them directly. I look forward to receiving a response to this letter by Tuesday, December 16. Sincerely, Ajit Pai

Filling in the gaps

Netflix declined to comment when contacted by Ars.

We asked Pai's office to provide further details and sources for the claims in the letter and received a partial response. Pai's office provided us links to three articles describing Netflix's refusal to join the newly formed Streaming Video Alliance, but no sources for the "fast lanes" claim or the accusation that Netflix changed its streaming protocols to prevent "open caching software" from working.

We asked whether Pai is accusing Netflix of purposely slowing its own videos down with his statement that Netflix "impedes open caching software from correctly identifying and caching Netflix traffic." Pai's legal advisor Nicholas Degani told Ars that "Netflix changing its protocol would only slow down Netflix traffic if an ISP installs the open protocol system and not Netflix’s." The letter doesn't explain why an ISP couldn't deploy both an open caching system and Netflix's.

The Netflix fast lanes Pai referred to seem to be the "Open Connect" video storage and caching boxes that Netflix provides to ISPs. Although Netflix doesn't charge ISPs for this equipment, Netflix gets to reduce its costs if the ISPs host it within their own facilities. Despite the name "Open Connect," the systems are proprietary, Pai noted. If Netflix were using a truly "open" system instead of a proprietary one, ISPs would be able to install open caching appliances that benefit all content providers, not just Netflix, Pai argued.

"Installing and maintaining these things isn’t free, so I understand that ISPs may be unwilling to incur those costs for a small startup when a deal with Netflix would solve a huge chunk of the congestion problem," Degani told Ars.

While the biggest ISPs refused Netflix's caching systems, smaller ISPs accepted Netflix's storage boxes and host them at their own expense.

As an alternative to installing caching systems inside the big ISP networks, Netflix started paying months ago to get direct connections to the networks of Comcast, AT&T, Time Warner Cable, and Verizon. These interconnects improved Netflix performance while diverting Netflix traffic away from other paths into the ISP networks that had gotten congested, indirectly improving performance of other traffic that went over these links. The ISPs argued that Netflix purposely sent traffic over congested links to lower its own costs, but now that Netflix is paying for interconnection, the conflict should no longer be affecting consumers.

The Streaming Video Alliance, composed of 17 companies including Comcast, Charter, Cisco, Fox, Level 3, and Yahoo, will not be slowed down by Netflix's absence, according to founding member Dan Rayburn, an analyst at Frost & Sullivan. The alliance is not a standards body itself but will propose best practices to standards bodies, Rayburn told Ars.

"The group is tasked with dealing with all different aspects of the streaming video ecosystem," he said. "We’re looking at a lot more technologies than just caching—encoding, 4K, content protection, all kinds of things."

When the group's formation was announced last month, Netflix told The Next Web that “We aren’t planning to join. Given the scale of Netflix video traffic, we custom-built our Open Connect network to ensure Netflix members have the best viewing experience and we provide it free to ISPs.”

During peak viewing hours, Netflix accounts for about a third of all downstream Internet traffic in North America and 9.5 percent of upstream traffic. Despite agreeing to pay ISPs for network connections, Netflix has asked the FCC to force ISPs to provide the connections for free. Apple and other content providers reportedly pay ISPs for interconnection as well.