It seems to be all over the news (like here) that Verizon (and Comcast) aren't happy with Netflix. Netflix has too many users and eats up too much bandwidth.
Users buy bigger pipes and FiOS just to get faster (they think better) Internet access to enjoy Netflix or Hulu without buffering. Surprise! That isn't the case at all.
The peering pipe between Netflix and most ISPs (VZ, ATT, Comcast, TWC, even Bright House) is saturated often. The reps in customer support try to make you think it is a last mile issue, when it is really an upstream issue - namely, the peering pipe to the content.
When you pay $58 for broadband each month, you don't want buffering
That's not the user experience I am paying for.
Then I see that VZ is accused of throttling other traffic - see here - and now I know it is a game for VZ. This game opened up after the US Appeals Court ruling against Net Neutrality.
"The ruling is a major win for US telecoms, which are pegging their future growth on alternative revenue growth streams. The wireless market is extremely saturated and growth can only come from an increase in data usage by consumers. Since the industry is extremely competitive and margins are thin, companies will benefit from additional revenues from their "enterprise solutions" segment in partnerships with major content developers." [source] Just one more way to get people to pay for transit or pay for using CDNs owned by the likes of Comcast.
Gary Kim wrote that Netflix agreed to buy transit from Comcast (since peering wasn't working out). Transit means that you pay the ISP for bandwidth. Peering is a settlement-free arrangement for the transfer of traffic.
"Verizon has a policy of requiring payments from networks that dump more data into its pipes than they carry in return. 'When one party's getting all the benefit and the other's carrying all the cost, issues will arise,' said Craig Silliman, Verizon's head of public policy and government affairs." [ARS]
I don't think it helps Netflix that they use a lot of Cogent, who has constant peering issues.
"Lines are being drawn in a battle that may ultimately be decided on Capitol Hill. In the meantime, things are getting uglier as both sides are blaming each other. Content developers are claiming that carriers are limiting bandwidth to cloud providers such as Amazon, while the carrier industry is complaining about the capacity constraint being caused by data intensive usage by subscribers to services such as Netflix." [source]
On the one hand, VZ complains about video traffic, yet it pitches watching live NFL games on its wireless network in commercials!!! DUH!!! VZW's LTE network --- which VZW claims will require up to 500 MHz of spectrum to provide adequate broadband -- can stream video but its wireline FiOS can't???????
Basically, F U to the users and hold the content providers hostage until they pay for transit to the users. As ARS is reporting, VZ and other ISPs begrudge the traffic from Netflix. Some of that is that it takes away from their own services like Pay-per-View or video-on-demand, but especially broadcast TV, which is a sunk cost for all of these providers.
If we had (A) a strong and smarter FCC and/or (B) broadband competition in the US, this wouldn't be an issue. But we have neither.