NetflixIf you’ve been following the news lately, you’ve probably heard a lot about the debate over net neutrality and the ongoing dispute between billion dollar companies over the Internet. Most people, however, probably don’t understand what the dispute is really about, and may not even care. Let me break down the situation and how the outcome impacts all of us.

Online content services such as Netflix and Hulu do not own physical Internet pipes that carry Internet traffic. Instead, they pay providers such as Level 3 Communications or Cogent to carry their data to Internet providers like Comcast, Verizon, or Time Warner Cable. These companies typically have sharing agreements in place whereby they agree to transport each other’s data back and forth instead of charging one another.

The problem is that streaming online services like Netflix and Hulu are getting more and more popular each day and take up an even larger percentage of online traffic (some estimates say Netflix makes up as much as one-third of all traffic during primetime hours). This means the amount of traffic carried over the Internet has increased enormously, overwhelming the network connections between companies like Level 3 and providers like Comcast. This has required massive investments in infrastructure to keep up with the demand and, of course, someone has to pay for these investments.

Internet providers have proposed charging a fee to content providers like Netflix for a reliable, fast connection. Content providers that pay this fee would receive priority, while those who don’t pay would experience slower connections. This approach obviously doesn’t create “net neutrality” since not all Internet traffic would be treated equally. Internet providers would be free to slow or even block certain services. For its part, Netflix is offering to pay to put some of its data centers directly in major Internet providers, thus bypassing the congestion between networks. This practice is done in Europe and with some smaller Internet providers here in America, but has been shunned by the big players in the U.S. The Internet providers argue that the content providers should be on the hook for the upgrade costs since their services are requiring the massive investments, while content providers argue that Internet providers should pay the costs to deliver the speeds they promise to their customers.

Multiple attempts by the FCC to regulate the Internet and impose net neutrality have failed for the most part, and Congress has yet to come up with any legislative solution. Recently, Netflix even broke its own code and began paying Comcast the fee they so strongly oppose in order to ensure its customers enjoyed uninterrupted streaming video.

The debate over net neutrality is nothing new and unlikely to go away any time soon. For many people, net neutrality seems like a far off matter for big business to sort out, but the consequences affect all of us – especially when we see a buffering message while watching our favorite online shows.

Now that you have a better understanding, what do you think about the idea of “net neutrality?”

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