Gigaom has an interesting and detailed article explaining why the incumbents hate Netflix. The popular movie and TV streaming service is an Over The Top (OTT) service that rides on top of (over) a customer's base Internet connection. Verizon is having a peering spat with Cogent, a long haul carrier that moves a huge chunk of Netflix's streaming data around the country, and it appears that Verizon is deliberately throttling Cogent's ability to push Verizon customer video streams onto the Verizon network, with the result that watching Netflix on a Verizon network may not always work well, with stuttering, rebuffering, and/or degraded picture quality.
Verizon's beef is that they have to haul the traffic but they don't get any of the revenue paid by Verizon customers to Netflix. One solution would be to do a deal with Netflix, which would offer Netflix better bandwidth in return for a cut of revenue, or to change the Verizon business model to stop trying to punish their customers for actually using bandwidth.
But we're in a very strange time, when the incumbent phone companies are trying to cut out their copper landlines completely in a transparent attempt to get everyone to buy their Internet access via the cellular network. But this will never work, as the bandwidth isn't there, even with LTE to support services like Netflix...hence the ubiquitous bandwidth caps on cellular service. If we could wave a magic wand and move all the Netflix traffic to the cellular network, the entire North American cellular network would stop working, as it simply has nowhere near the capacity (and never will) to take a third of all the Internet traffic that is being generated just by Netflix. We have not even added in the myriad of other streaming services like Hulu, AppleTV, SimulTV, and many others.
As always, part of the solution is to deploy fiber everywhere to break the bandwidth bottleneck, and you pay for the fiber deployment by changing to a business model that gives the bandwidth away and charges for the service. When you do that, and have dozens of providers offering hundreds of services, you have the cash flow to pay for the high performance, high capacity, AFFORDABLE fiber network.
Design Nine is building those networks today....and in both urban and rural areas, turning communities around the country into Gigabit Cities. It's just not that hard.
http://gigaom.com/2013/06/17/having-problems-with-your-netflix-you-can-blame-verizon/