Netflix benchmarks NZ ISPs – and ISPs weigh in on whether they have installed Netflix servers

Netflix has released its first benchmarks for New Zealand and Australian ISPs.

The survey finds no ISP achieves an average download speed of 4Mbit/s during peak viewing times. That puts us very middle of the pack; ahead of Australia but overall 14th of 29 countries were Netflix is offered.

The survey arrives on the same day that Spark exec Chris Quin says the streaming video craze has led to network congestion (keep reading), and on the heels of a TrueNet survey for the Commerce Commission that found "severe problems" at peak viewing times.

To put it in a more formal context, the average urban DSL (copper connection) supports downloads of around 10Mbit/s, and the cheapest UFB fibre plans offer 30Mbit/s (and the more expensive ones 50Mbit/s, 100Mbit/s, 200Mbit/s or 1000Mbit/s). Netflix' ultra HD or 4K option requires at least 15Mbit/s of bandwidth; CallPlus says its seeing some VDSL and fibre customers stream it at 20Mbit/s.

I sense a bit of an agenda here. Netflix is constantly in argy-bargy with ISPs in the US on two fronts: one, whether it has to pay fees to ISPs to ensure smooth delivery of its video (and early last year, Netflix did reluctantly agree to pay Comcast; a negative result for those who believe in net neutrality).

Two, Netflix encourages ISPs to install Netflix servers caching (holding local copies) of much of its content. That makes sense. On the internet, geography is destiny, and the closer the content is to a customer, the better (and conversely, long hops, especially those to the US or Europe, are prone to lag).

It’s obviously in Netflix’ best interests to highlight which ISPs offer the best performance, putting pressure on other providers to come up to snuff, or decide they should indeed install Netflix servers if they want to win or keep streamers’ hearts.

Who has Netflix servers, who does not?
Yesterday, as Netflix prepared to release its report, there were some rumours flying about the big three ISPS: Spark (which holds around 50% of the market), Vodafone (around 32%) and CallPlus (around 13% through its Orcon, Slingshot and Flip sub-brands).

Do they or don’t they have Netflix servers as part of their local infrastructure? And, if so, were they installed at Netflix’ expense or the ISP’s.

CallPlus CEO Mark Callander was the only one to deliver a straight answer.

“We had the Netflix appliances installed in our network to support their NZ launch.”

Who paid for the servers?

“Netflix supplied the appliances. However, your network must be of sufficient scale,” Mr Callander said. He added that Netflix now accounts for between 15% and 20% of CallPlus' total traffic on any given day. That's a hey-wow figure, but it's still below the US, where some ISPs say Netflix now accounts for 50% of their total traffic.

Is the CallPlus stat for Netflix NZ or Netflix US? "That is total Netflix traffic, but the significant growth has only been experienced since the Netflix NZ launch," Mr Callander says.

NBR was told by a Vodafone insider that Vodafone NZ has also installed Netflix servers on its network, incurring some costs in the process. Vodafone did not immediately return a request for comment.

The same insider said Spark had told Netflix it would have to pay to put servers on its network.

For Spark, spokesman Richard Llewellyn told NBR, “We’re not going to comment on any arrangements we may or may not have re Netflix.” Recently, Mr Llewellyn did note that Spark’s catch-all transparent caching would boost the performance of a range of offshore content. Yes, the court case against CallPlus and Bypass Network Services notwithstanding, that does help people who like to subscribe to offshore services (read Victoria academic highlights Spark’s caching of Netflix US content).

Mark Petrie, the head our fourth largest ISP, Snap (recently bought by 2degrees), said the terms of his company's Netflix deal don't allow him to comment on specifics, "But we do have local peering. You don't have to leave our network to access Netflix content." He also noted there are other factors, such as backhaul capacity on an ISP's network, or how much capacity it is willing to lease.

(Netflix chief product officer Neil Hunt has previously told NBR that while his company encourages ISPs to install its servers under its no-charge Open Connect programme, it never comments on specific deals.)

"Severe problems at times"
A recent survey by TrueNet, which is under contract to the Commerce Commission to monitor broadband speeds, identified a slow-down at peak times, which has been pinned on the rise of streaming video on-demand. It found some of its 400 volunteers had "severe problems at times" and, running against the Netflix server narrative, fingered Vodafone and Callplus-owned Slingshot as poor performers (which runs counter to my personal experience. I happen to be on Vodafone, on a pretty average copper connection that tops out at about 9Mbit/s. It's so-so simply because of the laws of physics. Copper broadband degrades with distance and I'm as far from the nearest phone exchange and cabinet as it's possible to get in our neighbourhood. Nevertheless, I've found Netflix and other video streaming services perform find during prime time).

Signs of congestion
Spark released a chart (above) showing strong growth in average household data use over the past few months, which is again attributed to the rise of SVOD (the company would not say how many Lightbox customers it has, or how much of the traffic was attributable to Lightbox vs Sky TV’s Neon, Quickflix, Netflix NZ, TVNZ OnDemand and other services. In January, Spark offered Lightbox free for 12 months to all its 600,000+ broadband customers).

“Across New Zealand’s internet signs of congestion are starting to emerge," Spark chief executive home, business & mobile Chris Quin says.

"It’s hard to think of any other industry that is experiencing such levels of growth. We totally understand that congested or variable broadband can be frustrating for customers. With more great new Spark New Zealand digital services in the pipeline, we’re accelerating our plans to make sure that we stay well ahead of this surging demand.

“Significant work is already underway to fast-track planned Spark Network capacity upgrades, improve our ability to manage traffic loads and improve the overall network performance for our customers. We’re also working closely with key industry partners such as Chorus to ensure that upgrades we make align with any upgrades they are making in order to avoid potential bottlenecks.

“New Zealand broadband services are delivered to the home by a number of organisations, all dependent on each other. Many different factors can impact broadband performance — at an ISP level, at Chorus, at website servers, even within the home set-up."

Some people will be saying, "Jeez, excuses, excuses," at this point, but all ISPs are very dependent on Chorus. And having superfast broadband into your home is all for nought if your home has lousy old wiring or creaky wi-fi. 

Again, I come back to my point that on the internet, geography is destiny. Belonging to an ISP with Netflix servers will help as data use rises (hear that, Spark?). But nothing beats having UFB fibre, which is far less susceptible to "contention" or peak-time traffic jams than copper, or, if you’re still on copper being close to a local phone exchange or cabinet.