It's rather simple. Verizon's customers are consuming traffic, and it's Verizon's job, as a consumer network, to facilitate consumption of said traffic.
I only pay Verizon so that I can have access to Netflix content. No access to Netflix, then I'm not a Verizon customer any longer. Verizon is a Consumer Network -- so by definition, almost all of their traffic will be ingress.
Level3 has a great blog post detailing the issues at hand. Specifically, they state the consumer networks are refusing to upgrade their networks, and this is shifting the burden to Level3. Level3 knows they are refusing, because they have discussed the matter with the "Big 5" ISP's here in the states.
Level3 has even offered to split the cost with the Big5, which as they pointed out, is a win-win for everyone involved. Yet, the Big5 still refused.
http://blog.level3.com/global-connectivity/chicken-game-play...
Should we now start talking about there is no such thing as a video, just 1's and zero's, or, there is no such thing as 1's and 0's, just timed voltage oscillations. Or perhaps in verizon's case, there is no such thing as customer service, just opportunistic moneymaking leveraging monopoly and an army of lobbyists.
Do you get upset when you sign up for a United flight and one of the legs is operated by a codeshare partner? It's the same thing: there's an idealized abstraction of a "flight from New York to Burkina Faso" and the actual reality that the underlying physical service is a distributed one.
1) Level3 has offered to split the cost with the Big5 ISP's of upgrading their infrastructure.[1]
* This would increase throughput and capacity for both Level3 and the consumer networks.
2) Netflix has offered free Open Connect Appliances to all major ISP's.[2]
* This would allow consumer networks to only download a video once, then serve it up locally within their network to all their customers. In-network traffic is almost free for the ISP's.
3) Netflix has offered to change their entire distribution model into a P2P model.[3]
* This would allow consumer networks to only download a video once, then serve it up locally within their network to all customers. In-network traffic is almost free for ISP's.
.
All of these options have been flat-out refused. The Big5 ISP's are purely after the money. There is no other compromise for them.
[1] http://blog.level3.com/global-connectivity/chicken-game-play...
[2] https://www.netflix.com/openconnect/hardware
[3] http://arstechnica.com/information-technology/2014/04/netfli...
So what you're saying is, Verizon's selling a product ("internet access") that doesn't exist—and that it's not their fault that they can't provide it, since it doesn't actually exist? Maybe they shouldn't be selling it, then.
If someone were to talk to Verizon's sales people, and watch their commercial, and read their sales copy—and then be presented with those two definitions, which do you expect they would believe Verizon is using?
You might not like the logical conclusion: the ISPs charge people for what they actually use.
What happened to all that "National Broadband Act" funding the Big5 ISP's got? What about annual infrastructure upgrades? These guys are not coping with the data-driven society the wold is now, and are trying to stretch their buck the furthest (I don't fault for that, it's business).
However, when they wrongly shift the blame to others, it really fires me up.
2) As trevelyan said, they operate around the world, and state that this situation, and mindset of last-mile carriers, is unique to the US.
3) One would think a backbone provider would share the same views as the last-mile carriers, since it would mean more money for them too. However, they state that big content providers such as Netflix are very much so not a problem, but instead it's the last-mile carrier's refusal to make necessary network infrastructure upgrades to augment capacity.
This information is available on their blog. This post in particular worth a read: http://blog.level3.com/global-connectivity/chicken-game-play...
It's always historically been the case that settlement free peering required balanced traffic ratios. The difference is L3 used to have far more consumer networks buying transit from them. Before, level3 was needed to connect a bunch of different regional ISPs together who each purchased IP transit. Now, every consumer ISP of any size can orderup a nationwide backbone network (from level3 ironically, yes despite being in a peering war for ip transit, comcast's nationwide fiber network is leased from level3.)
Many of the old Ma Bells that were broken up used to be clients of level3. Through the mergers, many of them now own Tier 1 backbone networks. Verizon, ATT, and CenturyLink all are now also competing backbone providers with Level3 as well as being consumer ISPs. This leaves Level3 in the position Cogent was in when L3 depeered them.
Level3 will now gladly split the costs for unbalanced traffic ratios now that it benefits them. 10 years ago they would have tried to extract transit/paid peering from the same situation from someone else.
Perhaps the whole balanced traffic ratios requirement doesn't work in a time when every consumer ISP has their own nationwide fiber network and many also own Tier 1 IP networks. Or perhaps expect Level3 to start looking to get bought/merge by Time Warner cable or Cox to even the playing field.
The cause of this dispute is that the ISPs each have a monopoly over access to a large distinct block of customers and want to leverage that into a tax on content distributors, creating an unlevel playing field in favor of the ISP's own over the top services in competition with services like Netflix.