Why Netflix Traffic Keeps Soaring

Netflix streaming continues to take over the Internet during the evening hours in North America, with Sandvine stating in its Global Internet Phenomena Report that Netflix traffic now accounts for an impressive 38.5% of all downstream bandwidth at peak times.

But what's behind that non-stop growth? It's not just the fact that Netflix Inc. (Nasdaq: NFLX)'s subscription video service is popular with consumers. It turns out that those interconnection agreements the company signed with ISPs last year are also having a significant impact. (See Netflix, Bright House Ink Interconnect Deal and Netflix, TWC Sign Pay-to-Peer Deal.)

"As they reached these agreements, that core bandwidth opened up," explained Cisco Systems Inc. (Nasdaq: CSCO) Senior Analyst Arielle Sumits in a recent interview with Light Reading, discussing the latest Cisco Visual Networking Index report. (See Cisco VNI Report Shows Set-Top Shift.)

"The core bandwidth for Netflix had been rather constrained since they didn't have these interconnect agreements," Sumits said. "So as a result, the adaptive bitrate streaming and Netflix's calibration were tuned to that available bandwidth. And then as they reached these interconnect agreements, it opened up, and the bitrates automatically bumped up, so any of the operators in the US who made these agreements saw their streaming traffic increase very significantly."

In other words, once connections improved, video streaming quality automatically improved as well, with Netflix traffic swelling to take up any newly available bandwidth.

Sandvine Inc. also noted in its report that a recent Netflix decision to encrypt video delivery means that a majority of traffic in both North America and Latin America will be encrypted starting in 2016.

"Network traffic in the Americas seems to be getting increasingly concentrated," said Sandvine CEO Dave Caputo in a statement. "Netflix continues to rise as a percent of North American fixed network traffic. In Latin America, when you add up the properties of Facebook and Google, including Facebook, Instagram, WhatsApp, YouTube, Google Play, etc., these two Internet giants control over 60% of mobile network traffic. Corporate decisions by these major players, like Netflix's recent decision to encrypt their streams or Facebook's decision to auto-play videos uploaded to its site, can instantly and dramatically impact subscribers and all Internet access networks."

Also of interest from the Sandvine report, Home Box Office Inc. (HBO) is now starting to have some effect on overall bandwidth usage. HBO Go and HBO Now generated 4.1% of traffic on one undisclosed wireline broadband network in North America during the Game of Thrones season five premiere. The debut of a new Call of Duty video game also caused a spike, booking 12% of traffic on one network.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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