Yes because those box aren't sufficient for 1M+ sub. You're better off using peering rather than cache boxes in your network if you're a large ISP.

That is simply not true.

A consumer broadband network often distributes out over a very large area and condenses into micro POPs. In the Bay Area think Pleasanton, Concord, Marin, etc. The ISP must then backhaul traffic from these micro POPs to a major POP where the whole internet interconnects (Santa Clara/San Jose).

If Netflix were to install a million terabits a second of peering and a hundred thousand caching appliances in San Jose, it wouldn't alleviate the ISPs pain point at all, which is the backhaul to the micro POPs.

Putting OpenConnect appliances into micro depolyments "out in the field" solves the problem, because it moves the content and caching out to the last mile. However the ISPs are reluctant to do this because then what used to be a half rack of telcom gear in a small shed somewhere has now become a defacto colocation facility. You have Netflix, Hulu, Amazon, Vudu, YouTube, Microsoft, eBay, and two dozen others each with 4u of gear in hundreds of locations that you are paying for power and rolling out to service when they fail (because you can't let competitors have physical access to each others gear, and a node failure can saturate the uplinks from the micro POP).

So why then large ISPs would refuse it, if it's free?

The physical box is free, yes. Imagine if every website you visited wanted to put a 1u box in your living room, which you paid to keep turned on and connected to the internet. If a box failed you either needed to unrack it, haul it down to FedEx, and rerack a replacement - or let a stranger in while you aren't home.

If you don't get a box fixed fast enough, or choose not to install the MSN or Baidu box, everyone in your house starts to complain about it.

I'm not defending the ISPs here, just simply explaining their perspective. I am a huge proponent of net neutrality, and I'm currently in the process of deploying something similar to OpenConnect for another large network.

Presumably because they can then increase revenue by charging for the peering.

And as other have noted, the issues with defacto colocation.

Because their competitive product can be sold without throttling versus the throttled Netflix.

Well, the boxes have multiple 10Gb ports on them -- so they can be as fast as the ISP will allow it to be on their network. And, Netflix will provide (free of charge) as many OpenConnect devices an ISP needs to serve all of their mutual customers.

Also, Netflix offered to change their distribution model into a P2P model as well -- the Big5 ISP's said no to that too.

That doesn't mean the hard drives can serve multiple 10Gb at once. And why would ISPs give them space, power, and cooling for free when every other colo'd box (including CDNs like Akamai) pay for that?

If the bandwidth savings generated by the box exceed the cost of hosting it, then take it. Otherwise don't. But AFAIK Netflix isn't willing to pay ISPs to take boxes that save the ISP money.

That's one part of a negotiation. There's nothing that says an ISP has to take any deal that's more than $0 net profit.

Nobody (sane) is trying to force ISPs to accept the boxes. But if an ISP refuses the boxes and they refuse to peer and they refuse to have uncongested transit... people start talking about regulation.

Also, a "negotiation" with a monopoly is often indistinguishable from extortion.

The new model has SSD but both could serve a useful amount of multiple 10Gb I believe.

in addition to RAM caching. these boxes should be capable of pushing lots of bits.

Citation needed. My understanding is that Netflix offers as many boxes as the ISP needs. This makes sense since each box is supposed to save money for Netflix and for the ISP.

That's ridiculous. What do you think is driving the traffic when an ISP doesn't accept the hardware. It's the same hardware just running in Netflix's data center.