Not true. Big CDNs have been cutting deals like this for a long time. It's often in a network owner's financial interest to host a node for free, because it saves them so much upstream bandwidth which they would otherwise pay for.
That's pretty hard to generalize. I worked at the biggest CDN for many years. They definitely get free traffic in many places. They had a whole team who's job was talking to network owners and saying "look, you paid for X terrabytes of traffic to us last month. We can cut that cost by 100 if you let us install servers inside your network that will cache the popular content locally."
It all depends on relative size. Bigger networks can demand money from smaller networks and/or CDNs. Networks of comparable size can profitably peer with each other without exchanging cash. Comcast may not do it for free, but the national ISP in a smallish developing country sure might.
It's a big dance, and the relationships are constantly changing. Managing it all in software to actually optimize cost and performance is a big part of the secret sauce for a CDN.
Yeah, it's a value proposition. The argument ISPs keep using is that Netflix traffic is costing them too much.
I don't think Netflix should have to engineer a solution to that problem AND pay the ISP for the privilege of saving them tons of money.
If the costs (4U of rack space, networking equipment, and network engineering around privacy/security) are more than the ISP would save, it's an easy decision.
Note that in this case, it does not appear to be the use of an appliance. If that were the case I think we'd see the Netflix content coming from a Comcast IP.
No; no ISP would ever run externally managed equipment inside their network. They would run it in a separate cage with a direct fiber connection to the gateway routers. Rule #1 of network security is that you never run someone else's equipment inside your network; you ALWAYS make them go through a gateway.
Also it's largely semantics where a device like OpenConnect is hosted. Netflix could host it at a datacenter across town with a direct fiber interconnect to the ISP and it would be effectively the same thing. This is how all the big CDNs do it; that way they host equipment once and connect to multiple local ISPs.
You have no idea how big CDNs do it. I've personally installed CDN gear into ISP racks. Sometimes you get an uplink into a router, other times you sit on a switch with other gear.
That "direct fiber interconnect" is called private peering and mostly used to fill cache boxes on the providers network.
Large ISPs sure as hell don't do this (maybe they used to; but not in the last 3 years). They have dedicated cages in their datacenters for external gear that sit at the edge of their network.
Regardless, the word on the Netflix-Comcast situation is that Netflix is indeed hosting the hardware at 3rd party datacenters with a dedicated connection to Comcast. Whether you call it an interconnect or private peering is just semantics; it's a pretty common practice in the industry and technologically, it's no different than having a 10gig fiber link within a datacenter.
I spent a year in 2007-2008 managing equipment inside Comcast's network while working for a very much not-Comcast company. Even had a Comcast VPN assigned specifically to me complete with RSA fob shipped to me by Comcast. You haven't got the first clue what ISPs do, nor how networks work.
Just stating the obvious here, but "Rule #1" obviously doesn't apply to service provider networks, who are specifically built so other people's equipment can be connected on almost every point. Customers on the access layer. Datacenters, colocation and these sorts of boxes on the distribution layer, and peers on the "gateway"/peering layers.
The second paragraph is wrong too, there are much closer relationships possible. They're much deeper than that today, and I would expect in the future to see CDNs much deeper in provider networks.