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To put it in the most basic terms, it is connecting two networks to deliver content. To use the Netflix and Verizon example, Netflix sends out its content over its ISP’s network, and pays that network for the bandwidth. Then that network, through a peering agreement, connects to and sends that same data over Verizon’s network to Verizon customers who are paying for the bandwidth they use. The big issue right now is because Netflix is popular and makes up a significant portion of internet traffic, “last miles” ISPs like Verizon want to charge Netflix for peering (even though Verizon customers are already paying to get access to the Netflix data stream), and are refusing to upgrade the hardware that supports the connections to other networks. Keep in mind, while the “last mile” ISPs are crying about how it’s unfair that Netflix should make money off of their networks for “free” they are making HUGE profits. This is the heart of the net neutrality debate, and in my mind it shouldn’t even be a debate. Sometimes there are good guys in white hats and bad guys in black hats, and this is a case where companies like Verizon, Comcast, Time Warner, et al are wearing very big, very black hats.