Netflix, Comcast Reach Deal to Improve Video Streaming

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Video-streaming giant Netflix agrees to pay Comcast, the nation's largest broadband provider, for more speed and better access for Netflix customers. Does that mean a price increase?

Netflix has cut a deal with the nation’s largest broadband provider, agreeing to pay Comcast for improved speed and more reliable access for Netflix’s video-streaming customers. You can imagine that Netflix will eventually pass the higher cost to its subscribers.

According to the Los Angeles Times, the pact should ensure that Netflix, the world’s leading subscription video-streaming service, can deliver its content “free of the pauses and hiccups subscribers have reported in recent months.” (We wrote a post earlier this month about that.)

Business Insider says the Netflix-Comcast deal will allow Comcast to “connect directly to Netflix’s servers, improving streaming quality for all Netflix content.”

Netflix allows Internet service providers to connect to its Open Connect network, in an effort to improve streaming quality. But, according to Business Insider, “Comcast, Time Warner Cable, Verizon, and AT&T have all refused to hook their data centers up to Netflix’s servers without payment from the video-streaming service.”

Those companies claim they should get paid for delivering content, just as they do with other content networks.

While this deal will alleviate some of the connection issues for Netflix customers, Business Insider says:

Comcast is the big winner in the agreement. Rather than installing one of Netflix’s Open Connect servers at a Comcast data center (giving up some control over the traffic it moves), Comcast will link up with Netflix at third-party data centers and charge the company for data that it delivers — likely on a per-gigabit basis.

The New York Times says it’s unclear if the Netflix-Comcast pact infringes on net neutrality, which aims to ensure that everyone has free and equal access to the Internet. A federal court recently ruled against the Federal Communications Commission’s ability to enforce it. But Comcast, because of another agreement, is still subject to those rules.

Both companies have said that Netflix will not receive preferential network treatment as a result of the arrangement.

But Columbia Law School professor Tim Wu told the NY Times the deal is one of the first of its kind and likely won’t be the last. He predicted that consumers will end up paying more because of them.

And let’s not forget that Comcast wants to buy Time Warner Cable.

Stacy Johnson

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