Netflix, Comcast reach deal that should improve video speeds
The Netflix news comes as Comcast prepares to merge with Time Warner.
Although neither company has confirmed it, Shalini Ramachandran of The Wall Street Journal reports that the deal will give Netflix "direct access to Comcast's broadband network." In exchange, Netflix will pay the provider an undisclosed fee.
"Working collaboratively over many months, the companies have established a more direct connection between Netflix and Comcast, similar to other networks, that’s already delivering an even better user experience to consumers, while also allowing for future growth in Netflix traffic," reps for Comcast said in a vaguely-worded press release. "Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed."
There's a lot going on here, so it may help to take a step back and consider the context. For one thing, there is the ongoing battle between Netflix, which is a bandwidth-guzzling monster, and Internet providers, who would rather not provide all that extra bandwidth for free. (Most recently, a tech expert alleged that Verizon is intentionally throttling traffic to Netflix; Verizon denies it.)
Meanwhile, there are fears, as Doug Henschen of Information Week puts it, that a "Netflix-Comcast deal will spark similar deals with the cost of the fees passed along to the consumer. Will carriers be able to hold content providers over a barrel until they agree to pay fees for adequate bandwidth?"
Finally, there's the impending Comcast-Time Warner "mega merger." The deal, assuming it is approved, will be worth $45 billion.
"I would have thought Netflix would have held out with the Time Warner Cable deal looming," analyst Craig Moffett told Reuters this week. "Netflix can ask for whatever it wants and has a reasonable shot at getting conditions put on the merger that could provide it with long-term benefit. On the other hand, that could be precisely what spurred this deal – that Comcast was willing to settle with Netflix for a relatively low price to make the Netflix problem go away ahead of the regulatory review."