Pay Up: Netflix Agrees to Pay Comcast

This could get interesting. It’s reported that Netflix has reached a precedent setting deal with Comcast to pay for the bandwidth burdens from their own pocket. You can read the joint statement here.

This past year, many Comcast customers have complained about streaming issues and interruptions while using Netflix’s services. This is due to the Internet Service Providers (ISPs) “struggling” (by which I mean refusing to cooperate) to deliver on the demand. Netflix has recently been pushing for US ISPs to update their networks and boost speeds for customers in order to meet the increasing demand for streaming video. The issue is bandwidth, or the amount of data traveling along the internet highway. Netflix wanted ISPs to pay the “tolls” and the ISPs — you guessed it — wanted Netflix to pay the “tolls.” In this landmark deal, however, Netflix has set the precedent that content providers should carry the burden of paying for the bandwidth they use on ISPs networks. Simply put, Netflix now pays Comcast for better, faster, and more consistent access to its network.

Now, what does this mean for Comcast subscribers? Netflix users with Comcast subscriptions will see a performance boost. What does this mean for Netflix subscribers who aren’t Comcast customers? That remains to be seen. The cost of bandwidth is sure to increase, and Netflix’s new push into original content isn’t cheap as well. The question becomes, can Netflix keep up with cost? The short answer, for the time being, is most likely yes. Over time however, licensing fees, production fees, and now the added cost of network access might pose a unique juggling act for the world’s largest streaming video service. Whether this cost could be passed on to subscribers is an unknown, as is whether this will influence Netflix’s content deals with studios (as in spending less to obtain certain programming).

There are other angles to this story as well. Reports indicate that the talks have been going on for over a year, so technically the deal has nothing to do with either Comcast’s acquisition of Time Warner Cable or the recent reversal of net neutrality laws. Still, although no party involved would ever admit to these events influencing the deal, it does seem like more than a strange coincidence. Netflix is also currently in a heated battle with Verizon, refusing to pay these same fees they agreed to pay Comcast. So, could this be a sneaky pro-net neutrality ploy? Possibly.

 

Net neutrality is the concept that ISPs should have to treat all internet traffic equally. ISPs, of course, are against this because with no net neutrality they can force content providers to pay for better and faster access, such as what’s happening with Netflix. Content providers, such as Netflix and Google, are pushing for net neutrality so that there services are not crippled by the ISPs and so that the market remains open and balanced. By signing a deal with one major ISP, Netflix essentially pits one ISP against another in the net neutrality battle. This provides a real world example that will bring to light the topic of net neutrality for many law makers, content providers, ISPs, and users. Before it was little more than rhetoric, but now there is concrete evidence of the discrimination that might take place without net neutrality. This could be the deal that relaunches an effort to push for realistic net neutrality legislation, or it could be the deal that opens the floodgates for ISPs to have unprecedented control over the traffic moving through their networks.

In the meantime, at least I’ll get faster Netflix service. Yay me?

Check out what Rich and Mike have to say about it in this bonus conversation from The Crispy Noodle Podcast…