Not So Neutral? Comcast and Netflix Strike Network Deal

The net may no longer be neutral.

Netflix has agreed to pay Comcast for direct access to the Internet service provider's broadband network, according to The Wall Street Journal. The move is anticipated to improve the streaming service's recent lagging performance.

 

While a deal was officially announced on Sunday, the terms of the agreement were not made public; this means neither Netflix nor Comcast admitted that money was involved in the deal. Similar agreements are usually done for free in the interest of improving performance for both parties.
Spokespeople from both companies declined to confirm or deny the allegation that money had changed hands.

If true, the agreement is the first known example of a company paying an ISP to improve connection speed. Network connection deals are not uncommon, but are usually done without payment. It also sets the stage for similar deals to be signed between Netflix and other ISPs that have shown speed problems, such as Verizon.

The move comes less than two weeks after Comcast announced that it had struck a deal to buy Time Warner. The combined company will be the largest ISP in the U.S. — a fact that has concerned critics who worry it could pressure content creators to pay for preferential treatment.
Netflix is particularly reliant on ISPs for its streaming video service, and its recent success has resulted in the company generating almost one-third of all North America's Internet traffic.

Broadband providers have had trouble keeping up with this growth, and appeared unwilling to help Netflix without getting something in return. As a result, Netflix speeds on Comcast and Verizon have suffered.

Netflix had recently been pushing Open Connect, its own content-distribution network that links directly with broadband networks to help improve its streaming speeds.

Terms of the deal were not disclosed, but a person at Netflix familiar with the agreement told Mashable that the companies will be directly connecting networks.

"Netflix wants to scale Internet TV for the future, and this is a mutual agreement with the biggest cable TV and broadband provider in the U.S.," the Netflix source said. "We realized we needed a compromise to find a path forward together. Both sides saw their customers affected, and set to work on solutions to scale high bandwidth applications like Netflix for the future that outweighed any pain of compromise for both."

A Comcast representative said customers should see rapid improvement in Netflix performance over the coming weeks.

The companies emphasized in a statement that Netflix traffic will not receive special treatment.
"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," the companies wrote in a press release. "Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed."

The difference between a network-connection arrangement and preferential network treatment is technical but important, particularly within the topic of net neutrality. The deal struck by Netflix and Comcast has to do with a process called "peering," in which companies physically connect networks together to exchange data.

This is distinct from the net-neutrality issue of simply favoring or throttling certain content in an attempt to solicit payment. The difference means Netflix and Comcast can claim to be abiding by net-neutrality rules (or, for right now, conventions) while still creating a system in which content providers pay for better speed.

The possible impact of deals like this becoming standard have caused analysts and critics to bring renewed attention to the issue, such as BTIG analyst Richard Greenfield, who called peering "the Internet Issue of 2014." via Mashable