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Netflix to pay Comcast for direct connection

Source: Reuters - Sun, 23 Feb 2014 20:20 GMT
Author: Reuters
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Feb 23 (Reuters) - Comcast Corp customers are about to get improved streaming service from Netflix after the two companies announced on Sunday an agreement to give Netflix a direct connection to the broadband provider.

As part of the deal, Netflix has agreed to pay Comcast for direct access, the first time the online streaming video company is paying a broadband provider in the U.S. Terms of the deal were not disclosed.

This agreement means that Netflix will deliver its movies and TV programs to Comcast's broadband network as opposed through third party providers, giving viewers faster streaming speeds for watching movies and TV programs.

The deal could also lead to Netflix striking similar arrangements, known in the industry as interconnect agreements, with other major broadband providers like Verizon and AT&T.

The companies said in a joint statement that they have been "working collaboratively over many months" to strike a multi-year agreement. Netflix will not receive preferential network treatment, the companies said.

The announcement comes as federal regulators are wrestling with an issue known as "Net neutrality" concerning broadband providers and whether they can slow down traffic to some particular websites or applications, potentially forcing content providers to pay for faster Web service.

The Federal Communications Commission said last week it plans to rewrite the rules after a U.S. court struck down the commission's previous version.

With more than 44 million subscribers throughout the world, Netflix has been making an effort to connect directly with broadband Internet providers. It has struck similar deals with Cablevision and Cox, though Netflix did not pay for these connections.

Comcast is preparing to acquire Time Warner Cable for $45 billion, a deal that will draw the scrutiny of U.S. antitrust enforcers.

The combined company would have a near 30 percent share of the U.S. pay television market, as well as be the major provider of broadband Internet access.

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