Netflix to pay Comcast for access to network in ground-breaking deal

In a significant break with its existing practices, Netflix has agreed to pay US cable giant Comcast to gain direct access to its network to deliver a better quality service to Comcast subscribers.

In a deal many industry observers see as likely to be the first of a series, Netflix will gain direct access to Comcast’s network in exchange for an undisclosed fee. The streaming VoD provider had previously pressed the cable operator to grant direct access to its servers for free, having struck an earlier agreement to do so with Cablevision.

Describing the agreement as one that “will provide Comcast’s U.S. broadband customers with a high-quality Netflix video experience for years to come”, Netflix and Comcast emphasised that the former’s traffic would not be prioritised on Comcast’s network.

“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 pair said in a statement.

“Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed.”

Until now, Netflix has delivered its content over the network of Comcast and other large cable provider by paying intermediary companies for access. These include Cogent Communications, which made the news in Europe last year after a dispute involving access to Orange’s network.

According to the Wall Street Journal, which first reported the Comcast deal, Netflix CEO Reed Hastings agreed its terms because he didn’t want to see streaming speeds continue to deteriorate, giving rise to a growing number of complaints.

The agreement comes after a period of several months that saw Netflix subscribers complain that the service on Comcast’s network was slowing down considerably, leading to suspicions that Comcast may be throttling back Netflix’s traffic.

According to the WSJ, Comcast CEO Brian Roberts and Hastings agreed the outline of their deal in January, the Consumer Electronics Show in Las Vegas. Netflix will not be able to place its servers inside Comcast’s facilities but Comcast will connect to Netflix servers hosted at third party data centres.

Observers believe the agreement is likely to be the first of several similar deals between Netflix and large UIS service providers.

The deal has led some commentators to suggest that it throws the principle of net neutrality into doubt.

However, Netflix’s negotiations with cable operators and other service provider relate to connections between Netflix’s own network and those of the service providers, rather than the last mile connections that are covered by the FCC’s net neutrality regulations.

The agreement may in fact smooth the path of Comcast’s proposed acquisition of Time Warner Cable, as Netflix had plans in train to use the regulatory review of that deal to press for new interconnection requirements, according to the WSJ.