Netflix will be shelling out the cash for faster, more direct content delivery speeds on Verizon’s network, improving video streaming for customers. This marks the second time that Netflix has had to pay an internet service provider to boost the content provider’s speeds, after Netflix’s deal with Comcast back in February. Verizon CEO Lowell McAdam said that he expected to strike a deal with Netflix, days after the Netflix-Comcast deal. The financial terms of the agreement remain undisclosed.
Despite the “paid peering” deal upsetting net neutrality activists, the company remains a supporter of internet equality, stating that ISPs should be upgrading their services and boosting speeds for all services and content providers, without charging those providers. Netflix Chief Executive Reed Hastings says that charging individual content providers for boosted speeds is a violation of net neutrality. In a March blog post, he said, “The essence of net neutrality is that ISPs such as AT&T and Comcast don’t restrict, influence or otherwise meddle with the choices consumers make. The traditional form of net neutrality which was recently overturned by a Verizon lawsuit is important, but insufficient.”
With the Netflix-Comcast deal in mind, he continued, “This weak net neutrality isn’t enough to protect an open, competitive Internet; a stronger form of net neutrality is required. Strong net neutrality additionally prevents ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai or Level 3, to deliver the services and data requested by ISP residential subscribers. Instead, they must provide sufficient access to their network without charge.”
On Monday, Netflix spokesperson Joris Evers announced, “We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months.” This was confirmed by Verizon.
Analyst Walter Piecyk leaked the deal, writing on Twitter, “Verizon CEO confirms they have signed direct connection deal with Netflix like Comcast’s”.
Verizon CEO confirms they have signed direct connection deal with Netflix like Comcast's. $VZ
— Walter Piecyk (@WaltBTIG) April 28, 2014
The controversial decision to pay ISPs for increased traffic began with the Netflix-Comcast dispute several months ago. There were even suggestions that Comcast customers were seeing poor connection speeds with Netflix. Netflix released data in February, with average Netflix streaming speeds decreasing 27 percent since October. Verizon has also been accused of throttling the Netflix service, though they have denied such accusations and implied that it might be Netflix’s fault.
AT&T may soon join Comcast and Verizon. They have been in talks with Netflix to strike a similar deal, but Netflix remains quiet on negotiation details.
This also comes days after the Federal Communications Commission’s net neutrality proposal leaked into the news and sparked controversy. Opposers believe that such deals between ISPs and content providers are a violation of net neutrality rules, creating favoritism and discrimination among content providers.
Some argue that this deal isn’t in any violation of net neutrality, since Netflix is only paying for a direct connection to an ISP’s network and not preferential treatment by the ISP.
Netflix has been making a lot of deals, as of late, even partnering with Atlantic Broadband, Grande Communications, and RCN to prepare the launch of its own channel, which will be delivered through TiVo set-top boxes. TiVo will include the Netflix app to stream on-demand content and live TV. Undoubtedly, we will see Netflix make more deals in the near future, whether they garner positive or negative feedback.