After a dispute spanning several months, Netflix has finally agreed to pay Comcast to ensure its movies and TV shows stream smoothly to the cable provider's customers.
The exact terms of the deal have yet to be disclosed, but in exchange for payment, Comcast will now allow Netflix to directly access its broadband network. (Via Netflix)
The two companies had been at odds over the cost of delivering Netflix streams to customers over Comcast’s broadband network.
CNET writes "While Netflix wanted to connect to Comcast's network for free, the cable giant sought compensation for the heavy traffic that Netflix users generate, arguing that it costs the company a lot to deliver Internet video."
Netflix CEO Reed Hastings apparently decided to strike a deal after learning that the average streaming speeds for Comcast subscribers had deteriorated by 27 percent since last October. (Via CNN)
The Wall Street Journal reports the long-term, multiyear deal is a landmark agreement that could set a precedent for the streaming service's dealings with other Internet providers.
“The deal could force Netflix's hand in its standoff with other major U.S. broadband providers, including AT&T, Verizon… and Time Warner Cable … all of whom have also refused to connect with Netflix's servers without compensation.”
A writer for SlashGear says while content may stream more smoothly under the deal, it’s going to come at a cost for Netflix, particularly if the company is forced to make similar deals with other providers.
“One possibility is that it could eventually offer more expensive plans to try to offset any extra it pays internet providers.”
Netflix isn’t the only one shelling out for smoother service. Technology companies such as Google, Microsoft and Facebook have also set up deals over the past few years to pay providers for direct connections with faster access.
