After months of declining streaming speeds, Netflix has agreed to a deal to get direct access to Comcast systems. The multi-year deal, first reported by the Wall Street Journal, comes just ten days after Comcast bought Time Warner Cable in a deal that could potentially make Comcast the internet provider for 30 million subscribers.
Netflix Chief Executive Reed Hastings decided to strike the deal after Netflix saw a deterioration in streaming speeds for Comcast subscribers. According to Netflix data published in January, the average speeds of Netflix's prime-time streams to Comcast subscribers had dropped 27% since October. Mr. Hastings didn't want streaming speeds to deteriorate further and become a bigger issue for customers, the people said.
One noteworthy aspect of this deal is its potential to set a precedent in future dealings between internet service providers and Netflix. In recent months, Verizon subscribers have also been dealing with slower Netflix streams. Beyond the Netflix itself, this deal also could have ramifications for dealings between broadband companies that aren't named Comcast and other online content companies that aren't named Netflix.
But what is likely to be the biggest upshot of this deal has to do with net neutrality. Parts of the FCC's laws were bid sweet adieu by a federal appeals court in January, which obviated the need for internet service providers to treat all data equally. What the Comcast/Netflix arrangement could do is provide a precedent for how preferential treatment could be given between certain companies in the future.
Officially, Comcast's deal with Netflix is about interconnection, not traffic discrimination. But it's hard to see a practical difference between this deal and the kind of tiered access that network neutrality advocates have long feared."
A joint statement between Netflix and Comcast made sure to emphasize that "Netflix receives no preferential network treatment under the multi-year agreement." Nevertheless, expect some public hand-wringing about this deal over the next few days. Or if you're a Comcast subscriber, get ready to enjoy better streaming.