Netflix Agrees to Pay Comcast to End Traffic Jam

[satam55]

Netflix Agrees to Pay Comcast to End Traffic Jam
Deal Ends Standoff Over Streaming, Would Give Netflix Direct Access to Comcast Systems

By SHALINI RAMACHANDRAN Updated Feb. 23, 2014 12:16 p.m. ET

Netflix Inc. NFLX -0.63% has agreed to pay Comcast Corp. CMCSA -1.37% to ensure Netflix movies and TV shows stream smoothly to Comcast customers, a landmark agreement that could set a precedent for Netflix's dealings with other broadband providers, people familiar with the situation said.

In exchange for payment, Netflix will get direct access to Comcast's broadband network, the people said. The multiyear deal comes just 10 days after Comcast agreed to buy Time Warner Cable Inc., TWC -0.79% which if approved would establish Comcast as by far the dominant provider of broadband in the U.S., serving 30 million households.

For months Netflix and Comcast have been in a standoff over Netflix's request that Comcast connect to Netflix's video distribution network free of charge. But Comcast wanted to be paid for connecting to Netflix's specialized servers due to the heavy load of traffic Netflix would send into the cable operator's network. Under the deal, Netflix won't be able to place its servers inside Comcast's data centers, which Netflix had wanted. Instead, Comcast will connect to Netflix's servers at data centers operated by other companies.

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.

During this period, Netflix was using Internet middlemen Cogent Communications CCOI -0.10% as a "primary" route into Comcast, a person familiar with the matter has said. That connection was starting to become overwhelmed with Netflix traffic, congesting traffic and leading to slower Netflix streams for Comcast Internet users, people familiar with the matter said.

At the same time, Comcast presented Netflix with more attractive deal terms than the operator had been offering, the people said. The deal spans several years. Netflix was aiming for a long-term deal to make sure its projected traffic growth wouldn't put it at a disadvantage, one of the people said. The connection is a so-called "paid peering" deal, which connects Netflix's network to Comcast's directly. Netflix was previously using several middlemen to access Comcast's network.

Mr. Hastings and Comcast CEO Brian Roberts have met on-and-off in recent months to discuss a possible deal and the two came to a framework for an agreement at a meeting at the Consumer Electronics Show in January. Final details were worked out over the past two days, one of the people said.

The deal could force Netflix's hand in its standoff with other major U.S. broadband providers, including AT&T Inc., T -1.15% Verizon Communications Inc. VZ -1.77% and Time Warner Cable Inc.—all of whom have also refused to connect with Netflix's servers without compensation. Netflix's streams with Verizon in particular have gotten worse in recent months.

Netflix has little room to pay more to transmit its TV shows and movies. In a February regulatory filing, Netflix said that if providers don't interconnect with its servers, its ability to deliver streaming video, its business and operating results could be "adversely affected" due to increased costs.

The deal is the latest sign that broadband providers are gaining leverage in their dealings with content companies. Over the past several years, technology companies like Microsoft Corp. MSFT +0.61% , Facebook Inc. FB -1.49% and Google Inc. GOOG -0.03% have also started paying major broadband providers for direct connections to their networks that would provide faster and smoother access.


http://online.wsj.com/news/articles/SB10001424052702304834704579401071892041790

How the fukk is this shyt Legal??!!! The FCC has really fukked up & needs to fix this shyt.

 

[ThePsydeFX]

I knew they were throttling my shyt. I've been wondering for months why netflix was struggling with the streams. Piece of shyt company.

 

[aXiom]

Well, it was fun while it lasted.

 

[L&HH]

This is going to cause alot of fukkshyt

 

[One4Deuce]

shyt like this could lead to the death of the internet in its current form. It's messed up to allow these ISPs to throttle traffic, etc.

 

[el_oh_el]

awwww hell fukk naw

I knew they were throttling my shyt. I've been wondering for months why netflix was struggling with the streams. Piece of shyt company.

Its not throttling

 

[newarkhiphop]

Google fiber will save us, plead your alligance to Google brehs

 

[Amestafuu (Emeritus)]

How the fukk is this shyt Legal??!!! The FCC has really fukked up & needs to fix this shyt.

These fukks always tryna stifle progress. U can't lock down the internet because cable TV is trash and dying.

Please Google overlords set up these fibe networks and kill these old ass companies.

 

[Costanza]

maybe im not understanding something.. netflix currently accounts for like 30% of all internet usage.. more than https... or youtube or anything... whats the issue with them paying the server owners to maintain this usage, at an acceptable speed?

 

[Ethnic Vagina Finder]

phase one - kill net neutrality

phase two - monopolize

phase three - no fukks given


How exactly does shyt like this help the economy and create jobs. Nothing but greed.

 

[Al Simmons]

How the fukk is this shyt Legal??!!! The FCC has really fukked up & needs to fix this shyt.

And we all lose in the end

 

[Crakface]

 

[L&HH]

maybe im not understanding something.. netflix currently accounts for like 30% of all internet usage.. more than https... or youtube or anything... whats the issue with them paying the server owners to maintain this usage, at an acceptable speed?

The probem with this logic is, presumably the people are already paying comcast for their service. Comcast is double-dipping and getting paid twice for selling the same product. Put it like this, if those same people were not on netflix but browsing something else during that time, how different would it effect comcast?

Also it's a slippery slope. Now websites can pay ISPs to make their website faster than other sites.

 

[Prince Akeem]

How the fukk is this shyt Legal??!!! The FCC has really fukked up & needs to fix this shyt.

FCC is corrupt and has pretty much been bought by big cable years ago.

 

[newarkhiphop]

maybe im not understanding something.. netflix currently accounts for like 30% of all internet usage.. more than https... or youtube or anything... whats the issue with them paying the server owners to maintain this usage, at an acceptable speed?

Cause now Comcast can say hey your watching too many Youtube vids, you have to pay a YouTube charge If you wanna stream in HD