Netflix blinks first in slowdown showdown

Netflix has reportedly agreed to pay Comcast a fee to improve speed and reliability of its streaming. It could set a major precedent in the net neutrality debate.

As we reported last week, Netflix confirmed that customers suffered a measurable slowdown in speeds over the past month, which appeared to be largely because of a failure to upgrade capacity at Cogent Communications, a company that acts as a middleman carrying data between Netflix and ISPs (specifically cable companies.)

Netflix had asked for a direct connection to the ISPs but was told that would only happen if it paid a fee. That left it reliant on Cogent, where nobody seemed willing to foot the bill for a capacity increase. It certainly appeared that the cable firms would normally pay out here but were refusing to do so in an attempt to pressure Netflix into paying for the direct connection.

That’s now happened with Netflix and Comcast, which have said:

Comcast and Netflix today announced a mutually beneficial interconnection agreement that will provide Comcast’s U.S. broadband customers with a high-quality Netflix video experience for years to come. 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. Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed.

The announcement didn’t detail any financial agreements. Credible media sources report that Netflix is making an annual payment that runs into the millions. However, it’s also suggested the fee is lower than Comcast might have hoped for and that it may have settled for a lower price to resolve the issue now, rather than have it become a political talking point during the regulatory review of its proposed merger with Time Warner Cable.

The deal pushes the issue of net neutrality to its very limit but it appears that it doesn’t break even the Federal Communication Commission rules that were recently struck down in court. Technically Netflix won’t get any preferential treatment over other providers in the sense that rival traffic won’t be blocked or intentionally slowed down.

In practical terms, it’s a little like the ISPs are operating a toll road in which traffic is treated equally in that all drivers pay the same price and follow the same speed limit. However, drivers who don’t pay the toll aren’t allowed on to the road and will thus often take longer to get to the same destination.

So while the deal doesn’t breach the letter of net neutrality rules, it certainly appears to destroy the principle. Netflix is getting its data to customers at a faster speed as a direct result of paying more money to an ISP. And in the big picture, that’s very much not a case of all traffic being treated equally.

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