The Wall Street Journal is reporting that Netflix has agreed to pay Comcast to peer directly with the broadband provider in order to ensure smooth delivery of Netflix services to end users.
The issue of Netflix performance had come to the fore in recent weeks. The streaming video service now accounts for about 30% of internet traffic and broadband subscribers have been complaining of performance issues in recent weeks, especially since Season 2 of House of Cards was launched last week.
Allegations that Netflix packets were being singled out as low-priority had been denied by Comcast. Such a move would have been a violation of ‘Net Neutrality’, and while the FCC’s Open Internet Order was recently invalidated in court, Comcast had already promised to adhere to it anyway until 2018, as a condition of FCC approval for its acquisition of NBC Universal.
Just last week, Comcast announced that it had purchased Time Warner. If approved the move will give it control of a third of the US broadband subscriber market.
There had been claims that Netflix content streamed better over a VPN, which had the effect of disguising Netflix packets from the ISP, but there was no proof that ISPs were discriminating against Netflix. Meanwhile Netflix ISP reports showed deteriorating performance on both Comcast and Verizon.
As it turns out, the question of net neutrality is a moot point. Strictly speaking it refers to how a carrier treats packets with respect to other packets on its network. And it turns out that Netflix’s problem was getting on to the last-mile networks in the first place.
As Netflix has grown, it’s become an increasing issue for them, and they’ve tried a variety of solutions, partnering with different carriers and Content Delivery Networks. But it would appear that the bottleneck in throughput to the last-mile ISPs could not be resolved without dealing directly with the ISPs themselves.
Some argue that this deal is no more than business as usual on the internet. The money Netflix pays to Comcast (amount undisclosed) will be offset by savings on money they would have paid others to indirectly deliver their content. Netflix still has to pay for its bandwidth, it’s argued, and it makes more sense to deal directly with the ISPs.
Others say that the spirit, if not the letter of ‘Net Neutrality’ has been violated and a precedent has been set. Comcast is now paid twice to deliver the same data: once by the receiver (the consumer), and once by the sender (Netflix). And ultimately, some say, it is the consumer who will end up paying both tabs.