The deal came out as a small surprise since Netflix has made similar agreements before with Comcast and Verizon. What's interesting about the deal is the fact that AT&T subscribers may have their Netflix quality issues fixed way ahead than the subscribers of Verizon.
Interconnection agreements would normally focus on how content gets onto the network as opposed to how it moves across an ISP network on the whole. Since Netflix and ISPs share similar customers, the latter are unhappy that Netflix sends too much data, as requested by customers, onto their networks. As a result, the connection points between the ISPs and Netflix become congested.
"We're now beginning to turn up the connections, a process that should be complete in the coming days," says AT&T spokesman Michael Balmoris.
In order to resolve this issue, Netflix agrees to pay the ISP to directly connect to its network. Customers are then assured that the content they're getting will no longer be delayed. In short, they can enjoy less buffering and faster streaming.
A spokesperson from Netflix said that an interconnect agreement with AT&T had already been reached in May. From that day onwards, the two companies have been working hand in hand to provide mutual customers with improved viewing experience by way of an additional interconnect capacity.
The agreement with AT&T is the third agreement that Netflix has closed with a major ISP in the US. The first was confirmed in February with Comcast Corp while the second was with Verizon Communications in the month of April.
Netflix's interconnection agreements with various ISPs came as the company's response to the proposed new rules of the Federal Communications Commission (FCC) which deals with how ISPs can manipulate Internet traffic. Some consumers are worried that such agreements can become a setback for Net neutrality. According to the commission, its Net neutrality protection does not include the interconnections agreements made between Netflix and the ISPs. On the other hand, the FCC admits that its office is definitely gathering more information on this type of deals as an overall effort to understand better what goes on in the Internet.
The financial terms involved in an interconnection agreement are usually undisclosed. In the paid peering deal, Netflix doesn't gain a priority over other applications when video traffic flows inside the ISP and moves toward the consumers. However, the deal would ensure that Netflix can bypass the congested links between the service provider and the rest of the World Wide Web. Through this, Netflix enjoys the same feature that is enjoyed by other companies when they connect to big ISPs. These companies would include Microsoft, Facebook, Amazon and Google.