One of them had to give in to end the standoff between Verizon and Netflix. Netflix needs to satisfy the craving of its consumers for "House of Cards" and for its other shows, so it decided to pay for better streaming. It will not pay Verizon for now but it has snagged a deal with Comcast.
On Sunday, Comcast and Netflix announced the new partnership to ensure an excellent experience for consumers.
"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," announced Comcast.
The deal is described as "mutually beneficial interconnection agreement" that will guarantee that Comcast customers will be able to access Netflix without having to endure very slow Internet connection.
"People familiar with the situation said Netflix Chief Executive Reed Hastings didn't want streaming speeds to deteriorate further and become a bigger problem for customers," reported the Wall Street Journal. The publication has also confirmed that the talks about the said deal started during the Consumer Electronics Show in January in Las Vegas.
Netflix paid Comcast so the latter will give direct access to its network but the details about the deal have not been disclosed as of reporting.
The company has been standing firm against big ISPs in the United States on who should pay to upgrade the Internet pipelines to guarantee smooth and efficient flow of Internet traffic. Bandwidth-demanding video services such as Netflix put additional stress to the information highway and while other video services have agreed to pay the likes of Time Warner Cable, AT&T, Comcast, and Verizon, Netflix hasn't budged until the announced deal with Comcast over the weekend.
Netflix instead used bandwidth companies such as Cogent Communications to carry the load over to the network of ISPs, which also demand payment for interconnection since the enormous data flow is just one way.
The cash box of Comcast will be ringing with this deal with Netflix, and for sure there will be no reason to stop Verizon and other big ISP providers to ask for the same deal.
For Netflix, the bottomline is satisfying its 30 million paying subscribers (read: profit). It cannot afford customer leaving its boat and it is not directly a big punch on the issue of net neutrality, which it has been supporting ever since a U.S. court scrapped the Internet openness rules of the FCC, because it only resolves the bottleneck that happens on the critical junctions between bandwidth companies and ISPs.
The implications of the Netflix-Comcast deal are worrying. Businesses have negotiated to resolve the issue affecting consumers and both will end up winning profits. Consumers, meanwhile, do not really know the details of the deal and might soon carry the burden of such deals through price adjustments of the series.
The deal between the two companies involves House of Cards-like politics and bureaucracy with a tinge of dysfunctionality and brattiness of Arrested Development.