Netflix Looks For Faster Content Delivery Under New Comcast Deal
February 24, 2014

Netflix Looks For Faster Content Delivery Under New Comcast Deal

Lee Rannals for - Your Universe Online

Netflix signed a new deal with Comcast that is expected to offer up faster speeds to the video streaming service, which could also lead to a spike in subscription prices.

The online streaming service announced that it will be paying Comcast for more-direct access to its broadband network so customers streaming movies over the Internet will see improved speed and reliability. The companies announced the multi-year agreement on Monday, but did not disclose many details about the terms.

Netflix has over 33 million subscribers in the US who are able to watch hours of television shows and movies. The company has even started to delve into the production business by creating its own award-winning TV shows.

“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 said in a statement.

According to a report by Bloomberg, a source familiar with the situation said Netflix will be paying Comcast millions of dollars annually to access this higher tier service.

Both Google and Facebook have also paid Comcast money for faster content-delivery network access. These agreements are part of an effort by broadband providers like Comcast to find ways to make more money off of content providers using the connection to deliver traffic-heavy services like movies and live television programs.

“The deal confirms that if you’re a video company that wants to get your stuff from point A to point B through a broadband pipe, you have to pay a tariff,” Michael Pachter, an analyst with Wedbush Securities in Los Angeles, told Bloomberg.

Pachter predicts that this deal will ultimately raise the cost for customers, because Comcast will be able to “raise the price to whatever the market will bear.”

The deal does not interfere with net neutrality laws, which are set in place to ensure a larger company isn’t able to receive special benefits from an Internet service provider over a smaller company. Federal Communications Commission Chairman Tom Wheeler said last week that it will be rewriting rules to forbid content blocking and ensure Internet providers treat Web traffic equally.

A court struck down the net neutrality rules in January, but left open the option for the FCC to “rewrite” the rules that meet the court’s test for preventing improper blocking of and discrimination among Internet traffic.

“Preserving the Internet as an open platform for innovation and expression while providing certainty and predictability in the marketplace is an important responsibility of this agency,” Wheeler said last week when announcing the agency was working on the new rules.