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While it's not clear how much Netflix is paying Comcast, the new deal will span several years

Comcast recently cemented its dominance as the top broadband provider in the U.S. after its planned acquisition of Time Warner Cable (TWC). And with a customer base that large, Netflix doesn't want to miss out.
According to Comcast, Netflix has agreed to pay the big cable provider to ensure that its movies and TV shows stream easily without traffic jams on Comcast's broadband network. 
While it's not clear how much Netflix is paying Comcast, the new deal will span several years and Comcast said it would connect to Netflix's servers at data centers operated by other companies. 
This means a less-congested streaming experience for Netflix customers using Comcast cable connections, and Comcast gets to collect fees for providing the service.
Before this agreement, Netflix wanted to connect its own specialized servers to the networks of big cable providers in order to improve streaming. But Netflix didn't want to pay for such connections, and big cable like Comcast wanted fees because they'd be carrying Netflix's heavy traffic.  

So Netflix traditionally used middle companies for connections, but it had to pay these middlemen to do so anyway. There were also traffic congestion problems with this route, which slowed connections for customers. Netflix likely thought it made more sense to just give in and pay the big cable company (Comcast) for direct connections to its broadband network, and to ensure that Netflix content is delivered smoothly. 
This is a big step between big cable and internet streaming companies, as it means Netflix is more likely to offer similar deals with other major cable companies. 
Comcast, which acquired TWC earlier this month for $45.2 billion, serves 32 million households in the U.S. With the company having such a dominant position in the U.S. cable market, it could be a good idea for Netflix to jump onboard and please both current and potential customers with better service. 
Netflix has over 30 million subscribers in the U.S. 

Source: Comcast

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Beginning of the end
By Motoman on 2/24/2014 10:43:32 AM , Rating: 2 think there were people so abysmally deranged to insist that such things would never happen.

Guess who's actually going to pay for this? Netflix? No. Netflix customers.

Are Comcast customers going to get Netflix usage deducted from their bandwidth usage, since that bandwidth was already prepaid? No. Comcast gets to double dip.

What about other video streaming services? What if they *don't* agree to send payola to Comcast?

And look at the precedent that was just set. Any content provider that wants unfettered data transmissions through an ISP has to pay up. r. Suddenly you, as the consumer, will have what content you can reliably have access to dictated by which service chose to purchase your eyeballs.

Who needs Big Brother when you have Large Comrade?

RE: Beginning of the end
By ebakke on 2/24/2014 11:48:32 AM , Rating: 2
I'm not sure what you think is happening here, is actually happening here.

From my understanding, Netflix isn't paying for unthrottled data on Comcast's network. They're merely paying for direct connections to Comcast's network to remove intermediate steps and provide shorter paths to Comcast customers (resulting in faster speeds).

Per the PR memo (emphasis added by me):
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.

RE: Beginning of the end
By Motoman on 2/24/2014 12:02:15 PM , Rating: 4

There's a good synopsis of what's happening. Read about port-peering and how the ISPs of the world are stopping the practice with regards to certain Netflix.

Netflix is now *paying* for port-peering. Meaning the entry point for being a streaming service probably just amped up to include paying ISPs for port-peering service.

And if you think it will stop at Netflix...I have a nice bridge for sale.

The linked article notes that the previous Net Neutrality regulation wouldn't have precluded paid-for port-peering anyway - but that's amongst what I'm referring to when I call for a new Net Neutrality...with teeth.

RE: Beginning of the end
By ebakke on 2/24/2014 1:25:28 PM , Rating: 2
Thanks for the consumerist link. As you said, that was a nice synopsis.

I still don't agree that a problem exists, though. If someone wants to push a ton of data down my network, and I'm not getting a reciprocal benefit by pushing a ton of data down theirs, I'd want to be compensated for the added burden to my network.

I'm also not sure that the entry point for a streaming service was just amped up. But certainly once the service becomes popular enough to have a noticeable impact on the ISPs' networks, there will be added costs.

RE: Beginning of the end
By Motoman on 2/24/2014 1:59:34 PM , Rating: 2
I can't disagree more.

Now that the precedent has been set for a content provider to pay for port-peering, it will spread. Is Redbox going to have to cave to the same thing? What about if Fox Sports does and ESPN doesn't? Or if Origin does and Steam doesn't?

So on and so forth. The ISPs don't *have* to play nice with port-peering. And now that they've proven that they can force a content provider to pay for port-peering...there's a line in the sand. Either pay up, or get left in the slow lane.

RE: Beginning of the end
By ebakke on 2/24/2014 2:30:24 PM , Rating: 2
I agree with your description on how things could likely play out. I disagree that the scenario is problematic.

RE: Beginning of the end
By Motoman on 2/24/2014 2:57:26 PM , Rating: 2
I agree with your description on how things could likely play out.


I disagree that the scenario is problematic.


RE: Beginning of the end
By ebakke on 2/24/2014 3:09:40 PM , Rating: 2
After re-reading the Consumerist article, I'm not sure Netflix has actually agreed to pay for port peering as you claim. It states port-peering was their original bottleneck, and it says they've entered an agreement with Comcast. But it doesn't say they've paid to open that bottleneck. It says they "established a more direct connection between Netflix and Comcast" and that they've removed the bottleneck all together by getting Netflix content directly on the Comcast network at 3rd party data centers. Maybe it's a distinction without a difference. But technically they haven't really paid for port-peering.

Even if they were, though... [shrug]. The end result is that those who use the network more, have to pay more for that usage. I have no objections to that.

RE: Beginning of the end
By Motoman on 2/24/2014 3:33:10 PM , Rating: 2
The problem you're not seeing is that they've established a precedent where a content provider is paying an ISP for better throughput...period.

Frankly there's nothing else that needs to be known, or said, about the issue. That is 100% of the problem, right there.

And left unchecked, this (and probably other traditional Net Neutrality issues) will be what ends the internet.

RE: Beginning of the end
By ebakke on 2/24/2014 3:57:03 PM , Rating: 2
I'm not an ignoramus. I see it; I get it. We've merely evaluated the information differently and I don't think it's a problem. I think an ISP should be able to charge for access to its resources. I think a content provider should be able to spend money to increase the quality of their product for their customers. If that means paying for better throughput, or co-located severs - great, fine, whatever.

Your doomsday prediction seems overblown. Making a mountain out of a molehill. Will things change? Sure. Will it "be what ends the internet"? Hardly.

RE: Beginning of the end
By Motoman on 2/24/2014 4:11:58 PM , Rating: 2

RE: Beginning of the end
By ebakke on 2/24/2014 7:16:42 PM , Rating: 2
Just be careful. If you shake too hard, you might lose control and fall off that high horse. ;)

Bookmark this thread. If you're right and I'm wrong, find me in another thread, put the link back to this conversation, and rub my face in it.

RE: Beginning of the end
By AntiM on 2/24/2014 11:51:50 AM , Rating: 2
I don't see anything from stopping Comcast from having their own video streaming service. If the FCC and FTC aren't going to stop the TWC acquisition, then there certainly won't be any eyebrows raised when they either buy out Netflix or start their own streaming service and put Netflix out of business.

RE: Beginning of the end
By augiem on 2/24/2014 9:42:11 PM , Rating: 2
You've never heard of Xfinity? Been around for years.

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