Netflix Agrees to Pay Comcast to End Traffic Jam
February 24, 2014 10:00 AM
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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.
, 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.
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.
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2/24/2014 11:18:49 AM
I have a better idea for Netflix, if they're willing to listen: create a VM or appliance (I prefer the VM route) that could cache certain videos on a customer's local network during low traffic times. Then the traffic wouldn't matter too much and the movie playback would be much better. They'd have to cache it locally with some sort of massive encryption so that hackers don't steal the movies so easily. The movie companies would insist on it. (As if Netflix even serves out movies before they're already old.) I'd like to see Amazon and Hulu do the same. We could have home servers to run the various caching VMs and better routing and firewall security than those crappy home routers. I'd be able to start my business of building home servers for people. (Right now, it's $700 for the server and $700 for the OS to run it. Hopefully, MS will make a home version with Hyper-V, DHCP, DNS, routing, and file services for cheaper.) It could be a boon for the economy to do such things, but I'm sure the movie and TV people would fight against it.
RE: Better idea
2/24/2014 12:38:12 PM
If people balked when streaming only service started to cost more, why would they want to pay for a local caching server?
RE: Better idea
2/24/2014 3:40:57 PM
I would have to be streaming an aweful lot and get crappy connections to shell out $1400 to then turn around and pay Netflix for streaming.
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