Netflix will reportedly pay to play on Verizon Communications’ FiOS network, after claiming for months that its video service was being throttled by Verizon. Netflix is calling the deal a “paid interconnect agreement” and saying that it hopes the arrangement will improve service for its customers.
The agreement follows a deal that Netflix struck earlier this year with Comcast, after the cable provider’s customers saw streaming speeds fall as traffic increased. Recently, Verizon’s customers have suffered the same fate; Netflix has published statistics showing that Verizon FiOS customers are getting slower download speeds now than they enjoyed six months ago. Verizon has maintained that the slower speeds are due to heavy network traffic during certain times of the day. But the company has never denied that it has the power to increase those speeds.
The network infrastructure that moves traffic on the Internet is at the heart of the conflict between Netflix and the service providers. Netflix pays Internet backbone providers like Cogent Communications and Level 3 to handle much of its Internet traffic. Verizon can improve the speeds at which users can download Netfix videos by investing more in hardware to improve its connections to the Netflix providers.
Traditionally, companies like Cogent and Level 3 have had “peering” relationships with ISPs like Verizon FiOS, meaning that the large service providers agree to handle one another’s traffic for free. The explosion in Netflix traffic has tipped the equation out of balance recently, and now many ISPs may think that the providers who handle Netflix traffic are using more bandwidth than they are supplying.
Now it appears that Netflix will pay to bring the equation back into balance. The company’s decision comes just a few days after the Federal Communications Commission circulated a draft proposal on its net neutrality plans. That proposal left the door open for service providers to accept payments from content publishers in exchange for preferential treatment on the network. With at least 15% of Netflix users already streaming video to their mobile devices, wireless carriers may be next in line to strike deals with Netflix.
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