Netflix and Comcast Cut a Deal

Netflix

Netflix and Comcast have cut a deal that will hopefully see customers getting a better service. Netflix, the online streaming giant, remains keenly interested in improving its service, and in order to smooth out any internet bumps it has been experiencing, a new deal has been made. The announcement was not particularly flashy, just six lines were in the news release, but this may have knock on effects on issues such as net neutrality.

The two companies announced that they would like to achieve a more direct link between themselves, but the full implications of this are currently unclear. Comcast has just finished buying up Time Warner cable in a $46 billion dollar deal that will see it reach 30 million customers, up %50 from its current base. This also gave Comcast control over NBC, Bravo and E!, not to mention Universal Studios. The company now represents one the largest vertically integrated entertainment companies in the US, that can produce, and deliver content, entirely under one corporate roof. Indeed, sooner or later the political influence and market power of Comcast is highly likely to land on the plate of the federal government.

Some have suggested that cutting a deal with Netflix might even be a way to head off potential criticism of Comcast before it becomes an issue. As the chief regulator, the FCC has made sure that so far Comcast has stuck to net neutrality rules, and this regulatory pressure is likely to continue despite federal court rulings that have undermined it recently. The principle of net neutrality is that all data passed over the internet should be treated equally, no matter what variation in use takes place. So Netflix should have as equal access for its streaming service as NBC, even given NBC’s closer corporate links with Comcast.

Comcast has in the past been criticised for breaching rules on net neutrality when it has come to peer-to-peer sharing. This form of sharing is often closely associated with illegal sharing of copyrighted material between consumers. However, in this instance it led to Comcast computers contacting file sharing sites and pretending to be users. At the time some believed that this constituted a form of Denial-of-service attack, but Comcast defended itself by saying that any Comcast customer could still contact the site, and that the interference was necessary to stop the network being overwhelmed by the amount of sharing taking place.

The current discussions between Netflix and Comcast have been taking place over several months are intended to enable a multi-year agreement for Netflix services for Comcast users. However, what is clear is that Netflix will be paying Comcast for an improved service for its customers, but what does this mean for other internet streaming services? Will other sites have to pay for equivalent access? This is questionable in face of the principle of net neutrality. However, currently Netflix represents 32% of internet traffic in North America each evening, and so a closer working relationship between it and Comcast was perhaps inevitable.

Time will tell if the deal cut between Netflix and Comcast is good for consumers, whilst still allowing smaller companies access, even while they don’t have Netflix’s deep pockets.

By Andrew Willig

NBC
Forbes
AFP

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