Netflix Comcast Deal Creates A ‘Direct Connection’ For Streaming Movies But Raises Net Neutrality Concerns

Netflix has agreed to a deal with Comcast that prevents any potential slowdown or streaming issues for users. The deal was meant to provide “Comcast’s U.S. broadband customers with a high-quality Netflix video experience for years to come” but raises some concerns for net neutrality, according to some critics.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Netflix Inc. (Nasdaq: NFLX) announced the deal on Sunday, Feb. 23. According to the statement, “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.”

Ars Technica, citing the Wall Street Journal report, says sources have stated that there was a “compromise” between Netflix and Comcast and part of that deal included better terms than what Cogent -- the company Netflix has been buying bandwidth from -- could offer.

The Associated Press reports Internet Service Providers wanted to establish deals with Netflix due to the streaming service’s popularity, citing a report from Sandvine, a research firm, that states the company accounts for around one third of traffic on the Internet. Comcast and other ISPs wanted a deal with Netflix that would help offset the cost and bandwidth use from around 33 million subscribers.

Prior to the deal on Sunday, Verizon made a similar request and wanted the company to pay for increased traffic, reports Ars Technica. The tech site has also discussed a noticeable throttling, or intentional slowdown, of Netflix streaming on the Verizon network.

The direct connection between Comcast and Netflix will eliminate any streaming issues but raises other questions, including a possible increase in cost for the service as well as net neutrality concerns.

AP notes Netflix’s investors will be keen to learn about the financial terms of the deal and if it will affect profits or will lead to an increase in subscription cost. The deal could also lead to similar agreements with other ISPs.

Net neutrality is a concept that the government or ISPs should not interfere with data or traffic on the Internet, such as giving preferential service to some or slowing down connections for others.

A proposal from the Federal Communications Commission wants to block ISPs from offering a way to pay for an “express lane” to companies like Netflix or Amazon as the cost could limit competition, reports the New York Times. The Wall Street Journal notes Netflix joins companies such as Microsoft, Facebook and Google that pay ISPs for direct connections.