A couple of days ago, it was announced that Netflix is going to pay Comcast for faster video delivery to customers. A day later, the CEO of Verizon revealed that the telecommunications giant is also in talks with Comcast about a similar deal. Now AT&T Inc. (NYSE:T) wants to make a deal with Comcast too.
AT&T spokesman Mark Siegel said this on Monday: “We’re in discussions with Netflix to establish a more direct connection between our networks, similar to agreements we have with others, so that AT&T broadband customers who use Netflix can enjoy an even better video experience.”
Verizon CEO Lowell McAdam said that the Comcast deal has been in negotiations for around a year. This deal will work out if Netflix can get direct access to Verizon through an “interconnect agreement” instead of going through third parties. Many Verizon customers have complained that Netflix speeds have been slow on their networks.
Apparently, interconnect deals are common in the broadband industry. Comcast has agreements with Google and Yahoo! Providers like Cox, Cablevision, and Google Fiber connects to Netflix through a service called Open Connect. AT&T and Verizon do not use Open Connect though.
The company that handles Internet traffic between Comcast and Netflix is Cogent Communications. Cogent’s stock price dropped a little bit after the Comcast-Netflix deal was announced. “It doesn’t mean that revenue goes away from Cogent. It just means that some of the growth in revenue may not occur through us,” stated Cogent’s CEODave Schaeffer.