Netflix, Inc. (NFLX) makes a streaming traffic agreement with Comcast

Posted Feb 23, 2014

Netflix, Inc. (NASDAQ:NFLX) has ended a dispute where Netflix’s streaming speeds declined by around 30% in the past couple of months through Comcast. Netflix agreed to pay Comcast for directly accessing its broadband network, according to The Wall Street Journal.

The agreement happens less than two weeks after Comcast announced a $45 billion deal to acquire Time Warner Cable. If the deal is approved, then the combined company would serve 33 million customers across the U.S The two companies did not disclose the terms of the deal. Netflix will not receive any preferential network treatment under the multi-year agreement.

This deal is called “paid peering.” Netflix will be able to connect directly to the Comcast network instead of going through intermediaries as they did in the past.

Netflix consumes a lot of bandwidth at Comcast. Netflix wanted to connect to the Comcast network for free, but Comcast wanted compensation for the heavy traffic that Netflix users generate. Comcast argues that it costs a lot of money to deliver Internet video.

Netflix released data last month that showed their streaming speed decline 27% since October. Comcast users also complained about seeing their connections to the video streaming service decline.

[Source: CNET]