Four Takes On Netflix's Streaming Deal With Comcast
If you are in the middle of a House of Cards binge, the news from Netflix over the weekend is good — video streaming quality will improve. After reports of declining performance in recent months, Netflix — which accounts for 30 percent of broadband traffic — cut a deal with Comcast to pay the cable provider for direct access to its systems.
The implications of this deal are complicated and wildly different, depending on whom you ask. We rounded up a few ways to look at the deal, which allows a broadband giant to charge Internet companies for direct access to consumers:
1) Paying for access could become a norm that could stifle opportunities for startup Internet services.
Existing companies with deep pockets can afford to pay fees to broadband giants for simply delivering Internet service, but what about the next generation of Internet-based services? Public-interest groups are worried that "such deals could normalize an environment" in which broadband providers can charge fees for delivering content, Time reports. With its dominant market power, Comcast could, for instance, charge prohibitive fees to stifle upstarts.
2) Payments for access have always happened. Now they're just going to different parties, since the "middleman" was cut out of this deal.
Netflix has been paying fees for access to Comcast and other servers — it paid content distribution networks, which are third-party middlemen. Now, Netflix will pay Comcast directly for access, instead of the content distribution networks. Streaming industry blogger Dan Rayburn excoriated traditional media outlets for writing that consumers may have to foot the bill for Netflix's deal with Comcast:
"This could not be further from the truth. Those stating this have no clue how Netflix delivers their content today or what costs they already incur. If they did, they would know this is not a new cost to Netflix, it's simply paying a different provider, and it should be at a lower cost. It should actually be cheaper for Netflix to buy direct from Comcast." See his full post.