Netflix Signs Fresh Peering Agreement With Verizon

Netflix has reached a deal with Verizon to link their networks to each other.

The interconnection deal links Netflix’s private network directly with Verizon’s network, making it easier and faster for their videos to be delivered to Verizon’s 3.4 million internet customers in the U.S.

“We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months,” a Netflix PR representative wrote in announcing the deal.

Verizon customers have been putting up with slow streaming speeds and a poor service on Netflix for the past few months, and this appears to be an attempt to resolve the situation. However, it remains unclear which company was at fault in the first instance.

Netflix ISP Speed Index - March 2014

This agreement is similar to another deal Netflix signed just two months ago, when the company entered into a direct peering agreement with Comcast, the largest internet service provider in the U.S. following a months-long public battle where both sides were claiming the other was intentionally slowing down each other’s traffic or not providing enough capacity on their networks, making Netflix un-watchable for many of their shared customers.

Despite entering into a peering agreement with Comcast, Netflix is still waging a war of words against the company. “We felt we had no choice,” Netflix CEO Reed Hastings said, explaining the deal to shareholders during the company’s quarterly earning call. “Service on Comcast… was declining rapidly” in the six months before the deal, Hastings claimed.

However, as Videoter’s Editor noted in his thoughts about the issue, it is very unlikely that ISPs or Netflix intentionally degraded traffic quality. Instead, it’s likely that Netflix’s intermediary networks (the companies Netflix pays to deliver their videos to your Internet Service Provider) could not handle the traffic, or Netflix did not purchase enough capacity on their networks to handle the sheer number of Netflix customers, which currently stands at 48.4 million worldwide.

“Netflix believes strong net neutrality is critical, but in the near term we will in cases pay the toll to the powerful ISPs to protect our consumer experience,” Hastings wrote while also announcing both AT&T and Verizon were actively seeking payments from the company.

Direct peering agreements usually fall outside of the realm of net neutrality, which requires that all internet traffic gets treated equally, and this appears to be no exception. It’s largely irrelevant whether Netflix pays ISPs directly, or whether it pays intermediary networks like Cogent Communications and Level 3 to deliver traffic to ISP, like it has in the past. We will just have to wait and see how this cookie crumbles.

Stephen Doble

From his London office, Stephen leads our new media industry coverage at Videoter.

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