BROADBAND MARKET

Netflix reaches streaming dealwith Comcast

Web company pays to ensure smooth speed for online videos

Netflix has agreed to pay Comcast, the nation’s largest home Internet carrier, to ensure its online videos are streamed smoothly.

WASHINGTON — Netflix has agreed to pay Comcast, the nation’s largest home Internet carrier, to ensure its online videos are streamed smoothly.

The arrangement highlights the vast power of Comcast, which is in the middle of an expansion effort, and how the firm’s dominance in the broadband Internet market can hold sway over how consumers experience the Web.

In a multiyear deal, Netflix will pay Comcast to directly connect its servers to Comcast’s network, removing third parties that slow the delivery of its streaming-video traffic.

Terms of the arrangement were not disclosed, but the deal could set the stage for similar payments by Netflix and other deep-pocketed Web companies to the Internet service providers who deliver content into homes and on mobile devices, analysts say.

Comcast said the multiyear deal does not give any preferential treatment to Netflix’s videos.

The firm said it regularly charges Web companies and other third parties that route traffic to its 22 million home subscribers.

Netflix’s deal is no different from the many interconnection deals it and other Internet service providers such as Verizon Communications create for the routing of Web traffic, Comcast said.

As part of a condition to its 2011 merger with NBC Universal, Comcast is prohibited from blocking or slowing down traffic for a profit.

But the deal is controversial because it shows Comcast’s sway over the media and technology industries. 

With its bid for Time Warner Cable, Comcast would have 30 million U.S. Internet subscribers, making it powerful in any negotiations for the carriage of programs and apps to cable television and Internet users, analysts say.

Verizon has reportedly slowed down traffic for Netflix video streaming in a similar behind-the-scenes dispute over fees on the routing of Internet traffic.

Netflix has been at the cross-hairs of the fight in “peering” deals because it generates massive amount of traffic on the Internet.

The firm had for months sought to connect its servers directly to Comcast’s network for free. 

But Comcast refused, and other Internet service providers say Netflix should pick up some of the costs for such a huge increase in traffic on their networks.

After months of negotiations, Comcast chief executive Brian Roberts and Netflix chief Reed Hastings reached an agreement on payments during meetings at the January International Consumer Electronics Show in Las Vegas.

The companies agreed to their deal well before Comcast’s bid two weeks ago to acquire Time Warner Cable, a deal that would combine the top two Internet service providers.