It was revealed over the weekend that Netflix and Comcast had struck a historic deal: for the first time the streaming-video service would pay the cable giant in order to ensure that the huge volume of data it was sending would arrive swiftly and smoothly in customers' homes. This came after months of Netflix traffic performing increasingly poorly on Comcast's network. Also at issue is the massive increase in the last few years of Netflix's size; it grew to encompass roughly one-third of all internet data piped across the United States during prime-time video-viewing hours.
Verizon's CEO wasted no time in announcing that the company expected to strike a similar bargain. On CNBC this morning Verizon's chief Lowell McAdams revealed that Netflix and Verizon have been in talks for almost a year now, and that he expects to finalize a deal soon. "If you see someone come in with a lot of load on the internet, [with] video, you've got to get that in an efficient place. So making the connection far out on the network is a good thing, and frankly, paying for it," said McAdams. "To me this shows you don't necessarily need a lot of regulation in a dynamic market here. By doing these commercial deals we'll get good investments and good returns for both parties."
These deals have proponents of net neutrality up in arms, and seem like a stark contrast to Netflix's stated position from last month, when it threatened to provoke customer outrage if it had to pay to stop the degradation of its traffic. The recent Comcast announcement that it would purchase Time Warner Cable, along with expectations of further consolidation in the cable industry, may have been a tipping point in the ongoing negotiations between Netflix and the companies that carry its video traffic.