By Drew FitzGerald
Netflix Inc. said it reached a commercial deal for direct access to Verizon Communications Inc.'s network, a step that will likely improve the streaming-video service's performance even as its chief executive complains publicly about having to pay for such connections.
A Verizon spokesman confirmed the deal. The terms weren't disclosed. The agreement follows a similar arrangement Netflix reached with Comcast Corp. in February. Netflix said it paid Comcast for connections for the first time, because its existing routes were congested and slowing service for its subscribers.
Netflix had been at odds with broadband providers such as Verizon and Comcast for months in a debate over who would pay for the huge volumes of traffic Netflix sends over their networks. Netflix has offered to pay for the cost of deploying equipment that will help deliver its videos more efficiently, but the biggest broadband companies have resisted, citing the heavy load Netflix traffic puts on the "last mile" of network infrastructure to their customers' homes.
The dispute involves the plumbing behind parts of the Internet that are invisible to consumers. As more people stream movies and television, that infrastructure is facing new strains, intensifying the debate over who should pay for upgrades.
Netflix said it hopes the deal with Verizon will improve service for customers over the coming months. The company's own traffic data showed a sharp performance jump for Comcast subscribers after the two networks reached a deal. Before then, Netflix had been sending its video to Comcast through low-cost intermediaries, a common delivery method.
Netflix accounts for as much as a third of North America's peak Internet traffic, according to network gear maker Sandvine Corp. Thousands of networks link directly to broadband companies to share traffic more efficiently, and some have paid for that access.
Netflix argues that such arrangements represent a slippery slope that gives broadband providers too much leverage. Chief Executive Reed Hastings said the company will keep agreeing to such deals "reluctantly" to ensure adequate video service. The company has asked regulators to step in and protect interconnections that are free of payments.
"Netflix isn't 'dumping' data," he wrote last month in a filing with the Federal Communications Commission. "It's satisfying requests made by ISP customers who pay a lot of money for high-speed Internet."
Comcast said last week that such deals aren't unprecedented. The company pointed to deals that content distributors including Akamai Technologies Inc., Yahoo Inc. and Limelight Networks Inc. struck with broadband providers long before the latest controversy over Netflix.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
Source : http://online.wsj.com/article/BT-CO-20140428-718041.html
