Netflix and Comcast have reached an agreement by which Netflix will pay millions of dollars to Comcast annually for faster and more reliable video streaming to its subscribers on its network, the New York Times reports.
The deal marks a new chapter in the history of internet because never before has a content provider paid a broadband provider for improved access to its customers.
However, the growing power of bigger broadband companies like Verizon, AT&T and Comcast has provided enough leverage to them to extract payment from companies whose traffic eats up a big portion of their overall bandwidth. At peak times, Netflix accounts for almost 30 percent of all internet traffic.
It is yet not clear if this agreement between Netflix and Comcast violates the principle of net neutrality – which means all content providers have equal and free access to a network’s bandwidth.
However, both the companies have said which announcing the deal that : “Netflix receives no preferential network treatment under the multiyear agreement.” No details about the deal were made public but it is likely that Netflix will pay millions of dollars annually to Comcast.
The agreement comes after 10 days of the announced merger of Comcast and Time Warner cable which will make the joint company become cable provider to 30 percent of American homes and will have 40 percent share among the bandwidth providers.
The agreement also follows the court ruling in January which struck down Federal Communications Commission’s net neutrality rules. Such agreement will most likely have not been allowed under those net neutrality rules.