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A slippery slope? Netflix pays Comcast for access

February 23, 2014
By

Civilization was nice while we had it, but it seems to be going away in bite sized increments.

After the ostensible death of Net Neutrality last month and agreeing to purchase Time Warner last week, Comcast has another victory under its belt this week in the form of dollars in their pockets from Netflix.

The cable giant will allow Netflix’s Open Connect platform on their system for an undisclosed price, joining Cablevision (NY tri-state) and Google Fiber (six people in Kansas City and Austin) in the program. (Those deals were undisclosed, even to the point of which direction the money was going in — Cablevision is locked in an ongoing battle with FIOS and has been using Netflix speed as a major selling point in the North East).

Since September most of the ISPs not a part of Open Connect have seen a dip in performance for their Netflix streams.

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Graph by sfugi on Reddit

With Netflix’s desire to “become HBO before HBO becomes them” — one they’re starting to succeed with, garnering both Emmy awards and an Oscar nomination — it was a necessary, though dangerous, step to take. Diminished speeds are unacceptable when it’s as vital to your whole business model as is the case with Netflix, whose goal is for five new original series’ a year. But allowing cable companies to charge for access on both ends of the pipe could lead to a disastrous future for the internet as a whole.

Original programming is the whole ballgame for Netflix right now. Old TV shows and movies will only take them so far. You can’t create social media buzz the way House of Cards and Orange is the New Black did with The West Wing and The Wonder Years (no matter how good those shows are).

But as with everything else concerning Netflix, the biggest question is, “what will it do to membership prices?” In the short term, probably nothing, but in a letter to shareholders in January, Netflix CEO Reed Hastings had already brought up the plan of a tiered pricing future. That plan would be based on how many simultaneous streams you could have at once (for families and password sharers), but one would assume the base price will eventually have to go up again as well.

As for the issue of bandwidth priority, which is really the biggest issue here, the press release says there is none. “Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed.” If it’s true, great (for now). But if that changes though, then everything changes.

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  • julius rosen

    this is why the cable monopoly must end .