Netflix CEO Reed Hastings may complain about it publicly, but his company's decision to pay Comcast for better access to the Internet service provider's subscribers is paying off. The streaming video service says performance on Comcast's network has improved dramatically since it started cutting checks.
Money talks, as it turns out. Also, water is wet.
The announcement came as part of Netflix's monthly report comparing data speeds among the top 20 ISPs--the first full month of data since Netflix and Comcast announced their interconnection deal in late February. In previous reports, Comcast ranked among the worst of the pack for delivering streaming video to Netflix subscribers. Users on Comcast's network previously experienced speeds of around 1.5 to 1.7 mbps, with many complaining of lengthy load times, lower video quality, and not even being able to access content at all in some instances.
That's changed, as money changed hands. Netflix says Comcast speeds shot up 65 percent from 1.51 mbps in January to an average of 2.5 mbps in March, good enough to get Comcast in the top 5 of all ISPs.
Netflix's deal with Comcast could be the first of several interconnectivity agreements, where major ISPs charge Netflix and others a fee to recognize the infrastructure needed to support the heavy traffic demands of streaming services. But Netflix holds out hope that there's a better way. The company used its latest monthly report as an opportunity to again promote its Open Connect content delivery network. Open Connect uses peer sharing and caching to offload some of the work to Netflix servers, so ISP servers don't have to bear the full load.
This would save ISPs money in the long term, Netflix contends, while avoiding interconnectivity agreements. Open Connect partners in turn don't pull a Comcast and ask Netflix for money, which keeps users like you and me paying less than $10 per month for a vast amount of content. If enough companies start asking Netflix, Hulu, Amazon and others for money, though, the cost of these services is likely to go up.
In time, perhaps, Comcast and the other holdouts will embrace the Open Connect platform and help keep costs of services in control. But, for now at least, it's all about the Benjamins.