Netflix and Comcast Strike a Deal, With a Bit of Mystery
Secrets are catnip for the curious. Netflix and Comcast left out a serious load of catnip when they announced a partnership that is long on implications for the Internet and its users, but short on details.
The video-streaming service Netflix says it has agreed to pay Comcast to ensure that consumers watching content streaming through the cable company's Internet service do not encounter slow video loading or hiccups in streaming, according to a joint statement from the two companies.
The one-paragraph announcement says that the deal is “mutually beneficial” and that Netflix and Comcast have been in talks for months. The statement says that the deal “will provide Comcast’s U.S. broadband customers with a high-quality Netflix video experience for years to come.” Netflix has 44 million members globally. At the end of 2013, Netflix had more than 33 million members who stream videos in the U.S.
The announcement comes right as the second season of Netflix’s original series, the wildly popular House of Cards starring Kevin Spacey, is released. Meanwhile, as users are clamoring to watch the show, Netflix customers with Comcast service have seen the quality of their service decline over the past few months. According to Los Gatos, Calif.-based Netflix’s own data, Comcast service has fallen for the past three months in a row.
And the Netflix-Comcast deal also comes a couple of weeks after Philadelphia-headquartered Comcast has agreed to buy Time Warner Cable. The acquisition needs to be approved by the Federal Communications Commission. If the deal goes through -- which Comcast CEO Brian Roberts seems pretty confident is going to happen -- then the resulting internet service provider will be an even bigger gorilla for Netflix to have to work with than it already is.
As Netflix and Comcast climb into bed together, though, they are not disclosing the specific terms of the deal. That means that down-the-road implications for consumers and other Internet-based businesses are unclear.
"No one on the outside knows what is happening in this market,” said John Bergmayer, senior staff attorney at Public Knowledge, a consumer protection advocacy organization, in a statement. "From what information is public, it appears that the largest ISPs are demanding payment from networks that deliver content and services that residential broadband consumers demand. Because the large residential ISPs themselves are the ones keeping the terms of their deals secret, it is raises the question of whether they have something to hide.”
Spokespeople for Comcast and Netflix insist that it's common practice for the terms of these sort of deals to be held close to the vest. "The terms of these types of agreements are often not disclosed. The point is it will deliver a better user experience for our mutual customers," said Charlie Douglas, a spokesperson for Comcast, in an email to Entrepreneur.com. Joris Evers of Netflix reiterated Douglas's comment.
Meanwhile, for the Internet to stay “open” and free from manipulation, internet service providers, like Comcast, should charge users for access to the Internet, but they should not be charging content providers, like Netflix, for access to users, says Bergmayer.
"What has characterized these traffic disputes has been their opacity,” says Bergmayer. He called on the FCC and members of Congress to step in and ensure that users’s access to the Internet is being protected first and foremost.