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After Hours

Does the Comcast-Netflix Deal Solve Net Neutrality Issues?

Does the Comcast-Netflix Deal Solve Net Neutrality Issues?
February 24, 2014 10:32AM

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The confusion around Net Neutrality is challenging the online world. Firms like Netflix need fast download speeds for their customers, but those companies don’t provide bandwidth. Customers have to pay for Internet connectivity from television or cable companies like Comcast. Comcast and Netflix seem to have struck a mutually beneficial deal.

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Comcast Corp. and Netflix just announced what the companies are calling a “mutually beneficial interconnection agreement” with Net Neutrality implications. In fact, the agreement could put the Net Neutrality debate to an end if bandwidth hogs follow Netflix’s footsteps and agree to shell out money for delivering over broadband networks.

Working collaboratively over many months, the companies said they have established a more direct connection between Netflix and Comcast, similar to other networks. That direct connection is now delivering a better user experience to consumers, while also allowing for future growth in Netflix traffic, they said.

Comcast made it clear that Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed. That means the deal doesn’t violate Net Neutrality agreements.

What’s Fair?

We caught up with Jeff Kagan, an independent technology analyst, to get his take on the team up. He told us Comcast and Netflix seem to have finally struck a deal that will benefit them both, and their customers.

“This is just one of many such deals that will have to be reached between a variety of companies representing both the providers of high speed Internet and those who want to use that bandwidth to reach customers and build their businesses,” said Kagan.

“Net Neutrality is often a confusing topic. I see the point both sides are making and they both make sense. Yet we have to make a decision that is fair to all, heading in one direction or the other and stick to it," he added.

An End-All Solution?

As Kagan sees it, the confusion surrounding Net Neutrality is one of many problems challenging the online world. Companies like Netflix need fast download speeds for their customers to download movies and television shows, he explained, but companies like Netflix don’t provide bandwidth. Customers have to pay for Internet connectivity from television or cable companies.

“Netflix alone uses roughly one third of all download capacity of the Internet each night. However they have not paid for that usage,” Kagan said. “Companies like Netflix and Google have been on the side of using bandwidth provided by companies like Comcast, Time Warner, AT&T and Verizon, and paying nothing for it.”

That, he said, means these providers must continue to invest billions of dollars every year to keep up with the rising demand. The bottom line, he continued, is that the system wasn’t set up right in the beginning.

“Now we have to try and retrace our steps and set up the system to be fair to all competitors and players,” Kagan said. “Will this be the final solution? Probably not, but it is a good start and may set the industry on a healthy course, finally. We’ll see what happens.”

Tell Us What You Think
Comment:

Name:

Missyg:

Posted: 2014-02-26 @ 7:58am PT
Net neutrality is an issue that needs to be fought for, and the first step is to keep up with the issue as much as possible. If anyone needs a refresher on the basic issues, here's a great short mockumentary: http://www.theinternetmustgo.com/

FreeMarketRules:

Posted: 2014-02-25 @ 7:26am PT
Accept the inevitable and deal with it. Telco is an industry that naturally tends to a few large players because of network effects and economies of scale. Deal with the fact that there will be only a few large Comcasts and Verizons. Stop trying to discipline them with antiquated concepts (net neturality) and pitch them against each other into competition. Policy: at least two large telcos must cover the same territory, i.e. must be present at every local interchange; control and ownership of the last mile between the consumer's premises and the local interchange rest with the consumer (whether residential or business). Consumer has a choice to connect their line to any of the telcos present at the interchange. No service contracts longer than 30 days. Let the competition play.

Jeremy:

Posted: 2014-02-24 @ 12:15pm PT
This is such a load of BS. Of course Netflix hasn't been paying Comcast, because Netflix's CUSTOMERS have been paying Comcast. Comcast customers pay anywhere between 25 and 120 bucks a month for speedy access to the internet - why should Netflix also have to pay? The suggestion that the system was "set up wrong" from the beginning is a load of tripe - if the internet had been set up the way Kagan wanted from the beginning, IT WOULDN'T BE THE INTERNET. It would just be a series of subscription services blocked off behind paywalls, without the universal access that makes the internet the amazing resource that it's become. There are so many things wrong with this article, and especially with Kagan's suggestion that this is somehow a "fix" for the "problems" (read: WAAAH I'M NOT MAKING AS MUCH MONEY AS I COULD) of the internet.

To answer the question raised by this article, NO, this is NOT a solution to net neutrality issues, this is exactly the problem that net neutrality was proposed to solve.



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