Boston, MA 02/25/2014 (wallstreetpr) – Netflix, Inc. (NASDAQ:NFLX)’s multi-year deal with Comcast Corporation (NASDAQ:CMCSA) is just a start as the video-streaming service provider might have to opt for similar arrangements with other broadband providers as well so as to ensure that its customers get faster streaming.
Broadband Providers Queing Up
The first internet provider company to start the buzz is Verizon Communications Inc. (NYSE:VZ), which made it clear upfront that it is expecting Netflix to pay it for faster speed. Verizon’s Chief Executive Lowell McAdam revealed that the two companies have been in a discussion for the past one year and asserted that the company is awaiting a deal from Netflix after it received slower connection issues from Netflix customers over its FiOS service.
AT&T Inc. (NYSE:T) spokesman Mark Siegel too agreed that the telecom company is in talks with Netflix to set up a direct connection, in order to give a better video access to Netflix, Inc. (NASDAQ:NFLX)’s customers over its network. The shares of broadband service providers have been on a rise since the Netflix and Comcast deal came into light.
The Future
As per the analyst Alan Gould at Evercore Partners, the Netflix, Inc. (NASDAQ:NFLX)– Comcast Corporation (NASDAQ:CMCSA) deal helped to remove uncertainty and indicate to the small payments as Netflix voluntarily agreed for such arrangement. Moreover, Gould thinks that the deal has opened a new format for other broadband service providers to follow the suit. The research firm has ‘equal weight’ rating for the company and it made a note that these payments from Netflix will not impact its business model severely.
It is to be ascertained if Netflix, Inc. (NASDAQ:NFLX) could set up a direct deal or “interconnect” agreement with Verizon or would go though a third-party arrangement. Interconnect deals have become a trend in the broadband industry in the recent years. Biggest example is Comcast Corporation, which has such arrangement with Google Inc. (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO). Moreover, Netflix, Inc. (NASDAQ:NFLX) has developed a service called Open Connect, which is being used by other providers like Cablevision, Cox and Google Fiber. These providers have not witnessed the slower connectivity issue in recent months. But, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) showed disagreement to adopt such service.
In the meanwhile, Netflix, Inc. (NASDAQ:NFLX)’s spokesman stated that the company is continually in discussions with the internet service providers so as to ensure that its users get smooth access to its services at all times.
