Boston, MA 02/24/2014 (wallstreetpr) – In an exceptional move Netflix, Inc. (NASDAQ:NFLX) today has reached a mutually beneficial agreement with the Comcast Corporation (NASDAQ:CMCSA), wherein, Netflix will be able to deliver content faster to the Comcast’s customers.
From Dispute To Deal
The two companies have been in dispute for the past few years over the Netflix, Inc. (NASDAQ:NFLX)’s streaming cost over Comcast Corporation (NASDAQ:CMCSA)’s broadband. Initially, Netflix wanted its users to access its streams freely over the Comcast’s network, however the latter disagreed with Netflix’s thoughts, citing hefty delivery costs attached to the heavy traffic generated by the Netflix users unworkable and therefore, demanding reasonable compensation.
However, in the recent months, the dispute had been seen far away from being over after the Comcast Corporation (NASDAQ:CMCSA) Customers reported slower connectivity to Netflix. This can also be referred to the Netflix’s published data last month, which indicated that its average streaming speed decreased 27% since October.
Netflix Deal Decoded
Netflix, Inc. (NASDAQ:NFLX)- Comcast Corporation (NASDAQ:CMCSA)deal is first-of-its kind in the internet industry where a content provider is paying broadband service provider, in order to reach its users. No doubt that the current broadband market players like Verizon, Comcast and AT&T are increasingly assuming dominance over the sites eating up their network capacity majorly,and Netflix is a ruler of the internet traffic accounting 30% during the peak hours.
The deal comes at a time when Comcast just took over Time Warner Cable Inc. (NYSE:TWC) for $45 billion, which positioned it as the cable provider for almost 33% of the American homes. Therefore, it is quite a win-win position for Netflix to reach the majority of the American users through Comcast. While the agreement comes out quoting that Netflix does not receive any preferential treatment under the pact, it does not have clarity pertaining to the financial terms of the deal. However, according to the source close to the matter, Netflix, Inc. (NASDAQ:NFLX) will pay several million dollars annually to Comcast Corporation (NASDAQ:CMCSA) for the decided number of years.
No matter how lucrative the deal looks, but it is going to raise eyebrows of Federal regulators for sure. Experts are not denying the fact that the deal can hit a hiccup as to its potential hindrance to the competition among internet providers and cable. Moreover, the agreement also spikes questions about the probable violation of principles of net neutrality, which aims at preventing in discrimination from broadband operators against the internet traffic.
