Dutch cable company Ziggo — recently acquired by competitor UPC for €10bn — is planning to charge video-on-demand providers additional fees to guarantee that its customers get high-quality access to their online TV services, Ziggo's CEO confirmed to ZDNet.
The measure is intended to provide a solution to the rising amount of bandwidth used by Dutch television audiences, which are increasingly opting for online streaming services like Netflix instead of traditional broadcast TV.
Netherlands, the fastest Netflix country
Netflix launched its services in the Netherlands in September last year, and although the company has yet to disclose an exact numbers of subscribers, it has repeatedly said the country has proven to be a very successful one for the company.
The reason for this success, according to Netflix founder and CEO Reed Hastings, is partly the fast broadband speeds found in the Netherlands. According to the company, Dutch networks have the best quality of service among all the 41 countries in which Netflix is active.
Be that as it may, the rapidly growing number of Netflix subscribers is giving Dutch cable companies a headache, because they're seeing a sharply increasing demand for bandwidth as a result.
In an alternate dimension, cable companies could just throttle these services; however (fortunately), net neutrality rules prevent cable companies from doing just that. So, rather than blocking sites or restricting access, Ziggo is planning on doing exactly the opposite — guaranteeing its customers high quality access to online services with heavy traffic. The catch? The content providers have to pay for it.
Quality not the standard?
Although this may sound a little backwards — after all, shouldn't high quality service be the standard? — Ziggo is not the first company to go down this path. Recently, US cable company Comcast struck a deal with Netflix, guaranteeing that Comcast households have high-speed, and therefore high-quality, access to Netflix at all times. It's a significant deal, since Netflix is responsible for a third of all US downstream traffic in the evenings.
In the Netherlands, the video on demand service is responsible for "just" 10 percent of all network traffic during evenings, but given the fact that the service has only been around for about six months and is still growing rapidly, you could be forgiven for understanding why the cable providers are worried.
Although the deal with Ziggo means Netflix traffic won't be blocked or throttled, Dutch critics still believe that this development threatens net neutrality, under which ISPs should treat all data and services equally.
Ziggo's plans as the company prepares to change ownership: in January, it was acquired by Liberty Global, parent company of former competitor UPC.
In this light, it's interesting to see that UPC has been giving its customers more bandwidth for Netflix. In the speed charts published each month by Netflix, UPC has been the slowest provider since September. However, recently the provider's speed has been on the rise, according to Netflix, even surpassing the speeds of its three main competitors: Tele2, Online, and XS4ALL. A spokesman for the company could not confirm or deny to ZDNet whether the company had struck a deal with Netflix similar to that announced by Ziggo.