Comcast and Netflix announced an agreement today under which Netflix will gain direct access to Comcast's broadband network. A Wall Street Journal report says that Netflix will be paying Comcast an undisclosed amount in the agreement.
The agreement was first reported by GigaOm. [Correction: An earlier version of this story said that the WSJ story was the first.]
The companies have released a statement:
Comcast Corporation and Netflix, Inc. today announced a mutually beneficial interconnection agreement that will provide Comcast's U.S. broadband customers with a high-quality Netflix video experience for years to come. Working collaboratively over many months, the companies have established a more direct connection between Netflix and Comcast, similar to other networks, that's already delivering an even better user experience to consumers, while also allowing for future growth in Netflix traffic. Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed.
As the statement says, the deal spans multiple years which, gives Netflix some security that their growing traffic needs will be met, while (per the WSJ story) Comcast gets some compensation for their costs in servicing Netflix, perhaps the biggest source of traffic on the Internet. The official statement neither confirms nor denies that Netflix is paying Comcast as part of the agreement.
As Netflix's own data shows (see graph below), performance on Comcast and many other ISPs has been declining in recent months. The WSJ story says specifically that Netflix Chief Executive Reed Hastings decided to make the deal because of the performance of their service for Comcast subscribers.
Netflix is making no statements about relationships with other ISPs, but this agreement would seem to make other agreements between Netflix and other major ISPs more likely. Last week reports indicated friction between Netflix and Verizon over the same issues.
The agreement between Comcast and Netflix is a paid peering agreement. Netflix has its own content delivery network (CDN), Open Connect, for such arrangements, but the agreement does not say that Open Connect is the mechanism by which the companies will interconnect.