Light Reading
Now that Netflix has agreed to pay Comcast for direct access to the MSO's broadband subscribers, how long before Verizon, AT&T, and others demand similar deals?

Comcast-Netflix Peering Deal: A Game-Changer?

Mari Silbey
2/24/2014
50%
50%

The peering deal struck by Netflix and Comcast over the weekend could well prove to be a game-changer for large cable operators, telcos, and other large broadband providers in their dealings with OTT video providers.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Netflix Inc. (Nasdaq: NFLX) confirmed over the weekend that they have signed a new interconnection agreement to improve the quality of Netflix streams for Comcast subscribers and allow for the continued growth of Netflix traffic. The announcement touched off a wave of excitable media reports and speculation over whether the deal has implications for network neutrality, OTT video carriage, and Comcast's planned acquisition of Time Warner Cable Inc. (NYSE: TWC).

First, here are the facts. The new peering agreement does not mean that Comcast will put Netflix's caching appliance in its last-mile network the way some other providers have. Several outlets are reporting that Comcast is not supporting the Netflix appliances, and Light Reading has confirmed with a source close to the deal that this is indeed the case.

Comcast has also been adamant that the agreement does not mean that Netflix traffic will get any preferential treatment. Here's what Comcast said in its official statement:

"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."

Because the agreement has been in the works for months, it means that Comcast's offer for Time Warner Cable was not on the table when the negotiations began. As for the terms of the deal, while Comcast and Netflix won't disclose them, many news organizations are reporting that Netflix is paying Comcast for the direct connection into its network.

Now, here is the controversy. Industry observers worry that many of the functions of the Internet are being consolidated in a handful of network and content companies, and that eliminating all of the middlemen (such as telecom backbone provider Cogent Communications Group Inc. (Nasdaq: CCOI)) in the delivery process will ultimately give these companies too much power. Also, because peering agreements are not within the Federal Communications Commission (FCC) 's regulatory jurisdiction (and officially not a network neutrality issue), there's concern that much of the brokering over Internet operations is happening without any oversight. (See also The Great Peering War Rages Again.)

And here's the heart of the issue. Peering agreements are based on closed-door negotiations, which means that nobody gets to see how the deals are done. Many consider the agreement between Comcast and Netflix to be a win for everyone. Comcast gets paid, Netflix gets an acceptable deal for traffic delivery, and consumers get higher quality video delivery.

However, there is no way of knowing what the implications are for these types of deals in the future, when the players and situations will be different. And without a transparent view of the process, there's no way to know if the industry needs to put new checks and balances in place.

— Mari Silbey, special to Light Reading

(15)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
pcharles09
50%
50%
pcharles09,
User Rank: Light Beer
2/26/2014 | 9:01:14 PM
Re: The problem
Only $15B...?

In all reality, that sounds like enough of a barrier to entry.
brookseven
50%
50%
brookseven,
User Rank: Light Sabre
2/26/2014 | 2:09:17 PM
Re: The problem
Community networks are a 100 year old idea.  Try the Independent Operating Companies (many of the smaller of which are muni owned).

 

seven

 
cwgservices
50%
50%
cwgservices,
User Rank: Light Beer
2/26/2014 | 11:38:56 AM
Re: The problem
I think municipal and community networks are an idea whose time has come. Check out all the activity in public-access small cell deployments as discussed here on Light Reading. Networks of interconnected networks can provide resilency and high performance, and will increase the options available to consumers.
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
2/25/2014 | 2:11:04 PM
Re: The problem
Thanks for suggestion (a)--I've been saying for quite some time that municipal networks aren't all that crazy an idea.
msilbey
50%
50%
msilbey,
User Rank: Blogger
2/25/2014 | 9:39:48 AM
Re: The problem
gconnery- You are exactly right. Frankly, Netflix only became the success it is because of pitch-perfect timing. It grew big enough quietly enough that the cable/telco companies didn't pay enough attention until Netflix already had the power of a massive audience. I don't see how a new start-up could squeak in anymore given everything that's happening on the distribution side of the market. 
gconnery
50%
50%
gconnery,
User Rank: Light Sabre
2/25/2014 | 3:07:43 AM
Re: The problem
We could:


a) allow local communities to build their own networks, and in particular make this legally nationally so we can stop the stupid cable companies from lobbying to block municipal networks in each state

b) we can require that the wire be installed by a separate company, which then charges all commers for access.  those can then sell ISP services.  yes this is how they would do it in Europe.  so?


c) we can hope and pray that Google fiber provides a real alternative over time

d) I guess we could do things to ensure that wireless eventually develops into a real alternative.  honestly though, this seems a bit far fetched right now, with the ridiculous data caps and the networks already getting bogged down by current LTE network penetration using only cell phones.  for the moment I'd say this isn't possible.

Other options?  Not sure there are any.

The issue with Comcast and Netflix is really not about Netflix.  Its about the next new disruptive service that won't exist because it now can't compete with Netflix which has already reached a scale where it can pay Comcast.  The next disrupter won't be able to.  There was a great post about this here:

http://avc.com/a_vc/2014/01/vc-pitches-in-a-year-or-two.html
mendyk
100%
0%
mendyk,
User Rank: Light Sabre
2/25/2014 | 12:55:44 AM
Money in the middle
Isn't eliminating the middle man (aka disintermediation) what effective disruption is all about? And yes, this is a partially loaded question.
brookseven
0%
100%
brookseven,
User Rank: Light Sabre
2/24/2014 | 8:28:03 PM
Re: The problem
Nobody has closed the door to competition.

Just pony up your own $15B and build your own network.  Anybody can!

seven

 
pcharles09
50%
50%
pcharles09,
User Rank: Light Beer
2/24/2014 | 8:11:52 PM
Re: The problem
That's what gets me. How do these lobbyists & campaign donors get to choose what we, the people want, & get away with it. I mean, I know money talks but when it comes to democracy & capitalism, I thought it's supposed to the the consumer that votes with their hard-earner dollars, not providers closing doors to competition... and then it being OK...?
KBode
100%
0%
KBode,
User Rank: Light Sabre
2/24/2014 | 6:06:52 PM
Re: The problem
I think the real problem (as Carol aptly hints at) is that the only way to truly get uniform broadband competition in place -- and improved networks to low ROI areas -- requires an independent regulator with the guts to do things that the incumbent operators won't approve of. We don't have that. We have a Congress and political culture that snaps its head at the slightest hyperbole, a total disdain of spending money on infrastructure (war and military investment is fine, though), and a general inability to sever regulation from campaign contributions.

Until we learn to fix some of these things, we're going to be mediocre at connectivity, and especially the kind of competition that prompts connectivity to flourish. I just don't think there's a route around this.
Page 1 / 2   >   >>
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
LRTV Custom TV
Exploring the Future of Cable Access

10|15|14   |   6:23   |   (0) comments


Cisco's Brett Wingo looks at where cable access architectures are heading, discussing the impact of DOCSIS 3.1, CCAP, Remote PHY, SDN, virtualization of cable networks and related technologies.
LRTV Custom TV
Optimizing & Monetizing WiFi

10|15|14   |   5:53   |   (0) comments


Cisco's Vince Pandolfi outlines the reasons for cable WiFi's rapid growth, lays out the issues with the technology and explains the new Cisco tools that can help operators monitor and improve their WiFi delivery.
LRTV Huawei Video Resource Center
Emulex & Huawei Collaboration Mutually Beneficial

10|14|14   |   4:17   |   (0) comments


US company Emulex collaborates with Huawei in areas such as blade servers and workload documentation. Mike Heumann of Emulex believes that Huawei has done incredibly well moving from a telecom company into servers and networks, working closely with customers to realize their needs.
LRTV Huawei Video Resource Center
Chile's VZION Looks Forward to Seeing More of Huawei

10|14|14   |   4:43   |   (0) comments


VZION is a systems integrator company in Chile with a focus on virtulization technology. In this video, Cesar Alcacibar talks about the challenges in virtualization and how Huawei helps his company to achieve the best results possible. Alcacibar is expecting more adoption and integration of Huawei technologies in Chile.
LRTV Huawei Video Resource Center
Pro-Datech & Huawei for a High-Tech Singapore

10|14|14   |   2:59   |   (0) comments


Pro-Datech Systems is a specialty IT solution provider based in Singapore. For an added value to its customers, the company uses Huawei's hardware and trusted performance and features for a total solution. It's looking forward to the creation of a lab, to be based in Singapore, for the two companies' coorporation on total storage solution.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Forget the Internet, Brace for Skynet
Stephen Saunders, 10/15/2014
HBO Will Go OTT in 2015
Mari Silbey, Independent Technology Editor, 10/15/2014
Google: Carriers & Cloud Providers Need to Cooperate
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/16/2014
Could Data Be the New 'Currency'?
Ray Le Maistre, Editor-in-chief, 10/16/2014
CBS Takes OTT Plunge
Mari Silbey, Independent Technology Editor, 10/16/2014
Like Us on Facebook
Twitter Feed