& cplSiteName &

Netflix, TWC Sign Pay-to-Peer Deal

Mari Silbey

Netflix has added one more major service provider to its list of pay-to-peer partners, signing a paid interconnection agreement with Time Warner Cable.

With the latest deal, Netflix Inc. (Nasdaq: NFLX) has now struck interconnection pacts with the four biggest broadband providers in North America. Previously, the Internet video giant inked similar deals with AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Verizon Communications Inc. (NYSE: VZ). (See Netflix Adds AT&T to Pay-to-Peer List.)

In a statement, a Time Warner Cable Inc. (NYSE: TWC) spokesperson said that TWC "reached an agreement with Netflix in June, and we began the interconnection between our networks this month." The spokesperson also confirmed that the paid connections with Netflix will cover all of TWC's markets.

The latest interconnection deal for Netflix comes as the debate over paid peering agreements continues to escalate in the press and in broadband policy circles. Somewhat ironically, Netflix continues to sign these agreements even as CEO Reed Hastings repeatedly rails against the practice in public forums. In an article penned for Wired this week, Hastings explained why he opposes paid peering, and why he believes that Netflix must sign these agreements with ISPs anyway.

"This year we reluctantly agreed to pay AT&T, Comcast and Verizon for access to our mutual subscribers, who were seeing a rapid decline in their Netflix viewing experience because of congestion at the connection point where we transfer content to the ISP," Hastings said. "The ISPs argue that our data-rich services take up limited capacity on their networks. But broadband is not a finite resource. Network limitations are largely the result of business decisions to not keep pace with subscriber demand in a world where the Internet increasingly is the main vehicle for all kinds of entertainment, from gaming to movies to video chats with loved ones."

In a statement specifically about Time Warner, a Netflix spokesperson insisted that there will now be no more such deals. "The agreement with Time Warner is the last," the spokesperson said. "We reluctantly signed this agreement -- and the three others -- to ensure our subscribers get the viewing experience they expect when watching Netflix. We continue to believe consumers should get the Internet they pay for without both the sender and receiver being charged for the same content."

The Netflix argument is that ISPs should pay for expanded broadband capacity to meet consumer demand for online entertainment. Many ISPs, on the other hand, believe that Netflix should pay the freight for content delivery, given that the video company is estimated to be responsible for more than 30% of downstream Internet traffic.

Other opponents of paid peering also point to the idea that if all content providers have to pay ISPs for higher-quality video streaming, then fewer new companies will enter the business because of the delivery cost barrier. That argument has some weight, but it also has to be countered with the reality that any new service would have to build a large audience before any paid interconnection agreement would be necessary.

Get the latest updates on the pay-to-peer and net neutrality battles by visiting Light Reading's OTT content channel.

One question that has not been answered is what the traffic threshold is for when a content provider must pay an ISP for direct connection. Apple Inc. (Nasdaq: AAPL) has also signed paid peering agreements, but the details of those deals -- and the ones signed by Netflix -- are all confidential.

As a result of public outcry over the issue, the Federal Communications Commission (FCC) has agreed to look into peering deals more closely. In a statement in June, FCC chairman Tom Wheeler said, "To be clear, what we are doing right now is collecting information, not regulating. We are looking under the hood. Consumers want transparency. They want answers. And so do I." (See Net Neutrality Redux? FCC Probes Peering Problems.)

Related posts:

— Mari Silbey, special to Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Sabre
8/21/2014 | 4:48:09 PM
Re: OTT Business viability affect
What's going to happen when some new data-driven product or services begins taxing the ISPs? Look, I understand why ISPs don't want to be paying for content that is being delivered by another provider – it competes directly with many cable subsidiary businesses these organizations have. But this is an issue that is not going away anytime soon. 
User Rank: Light Sabre
8/20/2014 | 6:04:01 PM
OTT Business viability affect
Wonder if Netfilx will reveal any numbers at their quarterly.
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
Wednesday, October 26, 1:00PM EDT
Security: Tackling DDoS
Gary Sockrider, Principal Security Technologist, Arbor Networks
Friday, October 28, 1:00PM EDT
Security: The Plusses and Minuses of Open Source Software
Nick Feamster, Acting Director, Center for Information Technology Policy, Princeton University
Wednesday, November 16, 1:00PM EST
SDN 101
John Isch, Practice Director, Network & Voice, Orange Business Services
Friday, November 18, 1:00PM EST
SDN & Open Source
Christopher W. Rice, Senior Vice President of AT&T Labs, Domain 2.0 Architecture and Design
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Next-Generation Technology Beyond DOCSIS 3.1

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Liu Jianhua speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Hybrid Video Solutions to Change TV, Change Future

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Ian Locke speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei Future-Oriented Giga Coax Network

10|20|16   |     |   (0) comments

At SCTE 2016, Huawei's Allen Wang speaks with Alan Breznick for an exclusive interview.
LRTV Custom TV
Huawei at SCTE 2016

10|20|16   |     |   (0) comments

Join Alan Breznick of Light Reading and take a sneak peek at the Huawei booth at SCTE 2016.
LRTV Custom TV
Assuring Network Quality in a Rapidly Changing Environment

10|20|16   |     |   (0) comments

As the rate of change and complexity increases in agile networks, the importance of introducing DevOps methodologies for integrating active test and assurance solutions throughout the full service lifecycle becomes critical to ensure that customers are experiencing the service quality they demand. The industry landscape is changing, and software-based test and ...
Telecom Innovators Video Showcase
A10 Networks on Service Providers' Industry Needs

10|20|16   |     |   (0) comments

Light Reading's Steve Saunders hears how A10 enables service providers to accelerate, secure and optimize their application delivery to drive down costs, enhance service availability, and better respond to customer requirements, so they can improve customer satisfaction, monetize their network, and grow revenues.
LRTV Custom TV
New NFV Use Cases for Cable TV

10|19|16   |     |   (0) comments

A large number of NFV use cases are focused on the enterprise domain, looking at virtualization of customer-premises equipment (CPE). To date, there has been little focus on the use cases and business case for virtualization of the video content delivery networks required to deliver unicast and streaming video to consumers. Amdocs commissioned Analysys Mason to ...
Women in Comms Introduction Videos
Meet the Future Workforce: New Faces, Expectations & Motivations

10|19|16   |   5:33   |   (1) comment

Millennials and their younger peers, Gen Z, expect more out of their network and more out of their work. Intel's Lynn Comp shares how the industry can prepare for this new generation of workers.
LRTV Custom TV
ZTE Global Services User Congress 2016 Highlights

10|19|16   |     |   (0) comments

ZTE held its 2nd Global Service User Conference in Dusseldorf on October 13-14. Representatives from network operators, leading industry analysts and ZTE senior expertsattended the event, exploring the best practice in managed services and the vision to transform network operations into the operations center of the future (OpCF) in the software-defined networking ...
LRTV Custom TV
Cliff Grossner on Cloud & Network Synergy From Carrier Service

10|18|16   |     |   (0) comments

Local carriers offer the collaborated cloud and network service that benefits from their understanding of the regulations operating in different vertical markets.
In this interview, Cliff Grossner from IHS Technology talks about how this advanced service can support business agility and flexibility.
LRTV Custom TV
VeEX: Live from SCTE Cable-Tec Expo 2016

10|17|16   |     |   (0) comments

Cyrille Morelle, VeEX's President and CEO, talks with Light Reading's Alan Breznick live from the SCTE Cable-Tec Expo 2016. They discuss DOCSIS 3.1 technology, deployments and early lessons learned. New products on display include the CX350s-D3.1, CX380s-D3.1, CX310, AT2500-3G, FX150 OTDR and MTT WiFI Air Expert.
LRTV Custom TV
Smith Micro's Carrier-Grade WiFi Component

10|17|16   |     |   (0) comments

Join Carol Wilson of Light Reading as she interviews the CTO of Smith Micro, Dave Sperling.
Upcoming Live Events
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Verizon Wants More Data on Yahoo Breach
Alan Breznick, Cable/Video Practice Leader, Light Reading, 10/20/2016
US Issues Total Flight Ban on Samsung Note 7
Dan Jones, Mobile Editor, 10/15/2016
Oh Snap! Qualcomm Unveils X50, Its First 5G Modem
Dan Jones, Mobile Editor, 10/17/2016
Telecom Italia Plots Digital 'Overlay,' Not Transformation
Iain Morris, News Editor, 10/17/2016
Rogers Says See Ya to CEO Laurence
Mari Silbey, Senior Editor, Cable/Video, 10/17/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
Live Digital Audio

A vital part of increasing the number of women in comms is transforming the ways companies can support and empower women. While progressive company policies that support both men and women in achieving work-life balance are a step in the right direction, creating a company culture that supports those policies can at times be more challenging.

During this show, we'll talk to Lynn Comp, Senior Director of Industry and Sales Enabling (ISE) in the Network Platforms Group at Intel, about why those challenges exist and how companies can overcome them. She'll provide insight into how Intel has worked to create a culture that supports work-life balance, and provide steps and guidance for other companies wishing to do the same. We will also leave plenty of time to get your questions answered live on the air.