Netflix, Bright House Ink Interconnect Deal

Netflix has struck a pay-to-peer deal with a fifth major US broadband provider, signing an interconnection pact with Bright House Networks.

Bright House Networks , the sixth-largest MSO in the US with more than 2 million broadband subscribers, confirmed news reports Tuesday that it recently notched a paid interconnection agreement with Netflix Inc. (Nasdaq: NFLX), along with its bigger cousin, Time Warner Cable Inc. (NYSE: TWC). Bright House thus joins AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA, CMCSK), Verizon Communications Inc. (NYSE: VZ) and TWC, all of which inked similar deals with the online video king earlier this year. Although the TWC deal with Netflix was confirmed earlier, Bright House's role in it was not known until now. (See Netflix Adds AT&T to Pay-to-Peer List.)

As has become standard practice in these interconnection agreements, neither Netflix nor Bright House revealed any details about their pay-to-peer deal. Only Bright House released even a brief statement about the pact under questioning by the press.

But the results of the deal are pretty clear to see. As noted by Multichannel News, Bright House suddenly leaped ahead five spots in Netflix's ISP Speed Index for September, moving from ninth place in August to fourth place last month after concluding the deal. Bright House delivered Netflix video streams at an average rate of 2.99 Mbit/s in September, up from an average rate of 2.58 Mbit/s in August, putting it right behind Verizon FiOS, Cablevision Systems Corp. (NYSE: CVC) and Cox Communications Inc. in the speed rankings of 16 major US broadband providers.

In its official statement, Bright House acknowledged that its recent deal with Netflix "increased the ('pipe') capacity between Netflix content and Bright House's network." The MSO said that "our ongoing significant investment in the infrastructure capacity of our network enabled us to immediately absorb additional traffic resulting from the Netflix interconnection agreement."

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Under loud public protest, Netflix has been striking these pacts with big US broadband providers over the past year because of customer complaints about poor video streaming quality at times. Netflix has accused the providers of not keeping up with customer demand and not dealing with traffic congestion at the connection point between its network and theirs, while the providers have blamed Netflix for creating the congestion and argued that Netflix should pay for better delivery quality.

In response to the public outcry over the issue, the Federal Communications Commission (FCC) has decided to probe peering deals more closely. In a statement issued 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.)

One of the big questions now is how many more deals with broadband providers Netflix will sign before the FCC and the public get the answers they're seeking.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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