Amidst the oncoming merger of Comcast and Time Warner Cable, Netflix has now agreed to pay TWC for direct access to its servers in an effort to improve the streaming experience for its users.
The statement that the company published was rather bare, stating, "Here is our statement on the interconnection agreement: We reached an agreement with Time Warner Cable in June and began the interconnection between our networks this month." It also included a brief description of what Netflix does.
Considering how straightforward and brief this statement is, it seems that Netflix management has been very reluctant to initiate this deal. This is the fourth deal that Netflix has signed with a major US ISP, and it follows similar deals with AT&T, Comcast, and Verizon.
The superficial problem that's occurring here is that Netflix does not have sufficient access to the ISP's networks in order to fluidly stream to all of its users, and new networks have to be laid out in order to provide sufficient bandwidth. A statement we received from Netflix for a past article indicated that Netflix already placed its Open Connect content delivery system at the ISPs interconnect locations, and that Netflix is paying said ISP to "haul our bits across the country". This would lead us to believe that there is something more going on than just a lack of networking resources.
Of course, there's more going on than the need to lay networks, and that's where things start to get messy. The whole idea that a content provider like Netflix needs to pay the ISPs in order to get proper access to their networks goes entirely against net neutrality, as this is discrimination by data type. After all, ISP's subscribers (you, me, your neighbor) pay the ISP to give them access to the Internet, and thus the content providers. Who are the ISP's to decide which content providers will have adequate network access and which don't?
In the past, Netflix has offered to pay for caching servers that could be placed in the facilities of the major ISPs; however, these offers were declined.
You're probably wondering why a situation like this exists in the US; the answer to that boils down to the FCC. Currently, the FCC is at a point where it needs to choose to either allow ISPs to build these 'fast lanes' or to reclassify broadband access as a telecommunication service, preventing such data discrimination.
For the time being, such deals will be necessary in order for certain service providers to stay above water, but we can't help but think that the FCC should decide to reclassify broadband access as a telecommunications service.
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