When Net Neutrality was recently shot down in the United States, many feared that Internet Service Providers (ISPs) would create toll roads that required companies to pay to reach their end-users. That could in turn force the prices of services up and stifle competition such that startup companies in the vein of Spotify and Last.FM could never again be viable.
It turns out that those fears may already be coming true: The New York Times is reporting that Netflix signed a deal with Comcast to provide the movie company with, "faster and more reliable access to Comcast’s subscribers." Details of the arrangement were not immediately released, but Netflix is apparently paying Comcast millions of dollars a year for this access.
For their part, Comcast is claiming that this has nothing to do with Net Neutrality. Indeed, the press release stated that, "Netflix receives no preferential network treatment under the multiyear agreement." the deal may simply allow Netflix to house servers in Comcast"s datacenters in order to stream content faster. However Netflix has been reporting that content delivery speeds have been reduced by more than 25 percent recently and, although the ISP claims that they have not been responsible for the throttling, the timing of this new arrangement is peculiar if nothing else.
We"ll have to wait and see if this is the first of many deals that ISPs make with content providers, whether this new revenue stream will reduce Internet costs for consumers, or whether this will increase consumer costs and stifle innovation.
Source: New York Times | Net Neutrality image via Shutterstock