Following its deal with Comcast, Netflix has agreed to an interconnection deal with another major U.S. Internet Service Provider, Verizon. The agreement is said to be similar to Netflix's deal with Comcast, but terms were not announced.
Just like the Comcast deal, Netflix will be paying Verizon to improve the quality of Netflix streams for Verizon home Internet subscribers.
Netflix is not paying for Verizon to speed up or give preferential speeds to Netflix streaming traffic. Instead, the deal allows Netflix to connect directly to Verizon's network, bypassing any potential bottlenecks between transit providers such as Level 3 and Verizon's network.
The end result, however, is the same: Verizon home broadband subscribers should see a marked improvement in their Netflix streaming experience as a result of the deal.
After Netflix and Comcast announced their interconnect deal in February, streaming speeds for Comcast jumped six places on Netflix's USA ISP speed index for March 2014, moving from eleventh place in February to fifth by the end of March.
Verizon's rating on the Netflix speed index may see a similar jump in the coming months. Verizon FIOS was rated eighth in March (dropping from seventh place in February). Verizon DSL, meanwhile, is one of the lowest-rated services among the major ISPs in Netflix's index.
The Netflix-Verizon deal is only the latest of what is sure to be numerous U.S. ISPs demanding cash for improved access to their networks. AT&T also reportedly wants payment from Netflix—its customers are currently ranked twelfth in the Netflix speed index.
Not net neutrality, technically speaking
Despite its willingness to pay, Netflix is not pleased with having to shell out cash to ISPs. In a blog post last Thursday, Netflix argued against these kinds of deals and accused Comcast of double dipping by extracting money from both content providers and its home Internet subscribers.
Interconnection deals are not part of current net neutrality discussions, which primarily deal with the so-called last mile between an ISP and a home user. But in a March blog post, Netflix CEO Reed Hastings argued interconnection should be a major part of any new net neutrality rules.
"The essence of net neutrality is that ISPs such as AT&T and Comcast don't restrict, influence or otherwise meddle with the choices consumers make," Hastings wrote. "Strong net neutrality additionally prevents ISPs from charging a toll for interconnection to services like Netflix, YouTube, or Skype."
The Netflix-Verizon interconnection deal was first reported by Walter Piecyk, an analyst at BTIG, via Twitter.