Netflix strikes another connection deal, this time with Verizon

Netflix has struck a deal with Verizon to improve the quality of its streaming video to the broadband provider’s customers.

Under the terms of the deal, Netflix is paying Verizon to upgrade their joint data connection.

“We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months,” Netflix said in a statement.

Netflix did not release the financial terms of the deal.

The deal follows by just two months a similar arrangement the company reached with Comcast. It also follows a significant drop in the throughput seen by Netflix customers on Verizon.

According to Netflix’s own data, the average speeds seen by its customers on Verizon’s DSL and fiber optic cable-based FiOS networks has declined since November. FiOS-based Netflix customers saw an average speed of 1.91 megabits per second in March, compared with 2.2 megabits per second in November. Verizon’s DSL customers saw an average speed of 1 megabit per second, compared with 1.23 megabits per second last fall.

In March, Verizon’s FiOS service ranked 8th and its DSL service ranked 15th among 16 national broadband providers.

Netflix has been in a standoff with many of the major U.S. broadband providers over who should pay to upgrade their interconnections.

Traditionally, when companies create direct connections between their networks — also known as peering — each side pays its own costs of establishing and upgrading the connection. But in recent years, broadband providers have been pressing major content companies such as Google and Netflix to pay for those peering relationships.

Netflix had refused to do so until February, when it signed the paid peering deal with Comcast. Other providers, notably AT&T, are pressing for similar deals.

The broadband providers have argued that Netflix and other big Internet companies send a vastly disproportionate amount of data to their networks and ought to pay for the costs involved in carrying that data. They’ve also argued that it’s unfair to charge all of their customers to upgrade the connections to services — such as Netflix — that only a portion of their customers use.

Reed Hastings, Netflix’s CEO, meanwhile has called for federal regulators to intervene to bar broadband providers from charging for peering relationships. Dubbing such charges unfair “tolls,” he’s warned that they will inevitably mean more costs for consumers and could thwart innovation by discouraging Internet entrepreneurs.

Hastings recently cited the power Comcast had to impose such a deal as a rationale for his company’s opposition to the broadband provider’s proposed merger with Time Warner Cable.

H/t to the Verge.

Photo courtesy of Netflix.

Troy Wolverton Troy Wolverton (271 Posts)

Troy writes the Tech Files column as the Personal Technology Columnist at the San Jose Mercury News. He also covers the digital media, mobile and video game industries and writes occasionally about Apple, chips, social networking and other aspects of technology. Previously, Troy covered Apple and the consumer electronics industry. Prior to joining the Mercury News, Troy reported on technology, business and financial issues for TheStreet.com and CNET News.com.