Netflix pays for better Internet access

  • By Michael Liedtkeap Technology Writer
  • Tuesday, April 29, 2014 9:54pm
  • Business

SAN FRANCISCO — Netflix will pay Verizon Communications to help clear up some of the congestion that has been bogging down its Internet video service.

The deal marks the second time in less than three months that Netflix Inc. has anted up for a more direct connection to a major Internet service, even though CEO Reed Hastings objects to having to pay for better access.

Netflix negotiated a similar arrangement with Comcast Corp. in February.

The financial details of Netflix’s partnerships with Comcast and Verizon Communications Inc. haven’t been disclosed.

Netflix is reducing its reliance on third-party vendors to deliver video to Internet service providers because the streaming speeds of its movies and TV shows have been slowing in recent months.

The company hopes the Verizon deal “will improve performance for our joint customers over the coming months,” Netflix spokesman Joris Evers said Tuesday. Verizon issued a similar statement.

Netflix has nearly 36 million U.S. subscribers to its Internet video service, which charges $8 per month in the U.S. About 9 million customers pay Verizon for high-speed online access in their homes and businesses.

With its Comcast partnership in place, Netflix says the quality of its video on that network has improved dramatically. In March, Netflix’s video streamed at an average of 2.5 megabits per second, a 66 percent increase from January. The higher speeds translate into a richer and steadier picture.

Netflix’s video streamed at an average of 1.91 megabits per second on Verizon’s Internet service in March.

Although Hastings has publicly complained about having to pay Internet service providers for more direct connections, it’s not clear the deals will cost Netflix more money.

That’s because Netflix already had been paying content-delivery fees to third-party vendors such as Cogent Communications Group Inc.

In a blog post last week, Comcast asserted that its deal will enable Netflix to reduce its expenses.

Netflix didn’t directly address that claim in its own blog post deriding Comcast last week. Instead, Netflix accused Comcast of “double dipping” by charging to deliver content that many of its subscribers want to watch. Netflix has become so popular that it generates nearly one-third of the evening traffic on the Internet in the U.S., according to the research firm Sandvine.

The Netflix traffic is straining some networks and raising tensions with Internet service providers who argue they shouldn’t have to shoulder all the financial burdens for handling all the extra traffic.

Even though Netflix is now working with Comcast, their relationship remains antagonistic. In the most visible sign of discord, Netflix is opposing Comcast’s proposed $45 billion acquisition of rival Time Warner Cable Inc. because it believes the combination will give Comcast too much control over the prices that both consumers and websites pay for Internet access.

Netflix Inc., which is based in Los Gatos, Calif., plans to raise its prices by $1 or $2 for new customers only within the next two months.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.