Netflix will pay Comcast for faster connections

(Reuters) – Netflix has agreed to pay one of the largest U.S. broadband providers, Comcast Corp., for faster connections, opening the possibility that more content companies will have to pay for better service. Comcast and Netflix made the joint announcement on Sunday, marking the first time Netflix is ​​paying for faster connections in the U.S. after customers complained about slow service. Terms of the deal were not disclosed. The deal comes as federal regulators grapple with an issue known as “net neutrality” involving broadband providers and whether they can slow down traffic to certain websites, potentially forcing content companies to pay for faster internet service. The Federal Communications Commission said last week it plans to change the rules after a U.S. court invalidated the commission’s previous version. The issue is being closely watched as millions of people watch movies and TV shows through streaming services offered by companies such as Netflix and Amazon. Netflix, which started as a DVD-by-mail service, has 44 million subscribers worldwide and 34 million in the United States alone. About 7 million subscribers pay for mail delivery services. The companies said in a statement that they have been “collaborating for many months” to reach a multi-year agreement. Netflix will not receive preferential network treatment, the companies said. As part of the deal, Netflix will deliver its movies and TV shows directly to Comcast’s broadband network rather than through third-party providers, giving viewers faster streaming speeds for watching movies and TV shows. It could also force Netflix to enter into similar agreements, known in the industry as interconnection agreements, with other major broadband providers such as Verizon and AT&T. With over 44 million subscribers worldwide, Netflix is ​​making efforts to connect directly with broadband Internet providers. It struck similar deals with Cablevision and Cox, although Netflix did not pay for those connections. The Netflix deal follows Comcast’s deal to buy Time Warner Cable for $45 billion (£27 billion), which will attract the attention of US antitrust regulators. The combined company would have a nearly 30 percent share of the U.S. pay-TV market and would also be a major provider of broadband Internet access. (Reporting by Jennifer Saba in New York; Editing by Meredith Mazzilli)