Netflix looks to ComCast to up speed and quality

Netflix has agreed to pay for more-direct access to Comcast’s broadband network to improve speed and reliability for its video-streaming customers, according to sources.

The two companies announced a multi-year agreement in a statement yesterday, without disclosing terms.

Faced with complaints about quality and speed, Netflix agreed to pay Comcast millions of euro annually to deliver its content more efficiently, said a source.

Netflix, the world’s largest subscription video-streaming service, joins companies such as Google and Facebook that already pay Comcast for content-delivery network access. The agreement is a surprise because Netflix could have used the issue as leverage while Comcast attempts to acquire Time Warner Cable, an industry researcher said.

“I would have thought Netflix would have held out with the Time Warner Cable deal looming,” Craig Moffett, founder of research firm MoffettNathanson LLC, said in an interview.

“Netflix can ask for whatever it wants and has a reasonable shot at getting conditions put on the merger that could provide it with long-term benefit.

“On the other hand, that could be precisely what spurred this deal — that Comcast was willing to settle with Netflix for arelatively low price to make the Netflix problem go away ahead of the regulatory review,” he said.

The agreement is part of an effort by broadband companies including Verizon Communications to collect millions in new fees from content providers who increasingly are using the web networks to deliver movies, sports and live programmes to televisions, tablets and computers.

Investments in the internet should be shared by its heaviest users, Lowell McAdam, chairman and chief executive of New York-based Verizon, said yesterday on a conference call following the (€94.6bn) acquisition of full control of the company’s mobile- phone unit.

He expressed confidence Verizon would also reach an agreement with Netflix.

“We’re pleased to see that Netflix and Comcast had an arrangement,” McAdam said. “We’ve had discussions with Netflix ourselves and feel that the commercial markets can come to agreement on this to make sure that the investments keep flowing.”