Comcast Internet subscribers are continuing to see dramatic improvement in Netflix performance following a deal in which the streaming video company agreed to pay for a direct connection to the nation's largest broadband provider, according to data released on Tuesday.
"This month’s rankings are a great illustration of how performance can improve when ISPs work to connect directly to Netflix," Netflix spokesperson Joris Evers wrote in a company blog post. "In the U.S., the average speed on the Comcast network for Netflix streams is up 65 percent from 1.51Mbps in January to 2.5Mbps in March."
The agreement, which was struck in February, intensified the already-heated debate about "net neutrality," the principle enshrined in the now-defunct U.S. Open Internet rules that prohibited major Internet service providers like Comcast, Time Warner Cable, and Verizon from playing favorites with certain online services at the expense of rivals. Comcast is currently seeking regulatory approval for its proposed $45 billion purchase of Time Warner Cable.
As high-bandwidth services like Netflix have exploded in popularity -- during evening hours the service accounts for as much as one-third of all Internet traffic, according to industry estimates — the broadband companies are increasingly demanding compensation in exchange for direct connections to improve performance. Faster speeds mean better video quality and fewer interruptions for Netflix viewers.
Comcast jumped six spots higher on the list — leapfrogging Time Warner Cable, Verizon, AT&T U-verse and other providers -- and its customers are seeing the best Netflix performance in 16 months. The performance boost comes after a precipitous decline in Netflix speeds for Comcast subscribers that began last fall, leading to numerous complaints about service quality.
By striking a paid-peering interconnection agreement with Comcast, Netflix gained a direct connection to the broadband giant's network, bypassing bandwidth providers that operate as third-party intermediaries between residential broadband companies like Comcast and Time Warner Cable and Internet firms like Netflix and YouTube. Financial terms of the deal were not disclosed, but many Wall Street analysts don't believe it will have a material impact on Netflix's bottom line.
Nevertheless, Netflix CEO Reed Hastings complained bitterly about having to pay "an arbitrary tax" to Comcast in order to improve service for customers, and urged federal regulators to include paid peering agreements in the new net neutrality rules currently under development by the Federal Communications Commission. Such agreements were not covered by the FCC's 2010 Open Internet order, which was struck down by a federal judge in January.
Hastings called for the FCC's new rules to prevent service providers like Comcast from "charging a toll for interconnection to services like Netflix, YouTube, or Skype, or intermediaries such as Cogent, Akamai or Level 3, to deliver the services and data requested by ISP residential subscribers."
Internet service providers, Hastings said, "must provide sufficient access to their network without charge." That suggestion is fiercely opposed the nation's largest ISPs, which for years have complained that they are obliged to deliver high bandwidth content — which often competes with their own video offerings — over the infrastructure they’ve spent billions of dollars to build. Both Verizon and AT&T have acknowledged that they are seeking to extract similar fees from Netflix in order to improve service for customers.
Google Fiber, the tech giant’s gigabit fiber broadband service, remains by far the fastest U.S. provider of Netflix streaming video, with average performance of 3.60Mbps, according to Netflix. Google has already launched fiber initiatives in Kansas City, Austin and Provo, and last month announced plans to work with nine more metro areas to expand the service.
Netflix says its ISP speed index is "based on data from the more than 44 million Netflix members worldwide who view over 1 billion hours of TV shows and movies streaming from Netflix each month. The listed speeds reflect the average performance of all Netflix streams on each ISP's network and are an indicator of the performance typically experienced across all users on an ISP network. A faster network generally means a better picture quality, quicker start times and fewer interruptions."