TIME Netflix

Netflix Pays Verizon in Streaming Deal, Following Comcast Pact

Netflix

Paid-peering deals, which happen at interconnection points around the U.S., are not considered to be a "Net neutrality" issue by the FCC

Netflix has reached a paid-peering-interconnection agreement with Verizon, both companies confirmed to TIME on Monday.

The deal, which establishes a direct connection between the two companies to improve service for users, comes two months after Netflix struck a similar deal with Comcast.

“We have reached an interconnect arrangement with Verizon that we hope will improve performance for our joint customers over the coming months,” Netflix spokesperson Joris Evers tells TIME.

A Verizon spokesperson confirmed the agreement but declined to provide financial terms of the arrangement. After the Comcast pact with Netflix, both Verizon and AT&T expressed a desire to reach similar deals with the streaming service to improve service for consumers. Netflix’s pact with Verizon was first reported by Walter Piecyk at BTIG Research and quickly followed up by Ars Technica and by GigaOm.

It’s important to emphasize that paid-peering, or transit, agreements, which occur at interconnection points around the U.S., are not considered to be a “Net neutrality” issue by the Federal Communications Commission (FCC). Net neutrality is the idea that Internet users should have equal access to public websites over the “last mile” into their homes.

After the Comcast deal, Netflix CEO Reed Hastings complained about having to pay “an arbitrary tax” to the broadband giant 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 FCC.

But despite his protests, Hastings has begrudgingly agreed to pay up for better service. Paid-peering agreements were not covered by the FCC’s 2010 Open Internet Order, which was struck down by a federal judge in January.

By striking paid-peering-interconnection agreements with Comcast and Verizon, Netflix gains a direct connection to their networks, bypassing bandwidth providers that operate as third-party intermediaries between residential broadband companies and Internet firms.

Earlier this month, Netflix released data showing that Comcast’s web subscribers are receiving faster connections while streaming video on Netflix by an average of 65% between January and March.

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