Netflix Agrees to Pay Comcast For Access to Its Broadband Network

In a landmark deal, Netflix has agreed to pay Comcast for direct access to the company's broadband system. The announcement comes after months of dispute between Netflix and broadband providers about who should pay for increasing bandwidth loads.

If you haven't been following the streaming wars, here's the basic gist: As Netflix has grown, an argument over who should pay for the increasing loads—the broadband provider or Netflix—has emerged. In the meantime, Netflix has been buying its bandwidth from a company called Cogent, which acts as the middle man between Netflix and Comcast or Verizon, which in turn deliver the stream to you. But that agreement hasn't worked out very well.

Under this new deal, Netflix will access Comcast's network directly—or, almost directly, according to the Wall Street Journal, which first reported the news this afternoon. "Under the deal, Netflix won't be able to place its servers inside Comcast's data centers, which Netflix had wanted," the paper explains. "Instead, Comcast will connect to Netflix's servers at data centers operated by other companies."

The deal was confirmed in a joint statement:

Comcast Corporation and Netflix, Inc. today announced a mutually beneficial interconnection agreement that will provide Comcast's U.S. broadband customers with a high-quality Netflix video experience for years to come. Working collaboratively over many months, the companies have established a more direct connection between Netflix and Comcast, similar to other networks, that's already delivering an even better user experience to consumers, while also allowing for future growth in Netflix traffic. Netflix receives no preferential network treatment under the multi-year agreement, terms of which are not being disclosed.

According to the WSJ, the deal was struck in January at CES, and that the details of the agreement were hammered out earlier this month.

What does this all mean for you? For one thing, Comcast customers are due to see some serious improvement when it comes to streaming video. But it's an ominous sign for the ongoing battle for net neutrality—a far more complex issue at stake here. In January, a federal court dealt a death blow to net neutrality when it struck down the FCC's open Internet rules, which demand, essentially, that all data be treated equal.

That decision opened up the possibility that broadband providers—like Comcast—could start giving specific companies—like Netflix—preferential treatment. But for now, it's still unclear what, if anything, this definitive agreement could mean for net neutrality.