Initial news of the deal came by way of a tweet, complete with confirmation by Netflix's CEO.
@WaltBTIG We have reached an interconnect arrangement with VZ that we hope will improve performance for customers over the coming months.
— Joris Evers (@jorisevers) April 28, 2014
Details are scarce, but presumably, like Comcast's deal, this deal involves Netflix paying Verizon for the luxury of transmitting its data in a more direct fashion. This is (just barely kind of) good because it cuts out the middleman and means better service, but (very very) bad because it establishes the practice of a streaming service like Netflix paying ISPs for higher speeds.
When Comcast muscled Netflix into paying for better connection speeds, it side-stepped other more complicated but pervasive infrastructure problems that will only get worse as more data-heavy services like Netflix pop up. This solution fixes Netflix by letting Netflix pay to avoid the bandwidth choke-points. Meanwhile, those choke-points continue to exist. That initial deal opened the door on pay-to-play juuuust a crack. This follow-up deal with Verizon however, straight-up kicks it down.
And as more and more deals like this happen—and they will—it only becomes harder for upstarts to shoulder the cost of getting in good with ISPs. Not to mention that the price of these deals are an added expense to Netflix and whoever else is up next. An expense you can damn well expect to trickle down to you, sooner or later.
Now that this practice is becoming more firmly established, the only way to stop the slide would be for the FCC to lay down some really stringent rules that prevent exactly this sort of behavior. And while the FCC's latest "net neutrality" proposal isn't out yet, it doesn't look like it will be that stringent at all, and might even explicitly OK this kind of thing.
Get ready for a brave new world. [GigaOM]