SAN JOSE -- Netflix and Comcast announced a deal Sunday to speed up the streaming delivery of movies and television shows to millions of customers. The stunning agreement comes amid a new era in the relationship between content providers like Netflix and companies like Comcast that provide Internet access.
While the new arrangement was reportedly settled at a Vegas sit-down between top executives, what probably won't be settled for a while is the brewing argument about new powers won by high-speed Internet service providers over what Americans can see on their personal screens in the future.
While not directly connected to the issue, the deal comes amid a renewed debate for companies like Comcast over so-called "net neutrality" rules, which were eliminated by a federal court in January. Basically, the rules leveled the playing field for all content providers -- new and old, big and little -- wishing to get their videos to customers via the Internet "pipes" owned by cable and satellite companies.
Advocates of net neutrality worry that the newly deregulated cable and satellite companies might gouge content providers for faster and smoother service, forcing customers to eat a share or all of the price increases. They also fear that some cable and satellite giants would block certain websites and favor movies and television shows produced by their subsidiaries or partners.
"We now have an Internet service provider telling content providers that the only way its service can work is if you pay an extra fee," Michael Weinberg, of Public Knowledge, a consumer advocacy group, said to USA Today about the Netflix-Comcast pact. "The Internet service provider is injecting itself into the relationship between Netflix and its customers."
"I'm not sure this is as nefarious as people are making it out to be," said Matthew Prince, CEO of CloudFlare, in reference to criticism that the deal was really Comcast forcing Netflix to pay a premium to get smoother and better delivery of streaming services.
Prince said it's likely that Netflix will pay less to Comcast than it was paying a middleman company to do the same thing.
"While this is being cast as a network neutrality issue, I think that's inaccurate," Prince said. "The news today is not a watershed moment but rather a logical step that likely decreased Netflix costs and allowed them to provide better service to Comcast customers."
Prince's San Francisco company helps content providers like Netflix get their videos to customers. Reached by telephone Sunday, Netflix and Comcast spokesmen described the deal as a winner for their mutual customers.
"They are going to be getting a better experience," said Netflix spokesman Joris Evers, meaning smoother delivery of streaming content. His counterpart at Comcast, Charlie Douglas, added, "Some may already be seeing it happening."
While a Comcast news release stated that Netflix "receives no preferential network treatment," neither company offered specifics about the deal. They did not say how much Netflix agreed to pay for enhanced streaming, or for how long or what types of improved services are involved.
Besides their mutual competitors, another group that would be interested in the details of the pact would be federal regulators and national legislators who intend to bring neutrality back to the Internet sooner than later.
According to a New York Times report Sunday, the agreement was forged in a meeting between Brian L. Roberts, chairman and CEO of Comcast, and Reed Hastings, the founder and CEO of Los Gatos-based Netflix, at the International Consumer Electronics Show in Las Vegas last month. Measured by customers and megabits, the two partners are the largest of their kinds, and their relationship stands to grow if Comcast's $45 billion bid for Time Warner Cable is approved.
Comcast/Time Warner would control about 38 percent of the high-speed Internet market, with 32 million broadband customers. Meanwhile, Netflix's 33 million subscribers in the United States generate nearly a third of North American Web traffic from broadband.
Contact Joe Rodriguez at 408-920-5767, and follow him at Twitter.com/joerodmercury.